Category: Minimum Wage

Governmental intervention is essential to the functioning of any economy and in the case of the market system, it is necessary to correct imbalances brought upon by excessive speculation and unfair business practices. Coming to the issue of minimum wage, it is the floor price of labor that is determined by the federal government to guarantee fair wages to the workers. This is the minimum wage that must be paid to the workers in exchange for the work that they do. Governments set the minimum wage to help the poor. The issue of minimum wage crops up wherever small businesses are concerned as compensation packages that allow variable pay and performance-related pay are in vogue in the corporate and manufacturing sectors. But, as far as minimum wages are concerned, they affect a lot of millions of workers in the small business category. There have been a couple of legislations that were passed in the 1990s that impacted the way in which small businesses compensate their workers. These relate to the way in which small businesses can get deductions for equipment purchases and also raised the minimum hourly wage to $5.15. There are many who criticize the minimum wage concept as making businesses un-competitive and prone to avoid hiring more employees and introducing a dead weight into the economy. However, unless there is significant governmental regulation, it is conceivable that businesses in their quest for profits might resort to unfair wage structures for their employees. This is particularly the case in economic systems that have a large unorganized sector and thus the workers need to be protected from unscrupulous business practices. The government also has to ensure that the minimum wage is implemented apart from specifying the same.

Sources

Dornbusch, Rudiger, & Fischer, Stanley (2004). Macroeconomics (p. 157, 558). New York: McGraw-Hill.

Minneapolis Raises Minimum Wages to $15 an Hour

According to the report of Associated Press, the City Council of Minneapolis has passed the ordinance to increase the minimum wages in the city to 15 dollars per hour. This decision was made at the end of June. According to the new regulation, large businesses that employ 100 workers and more will be obligated to provide the employees with a wage raise. To be more precise, the current minimum wage in the state of Minnesota is 9.50 dollars per hour; this minimum will be increased gradually over the next several years. In particular, on the 1^st of January of 2018, the minimum will be raised to 10 dollars per hour.

In that manner, by July 2024, the overall rise to 15 dollars an hour will be implemented. Smaller businesses will be required to increase the wage gradually over a slightly longer period. The supporters of the ordinance noted that a higher wage would benefit low-income workers who represent a large portion of the citys population, and the critics pointed out that the regulation may hurt smaller and new businesses or make the employers reduce working hours and cut staff to avoid financial losses due to wage changes.

Similar measures were taken in some other large cities of the US  San Francisco, Washington, D.C., and Seattle. However, some of the city authorities expect that the law will be challenged and the wage raise may be repealed similarly to how it happened in the state of Missouri when the state minimum wage of 7.70 dollars an hour was to undergo regulation and be raised to 10 dollars an hour.

New Analysis Shows Government Could Run out of Cash in Early to Mid-October

According to the information provided in the Congressional Budget Office report that was released at the end of June this year, there is a possibility that by the middle of October, the US government will run out of funds to pay the bills; this situation could only be addressed by the increase in the federal borrowing limit that could be made by Congress. In March 2017, the current federal debt of the United States has hit the limit imposed by Congress.

In that way, the lawmakers are working on the creation of a new law raising the debt ceiling. The Treasury Department that has been using cash conservation strategies to continue paying the bills of the government is expected to run out of cash and means as well by March next year. The delay in raising the debt ceiling will slow down the payments for governmentally funded activities and programs. Using the additional sources of income, the government could reduce the federal debt for the next few years; however, the other activities of the state are likely to lead to its steady increase that may continue for over a decade.

Moreover, the growth of the debt is aggravated by the weak tax collections that show a lower level of revenue that is significantly lower than those of the previous several years. The nearest increase in debt that is likely to take place within the next decade is estimated to approximately 7% from the current prospect. This tendency will occur because of the anticipated growth in the war-related activities carried out in Afghanistan that will require additional funding.

The minimum wage is the legally established wage for the rate fulfilled by the employee. This is the level below which employees are not allowed to sell their work. The level of wages directly affects the development of the economy in the country. The governments calculations show that the increase in the minimum wage will increase tax revenues, stimulate consumer demand for products and de-shadow the wage bill.

