The debate over the $15 dollar minimum wage has two sides, one that believes that the higher wages will mean less jobs and the side that wants to see better incomes for employees in low skill jobs in America. Currently 2 states and 4 cities have passed laws to increase the minimum wage to this level over the next couple of years. This higher wage will have negative impacts on businesses and the workers that currently are employed there, while limiting the number of available jobs for young workers.

Franchise locations of the popular fast food chain McDonalds are everywhere and employee millions of American workers. But the franchises only keep 6 cents of every dollar of revenue that they generate, the rest goes to staff, food, rent, etc. A typical franchise has income of $2.6 million a year or $156,000. With this new minimum wage, 15 employees will cost the franchise 75% of its profit for the year. The company will attempt to increase revenue through price increases but customers are sensitive to these increases and lower wage earnings will be most affected by the increase in their purchases.

Questions came today after Wal-Mart missed earnings with profit margins coming down from 5.6% a year ago to 5.1% this quarter. The retail giant blamed the pharmacy business, shrinkage, and increasing wages. The company now has a starting wage of $9.00 an hour which is set to raise to $10.00 an hour early next year. This increase in wages translates to a 24 cent reduction in profit.

Wage growth is not happening organically according to recent economic reports. But is expected to occur more so next spring, at which time, revenue growth is also expected to accelerate. These two moving at the same time allows companies to maintain profits. Artificial wage growth without top-line improvements causes profits to fall, like we are seeing at Wal-Mart and other companies that moved towards the federal governments desire for a $15 minimum wage.

The large US retailer, Wal-Mart, missed its first quarter earnings with slower sales and currency issues. Analyst were looking for profit of $1.05 a share but the company was only able to report $1.03 a share. Sales were also light with both Wal-Mart and Sam’s Wholesale seeing a slowing a sales growth. International revenue struggled due to the strong US currency in comparison to the devaluation of almost every other currency. $14 billion in sales is to be lost this year from currency issues, that equates to 13 cents a year in profit.

Labor markets improved last week according to government reports showing the number filing for unemployment benefits decreased more than expected. Initial claims came in at 283,000, which was 21,000 people lower than the previous period and lower than anticipated. The general consensus was initial claims would come in closer to 295,000. Some economist have become very optimistic about labor markets while others point to real employment and the low participation rates among other negative signs.