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The positive and negative effects of the minimum wage
Positive effects of increasing the minimum wage
Positive effects of increasing the minimum wage
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Minimum wage is the lowest amount of payment permitted by law. It protects wage workers from being ripped off or taken advantage of, and if a company wishes to pay them more, then they are free to do so (Cornell University Law School). There’s a political movement that’s currently sweeping across America calling for a raise in minimum wage. Many wage workers want to make more money, which would mean redistributing the income of a company; taking some away from other aspects of the business and giving it to the workers. The hope behind this idea for supporters is that raising minimum wage would be a way out of poverty or financial hardship for them and their family. The average minimum wage for states throughout the country ranges from $7.25 …show more content…
In fact, there’s numerous reasons why raising the federal minimum wage would be harmful to American businesses, workers, and consumers. For starters, if the minimum wage were to be raised, then companies would respond to the added payroll by laying off employees, including teenagers who are attempting to find a starting job (The Effects of a Minimum-Wage Increase on Employment and Family Income.). If companies choose to keep their employees, then they’re forced to either raise the prices of their products in one form or another, or they have to cut benefits to their workers (Sean Williams). Regardless of which way companies would choose to adapt to the new minimum wage, it wouldn’t be a good situation for …show more content…
Another response in having to pay workers more money, businesses would have to raise the prices of their goods to compensate for the income they’d be losing in the payroll. For example, a study performed by Purdue University in 2015 found that by raising the wages for fast food employees to $15 an hour would result in a 4.3 percent price increase and raising the wage to $22 an hour would increase prices by 25 percent (Greg McClure). Increasing wages would not only hurt workers and businesses, but it would also be harder on the consumer, as shown in this study. Obviously, this study only appeals to fast food services, because as a result of higher wages the company would have to charge more to make up for it. However, the same principle would apply to any other kind of consumer good as well. Each business would need to respond to higher wages, and the two best options include cutting job positions or raising the cost of the goods being sold. A similar study performed by NBC News found that in Oakland, California should cost 2.5 percent more after minimum wage was increased to $12.25. A coffee place called Farley’s Coffee raised prices from anywhere between 10-20 percent, which is around 50 cents more for a cup of coffee (Allegra Abramo). Clearly as the numbers show, these are some big price increases, despite the fact that they’re being applied to
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.’
Imagine a world where you are working overtime, seven days a week, yet your kids are starving. You can’t get the education you need because you don’t have the time and money to afford it, and you can’t change jobs because this is the only one you can get. Unfortunately, this is the reality for millions of Americans living today. The federal minimum wage is too low to help families, and actually mathematically speaking, too low to survive on. The quality of life for minimum wage families is terribly low, and that is unacceptable. As humans, we should be looking after others and helping the poverty come out of their continuous cycle. Raising the minimum wage would not only help families be able to afford a better quality of life, but help them to afford healthy food, get an adequate education, and invest in the necessary health care they need.
Some policymakers may believe that companies simply absorb the costs of minimum wage through reduced profits, but that’s rarely the case. Instead, businesses rationally respond to such mandates by cutting employment and making other decisions to maintain their net earnings. These behavioral responses usually offset the positive labor market results that policymakers are hoping for.”
In recent years the minimum wage has been a heated topic. People want to hike it up to 15 dollars an hour which they call a living wage, while others just want to keep it the same. There are also others that suggest to bring the minimum wage to around $10.78 an hour, which should be around the minimum wage now if we account for inflation from the 1960’s. I agree with that to a certain point. We as a nation need to bring up the minimum wage only up to ten dollars so that less people are living in poverty, and not any higher so that states with smaller economies don 't crash and burn.
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.
The minimum wage today has a lot of issues; some people say it is not enough to live comfortably. Many agree that there needs to be an increase in minimum wages and by doing that it can help with our issues of poverty. Statistics show that a worker who is full time and earning minimum wage makes only $15,080 a year, which is under the federal poverty line for a family of two. (Gitis, 2013) The problem with that is $15,080 is not a sufficient amount that a person can live and grow on. “A family of two can consist of a mother and son or daughter, father and son or ...
