Summary: The Effects Of Raising Minimum Wage

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The Effects of Raising Minimum Wage The minimum wage was first implemented as part of the Fair Labor Standards Act of 1938. (Patton, 2014) The effects of raising the federal minimum wage are highly debated by politicians and economists. This issue, along with unemployment, is one that is talked about frequently and often times in conjunction with political elections. President Obama, along with many other politicians believe and advocate that raising the federal minimum wage will be beneficial to the working class and the economy, but is it enough to justify the negative impacts that come along with it? When the federal minimum wage was signed into law it was $0.25 per hour, that equals about $4.18 today taking into account inflation only effected about 20% of the entire work force. (Patton, 2014) According to an article published by Forbes (2014), in 2012 there were about 275.3 million workers earring an hourly wage who were over 16 years of age, out of that group only about 3.6 million were being paid minimum wage or lower. The article further explains the …show more content…

In the article published by Forbes (2014), the example equation given uses the hypothetical circumstances that the 47%, or 75.3 million, of Americans earning at or below minimum wage all earn $15 an hour. Then multiply the number of worked time the minimum wage rate and assume that 100% of the increase in wages is being spent, or put back into the economy, the economic growth as a result is only 1.25%. After examining those results, it is clear that the economic increase is very insignificant. Also it is doubtful that entire wage increase would be spent. Based on this example it does not seem that the economic growth as a result of raising the minimum wage would be enough to justify the increase. It is possible that over the course of many years we would see economic increase but it would still be

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