First of all, raising the minimum wage would result in job loss. One basic law of economics is that the demand for a product decreases when its price goes up. This law of demand also affects the labor market. For example, Brodsky (2016) uses his own restaurant as an example and points out that he needs to cut down the number of employees in order to stay at the same level of revenue if the minimum wage is raised to $15 per hour. Raising the minimum wage means the higher labor costs for business and it becomes less affordable than before, which push business owners to take actions. Although there are two basic ways to maintain profits, which are firing workers and increasing the selling price, more business owners, in the short term, prefer …show more content…
Higher minimum wage increases the costs for retaining experienced workers. Brodsky (2016) points out that if the government raises the minimum wage, the owners of the restaurant not only need to pay more to entry-level employees, but every person above them should get a raise at the same time. In fact, businesses are sensitive to wages and do voluntarily raise them since they care a lot about the value that each employee adds to the company and want to retain skilled workers. After all, training new employees is quite expensive and businesses do not want to lose workers that they spend money on, so they raise payment voluntarily for workers to prevent them from leaving as long as employees are gaining more skills and experience. In this case, when the minimum wage is raised, employers need to pay more to prevent from losing their employees to their competitors, which puts great pressure on business owners. Furthermore, raising the selling price, the second way mentioned above for maintaining profits would have a great impact on consumers. For example, Meltzer and Chen (2011) emphasize that increasing the minimum wage would increase the price of fast-food and thereby decrease its consumption. Assuming the business owners do not fire their workers, they need to increase the selling price of their products or services to increase the revenue, …show more content…
Therefore, they insist that raising the minimum wage is necessary to help these individuals. However, most minimum-wage workers are not poor. Sherk (2013) summaries outside sources from the Bureau of Labor Statistics and the Census Bureau that demonstrate that over half of employees earning the minimum wages are between the ages of 16 and 24 and work as part-time workers, who are not their families’ sole breadwinners. Few minimum-wage workers are from families below the poverty line. On the contrary, they are from families whose annual incomes are $53,000 on average. Therefore, it is not accurate to use $7.25 to calculate the annual income for a minimum-wage worker’s family and state his/her family is below the poverty line. Furthermore, as I mentioned before, raising the minimum wage would increase the competition and cause job loss. Obviously, the low-skilled worker would prefer to have a comparatively low wage job than lose his job. Thus, the federal government should not raise the minimum wage from $7.25 per hour to a higher
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.
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...
Well, raising the minimum wage has both the pros and cons. Still, the fact that increasing the minimum wage nationwide would increase millions of workers’ earnings is deniable. I suppose that’s why some people advocate raising the minimum wage will grow the economy for everyone. In 2014, the president of the United States, Obama, called on the current Congress to raise the national minimum wage, which proves that Obama actually supports raising the minimum wage. ‘February 2014 Congressional Budget Office Report The Effects of a Minimum-Wage Increase on Employment and Family Income is the latest attempt to do so, in this response to Members of Congress with respect to an increase in the federal minimum wage from $7.25 to $10.10 per hour.’
"When we talk about the kind of folks whose lives will be made better by raising the minimum wage, we're not talking about a couple teenagers earning extra spending money to supplement their allowance. We're talking about providers and breadwinners. Working Americans with bills to pay and mouths to feed."
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.
The minimum wage today has a lot of issues; some people say it is not enough to live comfortably. Many agree that there needs to be an increase in minimum wages and by doing that it can help with our issues of poverty. Statistics show that a worker who is full time and earning minimum wage makes only $15,080 a year, which is under the federal poverty line for a family of two. (Gitis, 2013) The problem with that is $15,080 is not a sufficient amount that a person can live and grow on. “A family of two can consist of a mother and son or daughter, father and son or ...
"No family gets rich from earning the minimum wage. In fact, the current minimum wage does not even lift a family out of poverty."
Some think that the minimum wage should not be raised, but others think that the minimum wage should be raised. If one had to be chosen, raising the minimum wage would be better. The minimum wage should be raised because if you were to work full time on minimum wage, you are below the poverty line; Also states that did raise the minimum wage above the federal standard have had more job growth than states that did not. Finally, "Minimum wage workers are much more likely to immediately go out and spend that extra money in the economy," says Heidi Shierholz of the Economic Policy Institute, which favors raising the minimum. "That's because they're often living paycheck to paycheck."