Increasing the minimum wage by the government is a way to increase tax revenues to the state budget. The higher the minimum wage, the higher the taxes. The increase in taxes will cover the Pension Funds deficit, if not wholly, then at least partially (Lopresti & Mumford, 2016). Another advantage of increasing the national minimum wage is the de-shadowing of the salary fund. One of the most acute problems of the modern economy, including the labor market, is the shadow wage. The high tax burden does not encourage businesses to work fairly, and employers hire employees illegally. Concealment of income makes it impossible to raise social standards and at the same time serves as an influential destabilizing factor (Lopresti & Mumford, 2016). In addition, raising the national minimum wage will change the entire tariff grid. At the same time, the parliament will stimulate the domestic market, as it increases domestic consumption by raising the minimum wage. Also, higher wages promote economic development by increasing population consumption and bringing the wage to an absolute subsistence level.

Thus, the minimum wage is the lowest wage that employers can legally pay their employees. Increasing the national minimum wage is a way to enrich the state budget through tax increases. Another advantage is the de-shadowing of the salary fund through legalized employment. In addition, a larger minimum wage will increase demand for national products, which will lead to economic development.

References

Lopresti, J. W., & Mumford, K. J. (2016). Who benefits from a minimum wage increase?ILR Review, 69(5), 11711190.

The known evidence on the demand and supply sides of the labor market indicates that a $15 minimum wage will drive some hired personnel out of the market as well as further harm many small businesses that are already in trouble (Mankiw, 2020). The proposed increase will indeed benefit workers by raising their overall living standards by granting minimum wage employees a more appropriate pay level to contend with cost-of-living increases and the supply side of the labor market will have benefited tremendously as a result. The majority of individuals negatively impacted by rises in the minimum wage are less qualified employees as a result of many highly qualified professionals obtaining low pay jobs that would often go to youthful or otherwise inexperience workers. This might make it more challenging for newer, less qualified applicants to find employment and acquire the skills they need to propel their careers forward.

The high cost of acquiring a new worker may require a business to significantly raise its prices in order to offset the higher costs. Additionally, labor shortages brought on by employee turnover may cause a decrease in production, manufacturing, and overall product supply, raising the cost of the product more and more. After a wage increase, business must increase the prices they charge for the products and services they offer in order to retain profits. Overall, raising the minimum wage is regarded to enhance work ethic and elevate individuals from poverty, but it also contains a number of potential drawbacks, like rise in unemployment, prices hiking and can lead to adverse impacts on the economy and therefore in my opinion, this proposal is not a desirable option.

To sum up, the concept of a fair wage is an essential concept to take into account, and when minimum wages are increased, the fair wage which is above the minimum pay but below the living wage will be greatly impacted highlighting its relevance to the minimum wage topic. The living wage is a concept that is also crucial to the minimum wage increase because it defines the minimum working earnings required to satisfy basic needs while also retaining financial stability.

Reference

Mankiw, G. N. (2020). Principles of economic (9^th ed.). Cengage.

The minimum wage is the lowest payment to a worker allowed by the government. The price is set at $7.25 per hour by the federal government (Cooper et al., 2020). Over time, arguments have been raised on whether to increase the rates or remain the same. Each side of the debate provides evidence on why they should be supported. For example, opposers to the idea argue that it will not affect higher-skill workers, induces substitution, and causes inflation. On the other hand, the advocators for minimum wage raise claim that it will improve the living conditions of the people, avoid employee turnover and boost morale, and boosts the economic growth of a country.

Retaining the minimum wages will not affect the highly qualified workers, which leads to unfairness in the market. Opposers of the increase in minimum wage argue that a rise in one economic sector is discrimination and disregard for more qualified workers. Therefore, a proposal is that a change in the low-income earners should also translate to the others. For example, an increase to $9.00 per hour will lead to the exploitation of overqualified personnel in the market (Neumark, 2018). An instance of treating people of different qualifications as one is considered an insult to the better one. Therefore, Neumark argues that for a government to be considered fair, it should retain the minimum wage or increase wages for employees irrespective of their ranks (2018). One can conclude that the opposers had a strong argument while opposing the minimum wage changes as they wanted equality among all employees.

