Lower-income families may affected the most from an increase in the minimum wage because businesses faced with higher labor costs may be forced to raise prices. The Employment Policies Institute estimates that a small business with 25 minimum-wage workers would see costs rise by $57,389 in two years under the president's proposal. Most fast-food outlets operate on margins of less than 5 percent.increasing the minimum wage would lead to inflation because the cost of goods and services rises as well so the value of the dollar diminishes as you do so.Another way minimum wage increases might be absorbed is through changes in prices. Specifically, employers facing a higher mandated minimum wage might choose, if possible, to pass on the extra costs of labor to the consumers through higher prices. If minimum wage increases result in an increase in the aggregate price level, then the inflationary effects would erode some of the purchasing power of both those receiving raises and everyone else in the
Lower-income families may affected the most from an increase in the minimum wage because businesses faced with higher labor costs may be forced to raise prices. The Employment Policies Institute estimates that a small business with 25 minimum-wage workers would see costs rise by $57,389 in two years under the president's proposal. Most fast-food outlets operate on margins of less than 5 percent.increasing the minimum wage would lead to inflation because the cost of goods and services rises as well so the value of the dollar diminishes as you do so.Another way minimum wage increases might be absorbed is through changes in prices. Specifically, employers facing a higher mandated minimum wage might choose, if possible, to pass on the extra costs of labor to the consumers through higher prices. If minimum wage increases result in an increase in the aggregate price level, then the inflationary effects would erode some of the purchasing power of both those receiving raises and everyone else in the