Because the cost of living has sky rocketed, it has become almost impossible to raise a family on a minimum wage job. A person living on his or her own cannot survive on minimum wage job either. Their living expense would just be too much. The earnings of minimum wage workers are crucial to their families well being. Evidence from 2013 and 2014 minimum wage increase shows that an average minimum wage worker brings home more than half of his or her family's weekly earnings. In 2013 one million single mothers with children under 18 would have benefited from a minimum wage increase to $10.
Currently, in the United States, the federal minimum wage has been $7.25 for the past six years; however, in 1938 when it first became a law, it was only $0.25. In the United States the federal minimum wage has been raised 22 times since 1938 by a significant amount due to changes in the economy. Minimum wage was created to help America in poverty and consumer power purchasing, but studies have shown that minimum wage increases do not reduce poverty. By increasing the minimum wage, it “will lift some families out of poverty, while other low-skilled workers may lose their jobs, which reduces their income and drops their families into poverty” (Wilson 4). When increasing minimum wage low-skilled, workers living in poor families,
Today the federal minimum wage is $5.15, but should be about $8.50 if Congress had adjusted it for inflation over the past 35 years. While $5.15 may not seen that bad, when factoring in such variables as sky rocketing gas prices, budgets can get pretty tight. David Shepard, a sophomore at Wayne State University, worked at a Meijer Retail and Grocery Superstore for over two years while in high school. At the time Shepard lived with his parents and didn’t have to worry about paying rent or buying groceries, all that he had to pay for was filling up his gas tank and paying for his car insurance. Shepard recalled, “It was all I could do to pay for the basics like gas and bill’s, I barely had any money to have fun on the weekends”. This is only an example of a high school student that can nearly slip by on minimum wage with only a few expenses. There are 1.8 million people in America with children under the age of 18 that would benefit from an increase in minimum wage (Minimum).
As we see in the graph, when price increases the amount of workers increases, but the employers decreasing the need for employees at that cost. Again this will cause unemployment issues with number of employees needing a job significantly exceeding the number of jobs demanded by employers. Based upon these fundamental aspects of supply and demand as Bustamante suggests raising the minimum wage will have more negative consequences than positive.
One of the present and current implications of an increased minimum wage will be the workforce it attracts. Even with the increased minimum wage the job is still a minimum skill job, but with more applicants. Students out of high school unaware of the current workforce situation see a shining hourly wage and would rather start making money now than two to four years later. Economics Dr. John Perry explains the economic principle, Law of Demand in the realm of minimum wage, “The Law of Demand tells us that as the wage (price) of low-skilled/unskilled is artificially increased through legislation, the quantity demanded for those labor services by employers will fall,” and says this isn’t the main contributor to the jobless rate (Perry, aei.org). Dr. Perry goes into more depth about the economic principle, Law of Supply, which would primarily affect high school aged
A minimum wage is an hourly wage that is established by the government which represents the minimum amount an individual receives per hour. The federal minimum wage was established in 1938 under the “Presidency of Franklin Roosevelt” (Henderson). Currently, majority of the states have their minimum wage less than $10. However, the federal government wants to increase the minimum wage to $12 across the United States. The federal government believes that increasing the minimum wage will assist numerous people in the United States as most individuals are working in a minimum wage job to support their families. About “75.3 million people ages sixteen and over worked for hourly wages in 2008, according to the U.S. Department of Labor’s Bureau of Labor Statistics” (“Minimum Wage”). Meaning almost a quarter of the workforce of this nation are working a minimum wage job. Numerous people believe that these workers are not able to make their ends meet, and increasing the minimum wage will help these individuals substantially. Even though people believe that increasing the minimum wage will benefit the society, they tend to overlook the drawbacks of increasing the minimum wage, and how it will prove to be detrimental for the society.
Many critics claim that that raising minimum wage increases unemployment, especially for unskilled workers, and harms small businesses, including grocery stores and restaurants. The argument declares that companies such as these rely mostly on unskilled workers for labor, and if the minimum wage increases, then their profits and, therefore, hiring would decline, creating a...