An increase in minimum wages will lead to substitution in the market. For example, in the automobile sector, workers will be replaced with machines as many employers may not be able to afford the new set range. The result is unemployment which many people will oppose in both the short and long run. This is the case for jobs that can be easily automated; for example, supermarkets substituting cashiers for self-service checkouts and workers in manufacturing plants being replaced by robotic arms. However, the unemployment rate may not be as high as one could think since the same employers will employ people who will help in the servicing and maintaining the machines. In this case, the lowly skilled personnel is most affected as they are replaced by the more experienced people who will repair the machines. The cycle followed in this marketplace is classified as the reallocation of labor, leading to vulnerability (Lordan & Neumark, 2018). Therefore, those against the increase acknowledge that the unemployment rate may not be high, but the move will affect the majority.

Changes in the minimum wages will always lead to a significant adjustment in the prices of goods and services. An increase in wages will be directly proportional to the prices of commodities in the market. Cooper et al. argue that inflation is primarily felt on goods taken away from homes, especially foods (2020). Companies typically offset their higher labor costs by increasing respective commodity prices. Apart from food, other companies use the same approach as they are forced by the increased number of employees required to satisfy the demand. Conclusively, the speed at which the prices of goods increase is directly affected by the minimum wage. Energy prices also change with the shift in the minimum wage, as evidenced by the American economys uniformity. The changes are more felt in cities where minimum wage workers live most and depend on the money received to support their lifestyles. Durable goods inflation is cumulative and significantly higher than others due to their increased demand (Cooper et al., 2020). Therefore, people are right to discourage and oppose the increase in wages.

An increase in minimum wages results in improved living conditions for the people. Keeping inflation constant and increasing wages will increase the expenditure people spend to better their lives. The average mean wage rate is considered insufficient in the society to afford a better living condition; hence there is a need to improve it. Even in households where adults work full time, the current minimum wage rate is insufficient to support them. Many employers are advised to pay their employees depending on affordability rather than the stated rates. For example, they should consider the inflation rates in cities and the need to make their employees comfortable. Living conditions can be reflected in the general health condition of the people. Availability of excess disposable income will make people get better healthcare which improves their wellbeing. The money used in health-related situations is diverted to other productive uses, such as building better roads and other physical amenities (Reeves et al., 2017). Therefore, an increase in wages will improve living conditions, especially in the health sector.

A minimum wage increase will reduce employee turnover, leading to retention and morale-boosting. In an economical set up, employing a new set of employees is expensive as organizations will be required to recruit and train them. Companies tend to avoid the recruiting process as it is time-consuming and disrupts the average company functioning and productivity. Therefore, to avoid this, managers resolve to increase the minimum wages. Further, employing new staff increases the companys costs by almost sixteen percent (Erichsen & Reynolds, 2020). Avoiding this scenario will lead to an increase in savings in turnover costs. Additionally, making employees comfortable by paying them well improves their morale, reflected in increased productivity. An employee paid a fair wage leads to better physical and mental health, reducing fatigue (Erichsen & Reynolds, 2020). Therefore, employers aiming to increase their turnover costs should increase their employees minimum wages.

The general economy of the country improves with an increase in minimum wages. Improving the economy of a country involves alleviating people from poverty. Minimum wage earners usually are classified as poor hence decreasing its rate will lead to the countrys development. Gindling argues that increasing disposable income in low-income earners will allow purchasing essential goods and services for survival. Theoretically, increasing money in poor peoples pockets lifts them from poverty. However, the relationship between minimum wages and workers employment levels is complex. In one argument, minimum wages affect workers selectively; hence not all workers will be alleviated out of poverty. Second, minimum wages can increase the workers income but not necessarily the poor households incomes (2018). Therefore, it is not conclusive that the increase will improve the general economy but alleviating poverty can be used to indicate growth.

Different arguments are presented on the need to either retain the minimum wages or increase them. Each party supports its point of view, making them valid and satisfying. For example, those advocating for an increase argue that it improves the countrys economy, reduces employee turnover, and improves employees living conditions. On the other hand, the opposers assert that it will lead to inflation, affect overqualified employees, and cause market substitution. Therefore, some conclusive research should be done on some of the factors discussed to ensure conclusive evidence is provided, for example, how the increase will lead to the general growth of the economy.

References

Cooper, D., LuengoPrado, M. J., & Parker, J. A. (2020). The local aggregate effects of minimum wage increases. Journal of Money, Credit and Banking, 52(1), 5-35.

