President Obama approved a plan to raise the federal minimum wage to $10.10 an hour by 2016. Some believe the increase of the minimum wage will benefit low earners and boost their families above the federal poverty line. However, others believe it will negatively affect the same group of people it is proposed to help. Many believe that unemployment will increase due to fewer job opportunities and layoffs of employees, and that businesses will be put at risk. Small businesses will be more at risk than large ones. The majority of small businesses pay their employees minimum wage, while employees of larger businesses are paid per salary. Due to the increase in the federal minimum wage, small businesses will receive less profit for their business, will have to reduce their number of employees, and teenagers will be less likely to obtain entry-level jobs. With an increase in the minimum wage, companies will see a decrease in their profits. According to the Center for American Progress, "calculations show that prices would have to rise modestly and profits fall to meet President Obama's minimum wage proposal." It stands to reason that since the employee pay rate will increase, the company will spend more money on labor costs. Additionally, businesses will have to increase the prices of the items they sell. It is a known fact in economics that when prices rise, people buy fewer products or services (Sherk). If people buy fewer products from a company, the company will see its sales decline. The company will not make enough money selling products to have a large amount of pr...... middle of paper ...... its area of ​​work. Small businesses need to have employee positions available so that more teens can experience entry-level employment before moving to a higher level. Works Cited Dunkelberg, Bill. “CBO estimates that raising the federal minimum wage could cost 500,000 jobs.” National Federation of Independent Business. Np, January 15, 2014. Web. March 26, 2014. “Entry Level Jobs.” » BusinessDictionary.com. NP, 2014. Web. March 30, 2014. Sherk, James. “What is the minimum wage: its history and its effects on the economy.” The Heritage Foundation. Np, June 25, 2013. Web. March 30, 2014. Walker, Scott. “Minimum wage jobs are “for the most part” reserved for young people. » PolitiFact Wisconsin. Np, January 13, 2014. Web. March 30, 2014. Weller, Christian. “A higher minimum wage would hurt American businesses.” Center for American Progress. Np, February 15, 2013. Web. March 29. 2014.