The Minimum Wage Debate

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Disagreement over government actions occur almost on a daily basis, in economics there are no exceptions. When we look at the topic of minimum wage, there are no doubts that this topic raise numerous controversies. Minimum wage does not only affect the U.S economy as a whole, it is also something that particularly interest economist. It grants economist the opportunity to develop new theories, test them and find solutions. The discussion on minimum wage and how it should be handled is one that have been looked at throughout history, This analysis on the minimum wage controversy is based on a group opinion using guidelines from researches and in class learning. Minimum wage is the lowest amount than can be paid to an employee per hour. It was established by the Fair Labor Standard Act of 1938. (minimum wage, n.d) Minimum wage has been an ongoing discussion among economist. Currently the Congressional Budget Office (CBO) has reported that minimum wage will increase from $7.25 to $10.10, the first increase since 2009. (CBO, 2014). According to chapter 8, economist explains price flooring as being the “minimum price that is allowed by law” (Cowen & Tabarrok, 2012, p.147). This is where the government try to control prices above the market level, in this instant the sellers outnumbers the buyer. The same holds true for minimum wage, because the supply of labor outnumber the demand for labor. (Cowen & Tabarrok, 2012). Therefore, minimum wage is a form of price flooring that the government put in place to control the minimum price that should be paid by employers to employee above market price. So why do we have minimum wage? Minimum wage started shortly after the great depression and gained a foothold with the U.S Fair Labor Standa... ... middle of paper ... ...ic stimulus, low-income households earn more money, and they are more motivated to spend it, meaning that they are putting more dollars in the American economy. Issues pertaining to minimum wage might not affect all Americans, but for those that it does affect: we might ask why the controversy? There are no simple answers as this battle did not develop overnight. Minimum wage is something of much technicality, researches on minimum wage help to develop answers on whether or not it affects employment or unemployment, another issue is it helps to determine if inflation will occur. It is more than just coefficients or simple the elasticity of wages. Our group argue from different alternatives, at this time we feel as if the wages should go up over a gradual period of time. We do not feel as if: at minimum wage a family is able to maintain the basic living standards.

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