Erichsen, K., & Reynolds, J. (2020). Public school accountability, workplace culture, and teacher morale.Social Science Research, 85, 102347.

Gindling, T. H. (2018). Does increasing the minimum wage reduce poverty in developing countries?. IZA World of Labor.

Lordan, G., & Neumark, D. (2018). People versus machines: The impact of minimum wages on automatable jobs.Labour Economics, 52, 40-53.

Neumark, D. (2018). Employment effects of minimum wages.IZA World of Labor.

Reeves, A., McKee, M., Mackenbach, J., Whitehead, M., & Stuckler, D. (2017). Introduction of a national minimum wage reduced depressive symptoms in lowwage workers: a quasinatural experiment in the UK.Health economics, 26(5), 639-655.

Most developing nations see a decrease in poverty when the minimum wage is raised. The minimum wage barely covers a small percentage of disadvantaged people and excludes those employed in the vast informal industries, making the impact negligible. An increase in minimum wage can present advantages and disadvantages for different households, depending on various factors such as salary distribution and employment situation (Neumark, 2018). Nevertheless, such a policy could be a wise economic decision and a component of a comprehensive strategy to fight poverty. This essay aims to discuss and support the Presidents Obama Executive Order to increase federal contractors minimum pay to $10.10 per hour.

Generally, raising the legal minimum wage is associated with a positive impact on the countrys poverty level. In 2014, President Obama issued an Executive Order, and the minimum wage had increased to $10.10 (Exec. Order No. 13658, 2014). According to Neumark (2018), the key argument in support of increasing minimum wages is that it helps poor and low-income families (p. 1). Providing employees from low-income households enables such people to buy more essential goods and services they need to have a good quality of life. Theoretically, raising minimum wages can redistribute income from consumers to low-wage workers without large efficiency losses (Harasztosi & Lindner, 2019, p. 2724). Therefore, impoverished peoples incomes will increase, and they will be able to escape poverty. Furthermore, the federal minimum wages worth has decreased due to inflation outpacing wage increase rates (Harasztosi & Lindner, 2019). A boost in household expenditure and economic activity would result from additional income. Consequently, more goods and services would be affordable for consumers, companies would benefit from this rise in spending, and jobs could be created due to this economic expansion.

Moreover, government spending on welfare would decline with a greater minimum wage. Low-wage workers reliance on government assistance and eligibility for benefits would decrease if they made more money. More than 1.7 million Americans would no longer rely on government assistance programs if the minimum wage were raised to $10.10 (Gindling, 2018, p. 1). The number of goods and services that can be purchased with a monetary unit has significantly decreased because it is not inflation-indexed. Since lower-income households tend to expend a more considerable percentage of their income, raising the minimum wage would positively affect these households. This outcome can result in a rise in the demand for goods and services. Therefore, increasing the minimum wage might help the economy by stimulating it. Low-paid workers have ensured a wage that keeps up with the rising costs of goods and services because of inflation indexing and would be able to adopt a living level consistent with the economic climate if the minimum wage were increased and inflation indexes were.

With a rise in the minimum wage, employees and their families will have more room to operate and opportunities to improve their quality of life and financial stability. Since President Obamas initiative in 2014, President Biden issued an Executive Order to raise the minimum wage to $15.00, which will bolster economy and efficiency in Federal procurement (Exec. Order No. 14026, 2021). Furthermore, such measures will enable the government to carry out its duties more effectively and quickly because higher pay increases productivity and results in less employee turnover.

In conclusion, the choice to increase minimum wages is wise as it will enhance the efficiency and economy of government procurement. Furthermore, companies who already pay a living wage and take advantage of these savings would not be required to change their bids to comply with the Executive Order significantly. As a result, without significantly increasing prices, the new regulation may enable governmental agencies to choose from a higher-quality group of interested parties.

References

Exec. Order No. 13658, 86 Fed. Reg. 51683 (2014). Web.

Exec. Order No. 14026, 86 Fed. Reg. 67126 (2021).

Gindling, T. (2018). Does increasing the minimum wage reduce poverty in developing countries? IZA World of Labor, 2(30), 1-10. Web.

