Businesses can attempt to counter the issue by raising the costs of services or goods, which leads to less business and less revenue generated in the long run. From a business sense that does not work. A business may also attempt to allocate funds away from the profit margin that the company overall makes. This is another solution that does not work for those profiting from the business. The final solution is to cut back on overall employees. Doing this frees up significant amounts of money. This leads to less wages paid out overall, with the ability to still pay higher wages to those still employed, due to the shifting of money, as well as less money spent on individuals benefits, such as insurance costs as paid by the business (Wilson, 2012).
American Samoa raised their minimum wages in 2007 by a mere fifty cents. This caused such detrimental effects to their economy that Governor Togiola Tulafono, of American Samoa testified before congress regarding the state of the island's economic affairs. "We are watching our economy burn down. We know what to do to stop it. We need to bring the aggressive wage costs decreed by the Federal Government under control. Our job market is being torched" (Wilson, 2012, p. 07). Since employers in American Samoa had to pay out more to employees, without an increase in generated revenue, businesses began to suffer. In response President Obama signed into law, a bill halting the proposed fifty cent raise, planned for the 2010-2011 time frame (Wilson, 2012). A study conducted by Professor Joseph Sabia at San Diego University, concluded that roughly 1.3 million jobs across the United States would be lost, with an estimated 168,000 of those jobs belonging to the working poor, or those considered below the poverty level, if the federal minimum wage was increased to only $9.50 (Sabia, n.d.). If that sort of impact would be felt after a $2.50 increase, imagine the devastation be that would follow a raise to the $15.