Minimum Wage Effect

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Minimum Wage and its effects on the Labor Demand Market Beginning in 1938, the Fair Labor Standards Act introduced the federal minimum wage starting at 25 cents an hour. However, in order to reflect changes in the spending power of money caused by inflation, and increasing GDP (Gross Domestic Product) from increases in productivity, the minimum wage has been increased 22 times through the years to the current level of $7.25 per hour. The minimum wage was raised to its current level on July 24, 2009. “The minimum wage in 2014 was 24 percent below its 1968 level despite the fact that U.S. productivity more than doubled over that period and low-wage workers now have much more experience and education than they did back then. Now is the time to …show more content…

There has been discussion during the past year among politicians about raising the minimum wage soon to around $15 per hour which would more accurately reflect the amount of money a worker needs to earn in order to live a lifestyle free of government entitlements. With a raise in the minimum wage, benefits and consequences are incurred by both the employee and the employer. From the employee's’ perspective, they are always happy to get a raise in pay. In order to decide whether an increase in the minimum wage would be justified or not, we need to look at it from several different business perspectives. First, when the minimum wage rate is increased, low-skilled laborers will be more expensive to hire. This increase will have the greatest impact on businesses that need the …show more content…

The pros that come with an increase minimum wage include increased penalty that employers pay to prevent overtime, increased earnings among the low-wage workers who keep their jobs and preventing employers from exploiting their employees. Some of the cons include reduced hours, increased unemployment from people no longer searching for jobs, and overtime that reduces the GDP (Hamermesh). According to the article “It’s Time to Raise the Minimum Wage,” raising the minimum wage will benefit more than one in four workers. An increase up to $12.00 “would pump billions of dollars into the U.S. economy, benefiting Main Street businesses.” The business would be affected by the increase spending from their consumers. It would also give those workers who are tipped as well earn a wage a chance to get out of poverty (It’s Time to Raise the Minimum

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    Poverty continues to grow in America. The average minimum wage in the United States is $7.35 an hour- far too low in today’s society. Key expenses, for example, gas and housing prices, have gone up significantly since the minimum wage was last changed in 2007 (Wagner 52). The laws creating the minimum wage were intended to improve the standard of living and decrease poverty. Raising minimum wage is a vital step in decreasing poverty and giving every family the opportunity to survive and succeed. Millions of hard-working Americans are below the poverty line and need an increase in pay. Minimum wage must be raised because it will diminish poverty and assist the working class to support their families.

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  • The Economic Impact of Raising the Minimum Wage

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    The United States minimum wage is not indexed to inflation. Due to this fact, the purchasing power of minimum wage falls as the price of consumer goods increases. The current hourly minimum wage is set at $7.25, however many states do pay above this rate. One example of this is in Michigan, the current hourly minimum wage is $7.40. The last time a change occurred to raise minimum wage was in 2009. President Obama has put out a proposal that is designed to raise the federally required hourly minimum wage to $10.10 in 2015. The public opinion of this proposal is all over the board ranging from a positive outlook to a negative one. Some of the negative remarks are that it would dampen the economy and shrink the hiring done by small businesses. “The Household Survival Budget for the average New Jersey family of four is $58,500 and for a single adult is $25,368 in 2010. These numbers highl...

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  • Raise Minimum Wage to $15 an Hour

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    Minimum wage should be raised to at least $15 an hour. Doing so would benefit lower classes of people greatly. Higher minimum pays will keep people from doing illegal things for money, give them more money to spend, and it would make minimum wage do what it’s intended to do.