Harasztosi, P. & Lindner, A. (2019). Who pays for the minimum wage? American Economic Review, 109(8), 2693-2727. Web.

Neumark, D. (2018). Employment effects of minimum wages. IZA World of Labor, 6(2), 1-10. Web.

Introduction

An increase in the minimum wage is a highly controversial issue across the world. For example, the current minimum wage in the United States stands at 7.25 US dollars per hour, despite the concerted government efforts to raise it to 15 US dollars per hour by 2025 (Marchand et al., 2020). The current minimum wage in the US has never been raised since 2009. Previous legislation on whether or not to raise the minimum wage has died in Senate due to the controversy and politics surrounding raising the minimum wage in the country. The issue is equally controversial in British Columbia, Canada, and the efforts have been to raise the wage to 15.65 US dollars per hour. Although there has been resistance to increasing the minimum wage in British Columbia over the years, the government has committed to supporting workers and their families.

Topic Overview

For over two decades, the federal minimum wage has been a subject of the Canadian labor department in the territory or province where the worker is employed. The minimum wage is the lowest pay an employer can legally pay its workers. In this case, the minimum wage happens to be the labor standard as guided by law so that workers can have their rights regarding fair compensation (Wilson, 2021). The policy for having minimum pay varies across the board. For example, in Canada, the policy varies from province to province, and Vancouver may not have the same policy as British Columbia, Manitoba, or Quebec. The Canadian government has always had a minimum wage policy to protect the employment and compensation rights of non-unionized workers.

With its policy paper on wage, the Canadian government has had the interest in reducing the number of low-paying jobs, creating work incentives, stimulating growth, addressing inequality, and alleviating poverty. Therefore, the government has primarily advocated raising the minimum wage to acceptable levels. The minimum wage is also set and adjusted in various ways with the assistance of the government (Marchand et al., 2020). Some of the methods include government efforts, independent boards, and legislation. Factors influencing the minimum wage include economic factors, average wage rates, and inflationary pressures. The pioneer minimum wage rate was introduced in Canada at the beginning of the 20th century and was primarily applicable to children and women. For example, British Columbia and Manitoba enacted their minimum wage laws in 1918. Other provinces such as Saskatchewan, Nova Scotia, and Ontario have theirs in 1920.

The minimum wage in British Columbia has been controversial for many years. Most employers contest the minimum wage issue as advocated by the government because they are keen to control their ballooning wage bill and protect their bottom line. Many countries have their minimum wage rates based on their costs of living (Wilson, 2021). In the Canadian case, there is no minimum wage by the federal government, and every province, such as British Columbia, has its set minimum wage per law. In June 2021, the minimum wage in British Columbia was 15.20 US dollars per hour (Wilson, 2021). Therefore, every job that compensates its employees hourly, on commission, or salary must also reflect this wage.

Specific Focus Regarding the Topic

In British Columbia, numerous professionals are subject to the territorys minimum pay and benefit when it is increased. Some positions that are subject to the minimum wage include home support workers, resident caretakers, farmhands, retail clerks, and fast-food workers and several others (Marchand et al., 2020). Therefore, many people rely on minimum wage in the territory, and raising it is relevant because it will ensure that everyone has the ability to afford to live in the territory. Otherwise, some people, particularly the lowly paid workers might be forced to move out of the province.

However, some people are not subject to such a wage in the territory. Therefore, the laws of the payments do not influence their compensation packages from their employers. Although the law requires employers to pay their workers a specific minimum compensation, this law covers not everyone (Brouillette et al., 2017). Such a rule does not apply to every position and person. For example, training for a job such as an apprentice is not subject to the minimum payment. Some of these cadres include camp leaders and caretakers who live within the premises where they work. In such positions, people may earn less than the minimum payment if their employer compensates them for board and room (Harris et al., 2018). However, a wage can only go down by a maximum of half a dollar per meal and 0.6 dollars daily for housing.

In British Columbia, the law on minimum pay is subject to most students below the age of 18 years, but there are minimal exceptions. For example, such a law does not cover those students working on-campus or those completing work-study projects. Before, British Columbia was among two other Canadian provinces that paid liquor servers and other workers who benefited from tips less than minimum pay (Barr, 2016). This was because employees who receive tips tend to raise their wages and would therefore not be subject to minimum compensation.

