On January 28, 2014, President Barack Obama delivered the State of the Union address. Although he outlined many topics, one in particular sparked controversy and debate among business owners and their employees. President Obama asked Congress to increase the nation's minimum wage from $7.25 to $10.10 an hour - a 72% increase! Although a hike in wages sounds enticing, Congress should not increase the federal minimum wage.
Arguably, the people in poverty would be most enticed with an increase in the minimum wage, however it will not reduce poverty in America. 21 states have raised their minimum wage above the federal level of $7.25 (The White House). As a result, Employment Policies Institute, a nonprofit organization interested in employment growth, seized the opportunity to fund research and determine if a rise in minimum wage reduced poverty. Michael Saltsman, a member of Employment Policies Institute, published an article in association with CNN explaining the research findings when he stated, “ ...[the study] found no evidence that these state minimum wage increases reduced poverty rates” (Saltsman). It is important to analysis and learn from previous monetary policies in America. A significant rise in wages did not achieve the goal of reducing poverty. Therefore, raising the minimum wage in the remaining states would likely produce no significant reduction of poverty.
Furthermore, increasing the minimum wage will shift the financial burden from business owner to customers through higher prices. Over 500 economists from institutions and universities across America signed a letter to President Obama in warning when they stated, “business owners...will need to cut costs, or pass the increase to their consumers in order to make ...
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Saltsman, Mechael. "Raising Minimum Wage Won't Lower Poverty." CNN Opinion. Turner Broadcasting System Inc., 16 Sep 2011. Web. 16 Mar 2014. .
Smith, Vernon, Berton Abramas, Eric Abrams, Richard Adams, et al. Letter to Federal Policy Makers.
"The Effects of a Minimum-Wage Increase on Employment and Family Income." Congressional Budget Office. N.p., 18 Feb 2014. Web. 16 Mar 2014. .
The White House. Web. 23 Mar 2014. .
More than 4.6 million people live in poverty in the US. A question often raised when talking about minimum wage is, would raising it lower this number? The consensus is, yes, it would. If the federal minimum wage was raised, at lot of peoples’ incomes would grow, not just low wage workers. As employers shifted their pay scales upward, many incomes would grow. According to Jared Bernstein, the former chief economist of the Obama Administration, this isn’t as relevant as the impact is would have on low wage workers. He explains how, although many other people would benefit from an increase in minimum wage, most of the help would go to those who need it. He also notes, “We must be careful not to be wedded to poverty thresholds that are inadequate measures of who needs the help.” If the minimum wage was raised to $10.10 per hour, 2 million people would be lifted out of poverty (US Department of
While some may feel increasing wage will create additional financial issues, others feel that increasing minimum wage will give workers more money. The national minimum wage in the United States is $7.25. Employees and lawmakers feel that increasing the minimum wage to $10.10 will help boost the economy. The increase of minimum wage will bring people out of poverty and will be able to stimulate the economy by buying more items. This will help the nation pay back more debt and bring in more revenue for the country. Besides a positive effect with the nation as a whole, it will help workers financially. For example, by working thirty years with earning only minimum wage, some workers will benefit from increasing minimum wage. They can finally pay off old debts and loans since they will have more money in their pocket. Also, they will be able to pay bills on time and not have to pay a late fee. An increase in minimum wage will allow them to have additional money to buy items they need. Another way increasing minimum will help people is more independence ...
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.
Although raising the minimum wage won’t eliminate poverty as poverty can never be eliminated. It could help with lowering the poverty rate. The “inactive” unemployed Americans lack motivation, because they can’t support themselves with the money earned. It simply is not enough. As the cost of living rises, minimum wage stays stagnant. This is not balanced at all. If minimum wage back in 1968 was doable, raising it now could not kill the economy. Increasing the minimum wage could be an incentive for workers to finally seek jobs again; prompting growth in the economy and lower down poverty levels in many ways. The quality of a job is just as important when creating quantity of jobs. What lacks in the U.S right now is the incentives to make Americans want to do better. Raising the minimum wage could stimulate the desire to work and get around, possibly pursuing more education to climb the ladder to get higher in the economic
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
The United States has maintained a minimum wage which was enacted since 1938. At the present time there is much political debate in regarding to increase the minimum wage to levels at the federal level, state, and local levels of government across this country. There are various theories regarding the minimum wage. Some believe it would circulate money into the economy faster which would negate and negative effects on employment, or even improve unemployment rates. Others point to the economic theory of supply and demand, and claim it will increase the unemployment rate. Both of these are simply theories and must be shown to have real life implications. Are moderate increases in the minimum wage above the equilibrium market rate an effective policy tool in combating poverty? We can test this by comparing the unemployment rates of states without minimum wages above the federal level to those who do have state minimum wages above. Also something that has not been previously looked at is the minimum wages effects on the underemployment rates. I have found that these moderate increases of the minimum wage do not seem to have an adverse effect on the unemployment rates in the states that have adopted them. They may even have beneficial effects on unemployment rates. However they may have a small effect on underemployment rates. Also I will survey low-income individuals to see how it impacted their lives.