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  • Congress Should NOT Raise Minimum Wage

    650 Words  | 2 Pages

    Before other states jump on the $15 minimum-wage bandwagon, they might want to look at what's happening in Massachusetts — one of two states with a $10-an-hour minimum wage. Massachusetts increased the minimum wage from $8 to $9 at the start of 2015 and to $10 on the first day of 2016. The state is now mired in its longest stretch of net job losses since the recession, Labor Department data show. Minimum wage is the assured lowest amount of pay per hour that an employee can receive and it’s purpose is to make certain that employers are paying their workers fairly. The first minimum wage was created by Congress in 1938 as part of the Fair Labor Standards Act; it was twenty-five cents an hour. Since then, it has varied over the years, the highest being in 1968, but today it stands at $7.25 (Sherk). At the moment, Congress is contemplating the Fair Minimum Wage Act of 2013, which would, over two years, raise the minimum wage to $10.10 (GovTrack). However, raising the minimum wage is a bad idea because a majority of minimum wage jobs belong to teenagers who will not stay in the job very long and do not need to support a family, raising minimum wage will lessen the availability of jobs for the poor, and it is pointless since many of the impoverished that the raising of the minimum wage is targeted to help, will not be able to benefit.

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  • Persuasive Essay On Raising Minimum Wage

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    Many people against raising the minimum wage create arguments such as, “it will cause inflation”, or, “ it will result in job loss.” Not only are these arguments terribly untrue, they also cause a sense of panic towards the majority working-class. Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has consistently increased, even when the wage has been

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  • The Debate Over Raising Minimum Wage

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    Raising the minimum wage to $15 an hour has been extensively debated over the last year or so. Minimum wage is the undermost wage allowed by law to be given to an employee for their services. Introduced in 1939, its purpose was to stabilize the economy, which was healing from the Great Depression. Most importantly, it was designed to protect the health and welling-being of employees. Currently, the Federal Government 's minimum is $7.25 per hour ($14,500 per year). The ones in favor of the increase are saying that it used to be a living wage; however, now it is not and it now needs to be line with changes to the cost of living. In addition, an increase in minimum wage can increase the productivity and decrease income inequality and poverty. On the other spectrum, the ones who are against the increase are saying that the increased labor cost will drive up unemployment, affect small businesses negatively, and cause other workers from different

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  • The Benefits Of Raising The Minimum Wage

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    Minimum wage is a difficult number to decide on because it affects different income earning citizens in different ways. According to Principles of Microeconomics, by N. Gregory Mankiw, minimum wage is a law that establishes the lowest price for labor that and employer may pay (Mankiw 6-1b). Currently, the minimum wage in the United States is $7.25 per hour. For many years politicians and citizens have argued on what should be the minimum wage that would benefit the economy and society in general. A minimum wage was first established in 1938 to increase the standard of living of lower class workers. To discuss what is better for the country and its citizens, people have to understand what is a minimum wage and what are its effects.

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  • Minimum Wage

    747 Words  | 2 Pages

    Over the years the cost of living has been on the rise. Therefore, it is only right for minimum wage to increase as the cost of living increases. Many states and even some individual cities have taken the first steps toward raising the minimum wage. States like Washington and cities like San Francisco have already raised their minimum wage above the federal minimum wage. This is a very good start as it is becoming harder and harder for Americans to start and take care of their families. We need more states and cities to follow their lead some more Americans can feel more financially stable. This will make a better America for us all.

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  • The Minimum Wage For California Workers

    1355 Words  | 3 Pages

    In the eyes of the employees, the minimum wage raise is mostly a pro for them. There are three main reasons why increasing the minimum wage to $15 per hour would give benefits to both the employer and employees. Workers can make a decent living with a pay of $15 per hour. These people will then have a higher income that will enable them to pay their basic needs and living expenses. Back then in 2013, a report from the Congressional Budget Office estimated that 16.5 million low-wage workers would benefit from a $10.00 per hour wage; this includes 900,000 works coming up the poverty line ("The Effects of a Minimum-Wage Increase on Employment and Family Income"). So if employees receive a pay S15.00 an hour, the fewer people ar...