Arguments to Make

Having a minimum wage is very relevant for British Columbia so everyone working can have a decent living standard. Such a minimum payment is meant to ensure that everyone remains above the poverty line (Brouillette et al., 2017). In essence, it is a precautionary measure or safety net for all employees so that their employers do not exploit them. Such a wage is meant to cushion vulnerable employees to earn decently. In British Columbia, the average prices of commodities, homes, and food continue to rise, and the minimum payment must reflect the change (British Columbia, 2019). The wage in British Columbia compares favorably with other territories such as Quebec, Manitoba, and Alberta. For example, the salary is 15 US dollars in Alberta, 11.90 in Manitoba, and 13.10 in Quebec (British Columbia, 2019)

The minimum wage has a lot of variance among Canadian territories. The primary reason for such a marked variance is different living costs across the provinces. For example, Nova Scotia may not necessarily have the same living standards as British Columbia or Ontario. It is worth noting that the minimum salary in British Columbia is much higher than in a place like Manitoba due to various reasons (Barr, 2016). For example, purchasing a house, having leisure, and purchasing groceries are more expensive in British Columbia. As a result, the minimum salary is higher so that a person can have higher purchasing power and pay the living cost. The minimum wage is subject to statutory deductions by the employer according to government laws.

There are certain deductions that employers deduct from minimum pay in British Columbia. Some deductions include income tax, employment insurance, and the Canadian Pension Plan. Therefore, all employees between 18 and 65 years old and who work in pensionable organizations have CPP deductions. In this case, an approved calculation tool determines the amount of deductions from the employee. In many cases, employees in the territory also contribute to the employees CPP. The worker will benefit from such money when they retire from gainful employment (Brouillette et al., 2017). The minimum wage increase is usually meant to ensure low-income inequality levels in the Canadian territory. For example, vulnerable groups such as the youth, immigrants, and women benefit from the increase, lowering such inequality. Having a fair minimum wage is a relevant step in assisting in uplifting more individuals out of poverty. It is also meant to build a more robust economy and make life more affordable for British Columbians.

Conclusion

In conclusion, increasing the minimum wage is essential for every part of the world because it ensures that people keep poverty at bay. In this case, such people can be above the poverty line, which also reduces income inequality. In British Columbia, most vulnerable groups such as women and youth have significantly benefitted from a constant rise in minimum wages over the years. British Columbias wage policy demands an annual increase to cushion the low-income earners.

References

Barr, V. J. (2016). Planning for healthy and equitable communities in British Columbia: A critical analysis of the implementation of an equity lens in Healthy Built Environments initiatives [Doctoral dissertation, University of British Columbia]. The University of British Columbia Library. Web.

British Columbia (2019). TogetherBC: British Columbias Poverty Reduction Strategy. Web.

Brouillette, D., Gao, D., Gervais, O., & Cheung, C. (2017). The impacts of minimum wage increases on the Canadian economy. Bank of Canada. Web.

Harris, L., Janmaat, J., Evans, M., & Carlaw, K. (2018). Negotiating the frame for a living wage in Revelstoke, British Columbia: An econ-anthropological approach. Human Organization, 77(3), 202213. Web.

Marchand, Y., Dubé, J., & Breau, S. (2020). Exploring the causes and consequences of regional income inequality in Canada. Economic Geography, 96(2), 83-107. Web.

Wilson, S. (2021). Living wages and the welfare state the Anglo-American social model in transition. Policy.

The minimum wage is one of the many political-economic systems measures that work to redress the economic imbalance. It is the minor salary that an employer must provide to their workers at any given time. Many have strong feelings regarding the minimum wage principle, which is a contentious subject. It depends on a few aspects, including the living standards of the lower class and the influence on jobs that a labor surplus might cause. It can also affect the quality of an economys human capital whether or not this ongoing discussion occured. Although the minimum wage contributes to reducing income disparity, it should be eliminated because it worsens unemployment, violates the Constitution, and does not encourage healthy competition.