Currently, in the United States, the federal minimum wage has been $7.25 for the past six years; however, in 1938 when it first became a law, it was only $0.25. In the United States the federal minimum wage has been raised 22 times since 1938 by a significant amount due to changes in the economy. Minimum wage was created to help America in poverty and consumer power purchasing, but studies have shown that minimum wage increases do not reduce poverty. By increasing the minimum wage, it “will lift some families out of poverty, while other low-skilled workers may lose their jobs, which reduces their income and drops their families into poverty” (Wilson 4). When increasing minimum wage low-skilled, workers living in poor families,
First, raising minimum wage affects the amount of job availability. Many businesses will reduce their amount of employees, because the business will not be able to afford to pay all the employees and still gain profit. As a matter of fact, James Sherk, a Bradley Fellow in Labor Policy, states “Businesses will not hire workers whose labor produces less than the cost of hiring them” (Sherk 2). On the other hand, Holly Sklar, a director of Business for Shared Prosperity, states “Contrary to what critics predicted when the minimum wage was raised, our economy had unusually low unemployment, high growth, low inflation, and declining poverty rates between 1996 and 2000” (Sklar 4). The problem with this statement is Sklar states that inflation was low, which is not the case now. Inflation is rather high, and unemployment is lower than ever. With every minimum wage increase in the past, inflation has also risen. Since minimum wage affe...
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.
Raising the minimum will end up hurting Americans more than helping them. The people that are for raising minimum wage are people who believe that increasing minimum wage can help those people who are unskilled and need an income they can live on. Yet, raising minimum wage would do the opposite and make employers have to fire people who earn minimum wage, because they can't afford the higher wages. People need to realize that increasing the minimum wage would hurt people more than help them. In the end increasing minimum wage would result in some people being let go, for the reason, businesses can't afford paying them minimum wage anymore.
Most people during their lifetime have worked for a company in which they received minimum wage, I know I have and I am only 19 years of age. Well in 2013, 3.3 million people of the American workforce made the minimum wage, and of that 3.3 million people, nearly fifty-five percent were adults over twenty-five years old working full-time. With the current minimum wage at $7.25, there is no doubt that it is not sufficient to support a family with that amount. Although many people and many industries believe that the minimum wage should be raised to as much as $15 per hour, raising it to that level may be extreme. Minnesota raised its state minimum wage from $8 per hour to $9 per hour for companies making over $500,000 annually, effecting more
If the minimum wage increases, those people that are skilled and well trained with salaries over the minimum wage could feel the competition from those unskilled workers who will have a raise. These high skilled employees could demand a higher rate, making things even more difficult to a business owner. Therefore, an individual must build experience and knowledge through out the minimum wage; in addition, a well-experienced worker has higher possibilities to get into a better position with a higher income. In addition, education is a fundamental milestone in any individuals’ life in which holds the roots of success; a well-educated individual could have a broader window of success and a job that gives him or her a peaceful life. The economy of the US can be harmed if the minimum wage increases. In addition, restaurant chains’ owners could look into technology improvements to prevent the hike in the workers’ wage. As Lydia DePillis in her article on the Washington Post writes, “Many chains are already at work looking for ingenious ways to take humans out of the picture…” she argues that technology already has led thousands of workers from in many airports, grocery stores, tollbooths, gas stations, banks, and automotive factories jobless and similarly could occur if the minimum wages keeps growing. Some big-chain restaurants could
On the other side of the argument Americans believe that with the increase of minimum wages it would help Americans out a lot more. One possible way that the increase in minimum wage may help an individual out is in the article Minimum wage Pros and Cons, “The Economic Policy Institute stated that a minimum wage increase from the current rate of $7.25 an hour to $10.10 would inject $22.1 billion net into the economy and create about 85,000 new jobs over a three-year phase-in period. Though this may be true, one problem
The minimum wage being too low has been a public issue in America for generations. Basically, the debate includes two different opinions. Firstly, people who want to raise the minimum wage, and second, people who would rather is stay the same. The overwhelming majority of liberals are on the side that favors a raise. Additionally, a somewhat smaller proportion of conservatives favor the change as well, but for different reasons. The liberal opinion on raising the minimum wage is based on the idea that putting more money in the people’s pockets, will stimulate the economy, and decrease poverty. The problem that conservatives and liberals alike have with this, is that a few direct consequences are proven to apply when raising wages. Some proposed consequences include unemployment, inflation, and unfairness to higher educated people. Another main point is that raising the minimum wage is thought to helps small business by increasing worker satisfaction. This issue of minimum wage has become increasingly popular and important in current times, as president Obama has proposed the idea of raising the minimum wage of contract workers to 10.10$ 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.
Minimum wage is the lowest hourly pay employers are legally able to pay their workers. In United States there is huge debate on whether or not to raise the current minimum wage rates from seven dollars and twenty five cents per hour. States are leading push to increase the minimum wage by Democrats who appeal to working class Americans. Congress want to increase minimum wages above seven dollars and twenty five cents. The issues of whether to raise the minimum wage or not.