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Positive and negative effects of raising the minimum wage
Positive effects of raising the minimum wage
Positive effects of raising the minimum wage
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The Effects of Having a Minimum Wage and the Effects of Raising the Minimum Wage “I don't know of a single economist who disagrees that when you raise the minimum wage, you kill jobs for the poor”- Newt Gingrich. A federal and state minimum wage is good for the economy to incentivise workers, and make sure people are not underpaid, but if the minimum wage is too extensive, it can have drawbacks on the economy. While having a minimum wage, there are both positive and negative effects, but it seems to be a stable balance. When raising the wage, it appears that the same balance is possibly thrown off. Minimum Wage is a federal minimum that companies and businesses and everything that offers an occupation or job has to legally pay their employees.
Minimum wage is the lowest hourly wage an employer is legally permitted to pay an employee. Most employees are eligible for minimum wage, whether they are full-time, part-time, casual employees, or are paid on hourly rate, commission, piece rate, flat rate or salary. There are several different classes, which determine what minimum wage you will be entitled too. These classes are: General Minimum Wage, Liquor Servers Minimum Wage, Hunting and ...
“Franklin Roosevelt’s 1937 impassioned speech calling on Congress to help the one-third of Americans who were “ill-housed, ill-clad, and ill-nourished” heralded in the Fair Labor Standards Act of 1938 and with it a national minimum wage. Echoes of that speech are still heard today. Senator Edward Kennedy (1989: S14707), in his criticism of the most recent increases in the minimum wage, declared:
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.’
Minimum wage is a topic that has been popping up since the 1980s. From whether we should lower it, or even raise it, but now in the 2000s minimum wage has been the center of attention more than ever. There are two sides to this topic of minimum wage; whether it creates more jobs or does not create jobs. Those who argue that raising minimum wage will create more jobs will have a rebuttal which is that it does not only cause the loss of jobs but that it would make things much worse and vice versa for those arguing raising minimum wage will cause loss of jobs. There will be two authors representing opposite views, Nicholas Johnson supporting minimum wage will not cost jobs with his article “ Evidence Shows Raising Minimum Wage Hasn’t Cost Jobs”
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
In this article, James Dorn and David Cooper argue whether raising the federal minimum wage will help or hurt low-wage workers. James Dorn, Vice President of Academic Affairs at the Cato Institute, argues that raising the federal minimum wage would hurt low-wage workers by reducing job opportunities and raising prices. Dorn also states that the federal minimum wage is responsible for high unemployment among teenagers and minorities and lower productivity among low-wage workers. David Cooper, an analyst from the Economic Policy Institute, argues that the federal minimum wage is not a living wage and that raising the minimum wage doesn’t have a significant effect on employment. Cooper also states that eighty percent of low-wage workers are at least twenty years old and that eighty-five percent of small businesses already pay their employees more than the minimum
What is minimum wage? Minimum wage is the lowest hourly rate (dollars per hour) that employers can pay their employees. According to minimumwage.com Minnesota’s minnimum wage is $7.25 per hour but will be getting raised to $9.00 per hour. Minnesota’s minimum wage is a common rate among many states such as Texas, South Dakota, and Iowa. Oregon and Washington are states that currently have their minimum wage rate set at or above $9.00 per hour. For both of these states, raising minimum wage has not necessarily decreased the poverty line. Both Oregon and Washington are still among the top 20 states for high poverty rates while New Hampshire has the lowest poverty rate and also has minimum wage set at $7.25 per hour.
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.
Minimum wage was established state wide in 1938 by Franklin Delano Roosevelt; at that time it was only 25 cents which is equivalent to 4 dollars in today’s world. It was established as part of the Fair Labor Standards Act which covered youth, government and overtime pay. Massachusetts was actually the first state before Franklin’s statewide acknowledgement, and it only covered woman and children without overtime. There are lot of issues with minimum wage now such as setting a statewide minimum wage to $10.10, which does not benefit places were living is expensive such as in New York. It leads to an imbalance in different states’ economies, and the government setting price controls in wage has some issues.
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 definition of Minimum Wage is “an amount of money that is the least amount of money per hour that workers must be paid according to the law” (Minimum wage). Minimum wage, like other laws, are used to keep the economy in line. Minimum wage laws were invented in Australia and New Zealand with the purpose of guaranteeing a minimum standard of living for unskilled workers. (Linda Gorman) Minimum wage puts a price on the services one offers. Many different principles can be used to explain Minimum wage and explore the different aspects of it. Including what minimum wage does for our economy and the current status of it.
Americans are not wrong in thinking that increasing the minimum wage will increase low-wage working families’ incomes, and some of these families will rise above the national poverty threshold. While increasing the minimum wage might benefit some American families, it will hurt others. Increasing the minimum wage will eliminate many low wage jobs, which would then result in many people jobless and therefore, a substantial drop in those individuals’ household incomes (“The Effects of a Minimum-Wage Increase on Employment and Family Income”). . “Raising the country’s minimum wage could boost the incomes of millions of Americans, but it could also potentially cut total employment by hundreds of thousands of workers” (Kurtzleben). An increase in the minimum wage lowers employment, which makes it harder for these workers with minimal skills to find a job. Congress then explains that low income families will actually not bring in any benefits from an increase of the minimum wage (“Would an Increase in the Federal Minimum Wage Help or Hinder Small Business” 2-3). While increasing the minimum wage might raise the standards of living for some low wage workers and families, if the increase in minimum wage reduces employment rates, there is no certain answer on what
The minimum wage being too low has been a public issue in America for generations. Basically, the debate includes two different opinions. Firstly, people who want to raise the minimum wage, and second, people who would rather is stay the same. The overwhelming majority of liberals are on the side that favors a raise. Additionally, a somewhat smaller proportion of conservatives favor the change as well, but for different reasons. The liberal opinion on raising the minimum wage is based on the idea that putting more money in the people’s pockets, will stimulate the economy, and decrease poverty. The problem that conservatives and liberals alike have with this, is that a few direct consequences are proven to apply when raising wages. Some proposed consequences include unemployment, inflation, and unfairness to higher educated people. Another main point is that raising the minimum wage is thought to helps small business by increasing worker satisfaction. This issue of minimum wage has become increasingly popular and important in current times, as president Obama has proposed the idea of raising the minimum wage of contract workers to 10.10$ per hour (about a 30% increase from the current 7.25$ per hour minimum wage). A large number of people consider this wage hike unnecessary due to the fact that today’s value of minimum is higher than it has ever been since the 80’s, and because the wage hike comes at too high of a cost. All things considered, the issue of raising minimum wage is not a battle of political parties and their agendas, its really a debate between everyone.
How would raising the minimum wage affect employers? On first thought, raising the minimum wage sounds like a no-brainer, but after looking at
The White House claimed “that the proposed wage hike would not reduce employment, referring to studies that ‘built on earlier research and confirmed that higher wages do not reduce employment”’(Jordan Weissmann n.pag). A new working paper from the National Bureau of Economic Research finds that significant minimum wage increases can hurt the very people they are intended to help. The author Charles Hughes, find that “significant minimum wage increases can negatively affect employment, average income, and the economic mobility of low-skilled workers (n.pag). The author also found that a significant ‘minimum wage increases reduced the employment, average income, and income growth of low-skilled workers over short and medium-run time horizons”’(n.pag). Also, The Congressional Budget Office recently weighed in, estimating that “a three year phase in of a $10.10 federal minimum wage option would reduce total employment by about 500,000 workers by the time it was fully implemented” Charles Hughes