One of Bernie Sanders main running points is raising the federal minimum wage from $7.25 an hour all the way up to $15 by 2024. More than doubling the minimum wage in a 4 year period would by far be the largest increase in the United States history since minimum wage was introduced on the federal level in 1938. Currently, the largest federal minimum wage increase was from 2006-2009, when it jumped from $5.15 to $7.25.
While of course Bernie’s intention of raising the minimum so drastically is to help move people out of poverty, it needs to be discussed what effects this may have on the economy as a whole, specifically how it help big corporations.
For decades Sanders has preached his discontent for big business and corporations in America. However, it’s not often he talks about small business during debates and rallies. In fact, during a Town Hall Debate in 2016 he altogether avoided numerous questions on small business and pivoted towards taxing large corporations.
I remember during my college days during an economics introductory course our professor, reading off course the widely used textbook Principles of Micro/Macroeconomics by Gregory Mankiw that “small business is affected by raised minimum wage exponentially more than corporations”. On a basic level, it’s logical enough to assume that small business owners cannot afford to pay their employees a high minimum wage and that cutbacks have to be made when it is raised.
What isn’t so simple is how corporations are affected. Corporations on the other hand aren’t affected nearly as much by higher minimum wages, as it’s more likely that any setbacks come in the form of stock prices and investors, while profit margins continue as basically normal.
This is all fine for a lot of people. Some look at it as a win-win, poor people make a living wage (until inflation drops the value of the $) and big business isn’t substantially hurt. But the problem is Bernie is anti-corporation AND supports a historically high minimum wage. To put it quite simply, it’s impossible to have it both ways.
Make no mistake, the biggest threat to big corporations are small businesses, not the government. Taxes and regulations can hurt, but if small business thrives, big business dies.
At the very end of the Minimum Wage section of Bernie’s website FeelTheBern.org, he addresses the potential concerns on effects to small business. He cites Seattle raising the minimum wage to $16 by 2021, which is currently $12, small businesses have not been affected. Just to poke some holes in this example, for years Seattle has passed anti-big business regulations and pro-small business policies, so there isn’t much corporate competition for small business to compete with in general. Seattle in 2014 (when the bill was passed) also had a minimum wage well higher than the federal wage and had a 7 year plan to raise the wage to $15, where just a year out from 2021 it is only at $12. His other example in his small business section cites CostCo’s success, which has over $100 billion in sales and is definitely not a small business.
This is just one of the reasons there are many opponents of raising the minimum wage so drastically and thousands of examples exist on how it has hurt businesses in the past. In theory, a $15 federal minimum wage could help the overall economy, though the United States has never tried it at a level like the one Bernie has proposed. But there is a massive element of hypocrisy in Bernie Sanders pro minimum wage and anti-corporation policies.
National Hill Journalist