Economic Overview of the United States Minimum Wage

This essay will argue that the government should distribute subsidies for some people who are able to work, but cannot find a jobs to reduce economic problems, improve the standard of living of the unemployed, and even reduce crime. Unemployment basically means people who lack of seeking jobs. “The unemployed are people able, available and willing to work at the going wage rate but cannot find a job despite an active search for work” (Riley, 2012). Unemployment occurs when an expansion in demand rates, while the economic growth goes downward and layoff starts increasing because of a depression from the economy (Hardman, 1999). High rates of joblessness are the main obstacle that is damaging the social development as a whole.

Introduce thesis; list 3 supporting points. The minimum wage is a key economic policy tool as it can affect one’s earnings. In 1895 an inquiry into the labour market requested by the Trades and Labour Congress of Canada situation resulted in the Fair Wage Resolution of 1900. The Canada House of Commons enacted this wage policy to regulate government contracts so as to ensure that skilled workmen receive fair and reasonable wages but ignored the “question of who would benefit from regulation (Russell 1991). Men mostly benefited from government contracts for construction

In Illinois, the “basic minimum rate per hour is set at $8.25” (“Minimum Wage Laws in the States,” n.d.). However, as with most laws, there are both pros and cons to this type of policy. Supporters of minimum wage may argue that it has social benefits, employer benefits, and that raising the minimum wage would help the economic stimulus. On the other hand, those who oppose would argue that it causes declines in employment, and increased cost to consumers, and an increased Return on Investment from automation. The following report will further examine both sides of this complex economic issue.

The living wage laws can and will have negative effects as they can in certain job markets reduce employment opportunities for the low skilled workers or the workers without a higher education. Some employers will be forced to eliminate some job opportunities because they will not be able to produce enough profit to be able to or justify to having to pay the higher wage. The hardest hit will be the mom & pop or non-chain stores as they do not have the backing or income to support

In some cases, they will use more skilled workers to replace all the lower skilled ones to make the increase more profitable (Wilson 8). Some places even talk about using machines instead of people or moving production overseas That would cause a lot of backlash to the American people. Similarly, small businesses simply cannot afford to keep as many employees as they need. It forces them to fire their help. After some time with fewer workers, they are unable to stay open.

While, of course, a few lucky employees are able to enjoy a higher wage, many willing could-be employees are not able to find jobs as a result; in other words, the minimum wage creates unemployment in poorer communities (Rothbard). One sensible person might ask, “Why is the minimum wage still being enforced today even though it is such a horrible law?” This perceptive question leads to a disappointing answer; the people that actively support the minimum wage act because of politics or simply economic ignorance. A minimum wage that derails the less affluent can positively affect those with larger wages and those in power. Therefore, the minimum wage is often used as a scheme for political and personal gain, despite the great amount of hurt that it causes to others (Vuk). In order to avoid unfair political advancements and unemployment to those who need it, the minimum wage should be outright eliminated; the market would work its own way through finding the right price to pay low-level employees.

Small businesses operate with little capital and net profit margin. Opponents argue the increase of the minimum wage affect the small business owners the most because they have a hard time paying employees. The oppositions believe increasing the minimum wage creates a market distortion (“Federal Minimum Wage”). It means the government intervention in raising the minimum wage causes a higher price floor that defines as the minimum price for the employees’ service. Because of a higher price floor, it reduces the employment opportunities and business profit.

The federally regulated minimum wage was established per the Fair Labor Standards Act by the Roosevelt administration. This was but one part of the act and mandated every employer must pay their workers a federally set minimum amount for their labor services. In 1938, the minimum wage was set to $0.25 per hour. States were given the ability to set their own minimum wage laws as well. If the state regulated minimum wage exceeds the amount set by the federal government, then the state's legislation is applied for the citizens of that state.

American workers are subject to jobs that pay their workers the bare minimum. In the wealthiest nation on Earth, no person that works full time should have to live in poverty. At the 1912 Progressive Party, Theodore Roosevelt told the attendees: “We stand for a living wage, enough to secure the elements of a normal standard of living, a standard high enough to make morality possible, to provide for education and recreation, to care for immature members

As stated, many people do not stop to consider the costs of minimum wage increases. For example, where does the increase in wages come from? It certainly doesn't come from taxes or government funding. It comes from the employers, whether they are large or small. In a recent California wage hike, one employer illustrates how the wage was paid: "'I took the hit completely the first [two] times, but this last time I raised prices,' says Mickle, who employs eleven people at minimum wage in one store and sixteen in the other.