Economic Overview of the United States Minimum Wage

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Introduction This report is an economic overview of the United States minimum wage. It’s presented in three perspectives on how consumers, corporations and the community are affected by new minimum wage laws. The purpose of this report is to provide imperative information that examines how an increase in minimum wage attributes to multiple effects. This report will also explain the advantages and disadvantages that many people face when the government intervenes to pass a new minimum wage law in the United States. This report focuses on the state of California and it emphasises on the city of San Jose. This report incorporates how the city of San Jose was affected by Measure D. a new minimum wage that was imposed in the beginning of the year. Towards the end of this report, recommendations are given to better the problems of minimum wage. Minimum wage is a government-enforced law in the labor market that does not allow employers to pay their employees below a certain wage. It is also known as the wage a worker is willing to sell their labor in return a good hourly wage. Minimum wages guard employees from being exploited and underpaid. These laws are set and regulated by the federal and state governments. Minimum wage was set in the Fair Labor Standards Act of 1938 by President Theodore Roosevelt. As of 2011 the United States minimum wage was set by the federal government at $7.25. Each state is allowed to set their minimum wage laws according to living cost and other factors, as long as the wage is never below the federal minimum wage. For the state of California, the federal state minimum wage is at $8.00 an hour. According to Bernstein (2013) she states “California has become ... ... middle of paper ... ...a surplus of labors (Mankiw Ch.6). Many people in San Jose now find it harder to find a job because not many positions are available. These positions are no longer available because employers are not willing to lose profit. Economist Henry Hazlitt, believes that the government tries to stabilize commodities by trying to help the low income and unskilled workers by adjusting minimum wage laws. Hazlitt states “[t]he government attempts to help [a] large number of workers […], and the more it attempts to raise their wages, the more […] harmful it is […] to exceed any possible good effects” (Hazlitt 2010). This means that the government tries to make a better living for everyone but in the end, it ends up hurting workers who are no longer worth the minimum wage pay. This hurts the community because less jobs are available to people trying to get a better paying job.
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