One of the potential drawbacks to raising the minimum wage is that businesses often pass on the increased labor costs to customers. While the intent is to help low-income workers, the reality is that only certain prices, particularly those tied to minimum wage labor, tend to rise. This can result in significant increases in the costs of essential goods and services like milk and housing construction, as we witnessed during the COVID-19 pandemic. Meanwhile, luxury goods remain unaffected. In essence, raising the minimum wage can inadvertently lead to a disproportionate rise in the cost of living for the very population it aims to assist. Additionally, it can put additional strain on businesses, forcing some to close, relocate, or resort to paying employees “under the table.” These outcomes can ultimately reduce tax revenues that could otherwise support essential social services.
In light of these challenges, an alternative approach worth exploring is the concept of a Citizen’s Dividend. This innovative strategy involves providing a no-strings-attached cash refund to every citizen and their dependents. Some cities, such as Austin and Denver, have already experimented with this approach, and the results have been promising, particularly in reducing housing and food insecurity among their residents. A Citizen’s Dividend can be financed by reallocating funds from unnecessary expenditures or through a more equitable taxation system.
It is essential that we prioritize the goal of fostering a thriving local economy. To achieve this, we should consider alternative solutions like the Citizen’s Dividend, which can help address the financial struggles of our citizens without inadvertently raising the cost of living or burdening businesses. Let’s adopt a forward-thinking approach that truly benefits our community.