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  • Minimum Wage: Impact on American Poverty

    1282 Words  | 3 Pages

    One way raising minimum wage will be beneficial is that it could lift many Americans out of poverty. Raising the minimum wage in Illinois, would help the families of more than 1.1 million workers who work to meet their children’s basic needs and “reduce the adverse effects of poverty on a child’s well-being” (Fiscal Policy Center). Studies have shown that raising the minimum wage would help 1 in 5 Illinois families who are in poverty. By raising the minimum wage in Illinois, it would help workers with families spend money on food, housing, gas, and other needs without going into poverty. Along with puling Americans out of poverty, raising the minimum wage could also stimulate economic growth. Raising the minimum wage, is stimulating economic growth by worsening the income inequality and substantially reducing the employee turnover for the business. Increasing a person’s income would raise their yearly earnings by $3,640 and “Improve the economic security and reduce the economies poverty rate” (Fiscal Policy Center). Low-wage workers spend most of what they earn on their basic needs, which is quickly spent and does not leave the worker with much money left to spend on other needs. This boost in the minimum wage will stimulate the economy and help create opportunities for more people, by hiring more workers to keep up with the

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  • History of Minimum Wage

    1128 Words  | 3 Pages

    Congress created minimum wage with the Fair Labor Standards Act of 1938. The first minimum wage was only 25 centers per hour. Through history the minimum wage has increased a little at a time, umping a couple cents each time. The last time the United States changed the minimum wage was in 2007 which was a large jump from $5.15 per hour to $7.25 per hour. This jump of $2.10 was a large increase. Through the years it is evident that the minimum wage is constantly changing. “. It has averaged $6.60 an hour in purchasing power in 2013 dollars. But it has ranged from a low of $3.09 an hour in late 1948 to a high of $8.67 an hour in 1968(Sherk, J. (2013, June 25).

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  • Persuasive Essay On The Increase Of Minimum Wage

    1448 Words  | 3 Pages

    On the other side of the argument Americans believe that with the increase of minimum wages it would help Americans out a lot more. One possible way that the increase in minimum wage may help an individual out is in the article Minimum wage Pros and Cons, “The Economic Policy Institute stated that a minimum wage increase from the current rate of $7.25 an hour to $10.10 would inject $22.1 billion net into the economy and create about 85,000 new jobs over a three-year phase-in period. Though this may be true, one problem

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  • Minimum Wage and Its Effects on the Supply and Demand Curve

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    In summary, an increase in minimum wage is only beneficial for skilled and well educated workers. That is said because workers that are unskilled or lack education are the first people to lose their jobs when there are budget cuts in a company because employers prefer using more labor saving methods in order to maintain their revenue. With an increase in minimum wage, there is a surplus in the supply of the workers because everyone wants to work now that the wages are higher, however, the demand for labor is decreasing which in turn increases unemployment in a country.

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  • Argumentative Essay On Minimum Wage

    1334 Words  | 3 Pages

    When approaching the subject of minimum wage increases, we consider the topic to be extremely controversial. Both proponents and opponents argue what impact it will have on the economy and how to bring low-income wage earners out of poverty. Some claim it will have a negative impact on small business and decreased employment rates while others think, it will improve low-income families’ standard of living and boost economy. Increasing the minimum wage assists in decreasing poverty but more support programs are need.

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  • The Minimum Wage Must Be Increased

    1491 Words  | 3 Pages

    In the 2014 State of the Union address, President Obama called on Congress to raise the national minimum wage from $7.25 to $10.10 an hour, and soon after signed an Executive Order to raise the minimum wage to $10.10 for the individuals working on new federal service contracts. An increase in the minimum wage has been a topic of discussion for many years now, and it looks like this year will finally see the first increase of minimum wage in 10 years. Not everyone agrees that there should be an increase, but many states have already raised their minimum wage rates because of the federal government’s inaction. Iowa raised the state’s wage, and it will rise again in 2016. Clearly there are benefits to a higher minimum wage; the current minimum wage in the United States should be raised because it helps the economy by increasing employment, and it is now at the lowest value it has been in more than 50 years, causing hardship for earners of minimum wage.

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