It’s both. If you were looking for an easy answer we all would have had it a long time ago. Obviously most businesses aren’t going to want to pay a more than the federal minimum wage to their employees. That means less profits for them. Neither the big nor the little business is going to want to give up some of their profits. What will happen is the businesses will fire some of their workers to try to keep from feeling the difference in the amount they have to pay. People will lose their jobs. That is inevitable and it is a negative aspect.
The loss of jobs is one of the reasons that businesses have given to try to stop the minimum wage being raised. Their argument is valid to an extent, they can hire more people at lower wages than they can at higher wages. By expanding on their argument they can hire even more people if we lower the minimum wage from $7.25 to $6.25 and even more if we lower it to $5.25. How many people could be hired if we let people be paid $4.25 an hour? Maybe $3.25 is the magic number. We could have tons of employed starving families living on the streets.
On the other hand, raising the minimum wage will lead to those workers being able to afford better housing which will help the real estate industry, they’ll be able to afford to buy new clothes which will help the retail industry, they’ll be able to go out to eat which will help the food industry and so on. As those industries get an increase in business they will need more workers.
From the time a minimum wage was first implemented businesses and their minions have been saying it will be the destruction of civilization as we know it. Didn’t happen. However, implementation of a minimum wage won’t solve all our problems either. It never has. There will be some job loss that will probably take years to balance out. A lot of that will be due to the resistance from businesses, businesses who are hoping to make the initiative fail, hoping to make people believe it was a bad idea and that it is not working. Regardless of whether it is intentional or natural it will still be there.
Seattle, Washington implemented their $15 minimum wage three years ago. They seem to be doing just fine even with the resistance. Their unemployment rate is currently one of the lowest in the nation at 2.9%. The economy is driven by the purchasing habits of the largest number of people. That would be the middle class. It’s not driven by millionaires and billionaires who have their money in the bank or tied up in stocks, real estate and other types of investments. And it’s not driven by people who can barely afford food and rent. The best thing for our economy is people being paid enough to be able to buy items. That benefits everyone.