A raise in the minimum wage is only a temporary solution to fixing the problems in the United States. The federal minimum wage was introduced in 1938, during the Great Depression, and has already been increased 22 times. There are already 19 states that pay their employees well over the federal minimum wage. The highest minimum wage in the United States is in Seattle, Washington, and is set at fifteen dollars an hour. Interestingly enough, if minimum wage followed inflation, then it would be set at $4.24 an hour, which means it is already $3.01 over that amount that it should technically be (James Sherk 2013). Continued increases of the minimum wage in the United States need to be stopped as it will result in devastating impacts on low-skilled
On Saturday, June 25, 1938, President Franklin D. Roosevelt signed 121 bills. Among these bills was a landmark law in the United States’ social and economic development—Fair Labor Standards Act of 1938 (FLSA) or otherwise known as the Wages and Hours Bill. This new law created a maximum forty-four hour workweek, guaranteed “time-and-a-half” for overtime hours in certain jobs, banned oppressive child labor, and established the nation’s first minimum wage. By definition, a minimum wage is the lowest wage permitted by law or by a special agreement (such as one with a labor union). Throughout the years, the minimum wage has been a central debate topic for the socioeconomic world and now in 2014, the debate has broken through the surface once more. In order to make a choice of whether the wage should be increased or decreased, the history of the wage is needed to make an informed decision.
One of the most talked about subjects in the U.S economy is the topic of minimum wage. With president Obama working to increase the minimum wage to 10.10$ per hour people, both economists and politicians alike, have been debating whether or not raising the bar is a smart idea. At a time when the country the country’s inflation continues to rise at a steady pace and Americans are constantly working to feed their families, some economists know that a raise in the minimum wage would help elevate some of the difficulty. The last time the federal minimum wage was raised was in July of 2009, where rose from 6.55$ to 7.25$. However there are plenty of reasons as to why the wage should be raised. Some may not think it, but raising the federal wage could very well assist the U.S with some of its largest economic problems; the increasing standard of living in the U.S, the recession in the economy, and even the ever inflating U.S national debt.
...mieson, Dave. “Obama State of the Union Address: President Calls for raising the Minimum Wage,” Huffington Post. 13 February 2013.
In the 2013 State of the Union, President Obama proposed raising the minimum wage from the current $7.25 to $9.00 by 2015. This has caused arguments between the rich, small businesses, minimum wage workers, and the unemployed because it affects each of them differently. Obama’s plan is to bind the minimum wage to the cost of living, which ensures that minimum wage goes up with inflation. In general, this benefits minimum wage workers by improving their standard of living.
Raising minimum wage can be a dangerous idea, even if it is to help with poverty. It would cause inflation, and a huge amount of unemployment. Even worse, it could possibly lead to recession. According to Mr. Ron Anthony “Minimum wage has four major areas of economic defect on the labor
"Raising the minimum wage will benefit about 28 million workers across the country. And it will help businesses, too - raising the wage will put more money in people's pockets, which they will pump back into the economy by spending it on goods and services in their communities." -- President Obama
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.
Many areas could be affected by a change in minimum wage, but potentially the most drastic change would be to unemployment. Advocates of a higher minimum wage insist that a raise would significantly decrease the unemployment rate in the United States and improve the quality of living. However, there are conflicting opinions on this. Higher minimum wage would mean higher labor costs for business owners, thus making it more difficult for employers to maintain the amount of workers they have, let alone add new employees. Raising the minimum wage does not increase the value of the worker's labor; it increases the cost of the worker's labor. As a general rule the more something costs, the less of it people will buy. This is true of not only consumer goods but also of workers in the labor market.Many jobs come from large corporations but they also come from small businesses.There are 23 million small businesses in America, accounting for 54% of sales and 55% of jobs. Raising the minimum wage means that all of these corporations and businesses will have to dig deeper in...