Natalia Molina

Julio Alicea
Economics
10/25/16
Is raising the minimum wage good or bad for the economy?
Raising minimum wage has both benefits and costs to the economy. On
one hand it's bad for the economy because according to an analysis done in the
Survey of Economics, raising the minimum wage could lead to more
unemployment. This happens because when minimum wage is higher than the
equilibrium wage, resulting in a surplus of workers. This happens because the
supply of workers exceeds the demand for workers. The law of supply shows
how much of a quantity sellers are willing to produce and offer at a specified
price. To connect these ideas, companies have a supply for workers needed, as
the value of each worker goes up, the supply of workers needed will go down. In
other words,If workers are getting paid so much money, more people will look for
jobs and employers will hire less employees leading many people towards
unemployment. On the other hand it's good because according to CEA
calculations, raising minimum wage will help people get out of poverty. The graph
from the report showed this because when minimum wage is $10.10, 5% of
people will live above poverty line versus 17% of people living below poverty line
when minimum wage is $7.25 (CEA Calculations). When minimum wage is
raised, income rises for 12 million people and 2 million escape poverty. This is

good for the economy because once those families get out of poverty, they don't
have to depend on the government to provide the resources they might need.
This is also good because when somebody's income rises then their demand for
goods will increase, causing the suppliers to also benefit. In conclusion, a raise in
minimum wage is both good and bad for the economy because the surplus of
workers can cause an increase in unemployment but it can also lead to taking
families out of poverty which is helpful to the economy.