The lower class cannot live comfortably because of the minimum salary. The top class, middle class, and bottom class are the three classes that Americans believe in. Social class is the division of people into visible social classes supported by money, income, education, occupation, and social connections. Health, family life, and education may all be impacted by ones place in the social hierarchy. It is evident that socioeconomic status (SES) is linked to specific opportunities and resources and describes a persons position in order (Harasztosi & Lindner, 2019). The best socioeconomic group or layer is referred to as the upper class; members of this group typically possess exceptional wealth and influence. The lowest socioeconomic group, which includes persons with poor status, income, and education levels, is known as the lower class. The middle class, which sits between these two classes, is also mentioned.

Education and professional achievements determine ones place in a particular social class. According to research, teenagers from low-SES families and communities develop their academic skills more slowly than those from higher-SES groups (Cengiz et al., 2019). Sometimes there needs to be more funding for school systems in low SES areas, negatively impacting the childrens academic growth and results. According to several studies, people from lower social classes often exhibited weaker career-related self-efficacy regarding their desires for employment (Manning, 2021). Children who grow up in an economic environment with better facilities have more money saved for employee training. The federal minimum wage (FMW) was established to stabilize working peoples wages by assisting them in making ends meet so they could afford to house (Gindling, 2018). The FMW no longer pays workers enough to cover the costs of housing and utilities for households making the minimum wage.

Due to the absence of affordable health care, many states have tried to overthrow the Affordable Care Act, which might cause a familys savings to be destroyed and force them to live on the streets (Dustmann et al., 2022). A person on minimal pay cannot possibly win that war. The suggested increase would only slightly improve the minimum wage laborers life. The minimum wage can impact the level of human capital in an economy. Employees knowledge, skill sets, and experience in an economy are referred to as human capital. Because a skilled workforce will result in increased output, skills have economic worth. Realizing that only some have the same abilities or knowledge is what the concept of human capital is all about. Raising the employment standard by investing in peoples education is possible. There is a strong correlation between human capital and economic growth. Human capital impacts economic growth and can enhance a countrys economy by strengthening the knowledge and skills of its citizens. Economic growth is an increase in an economys capacity to generate goods and services compared to earlier periods.

In conclusion, the minimum wage debate is still important in our society because it has both positive and harmful effects on living standards, employment opportunities, and the economy. By encouraging consumption, the minimum wage promotes economic growth in a nation. Although it might improve the standard of living for low-income people, it still depends on the labor markets structure. While a significant rise may result in employment, a modest increase does not affect a career. This demonstrates that the minimum wage is still an important topic.

References

Cengiz, D., Dube, A., Lindner, A., & Zipperer, B. (2019). The effect of minimum wages on low-wage jobs. The Quarterly Journal of Economics, 134(3), 1405-1454. Web.

Dustmann, C., Lindner, A., Schönberg, U., Umkehrer, M., & Vom Berge, P. (2022). Reallocation effects of the minimum wage. The Quarterly Journal of Economics, 137(1), 267-328. Web.

Gindling, T. H. (2018). Does increasing the minimum wage reduce poverty in developing countries? IZA World of Labor. Web.

Harasztosi, P., & Lindner, A. (2019). Who pays for the minimum wage? American Economic Review, 109(8), 2693-2727. Web.

Manning, A. (2021). The elusive employment effect of the minimum wage. Journal of Economic Perspectives, 35(1), 326. Web.

There has been a lot of discussion concerning the positive correlation between the minimum wage and unemployment rates. Economists debate on the nature of these two notions and create contradicting arguments. The purpose of this paper is to analyze the impact of the minimum wage on unemployment rates in general and those of the state of Massachusetts in particular based on both sides of the argument.

As of January 1, 2020, the Massachusetts minimum wage increased to $12.75 per hour, with the service rate being $4.95 per hour. This increase is a part of a new law that is intended to establish the minimum wage rate up to $15 by 2023 in Massachusetts (Minimum wage program, 2020). According to some economists, higher minimum wages can actually raise the unemployment rates despite the good news. It implies that the companies would want to hire fewer employees for their business to stay cost-effective. It would be more profitable to automate the tasks that were performed by lower-waged workers.

However, such an approach may not be rational if applied in practice. Indeed, not every business or organization can access the technology necessary for the automized operating at a reasonable cost, which will make quitting the employment of actual workers impossible. It especially applies to small employers who have limited funds. Moreover, the increased minimum wage would create more jobs for low-wage workers, as this rise would stimulate the goods and services demand of such workers who would now be able to afford more. Thus, productions will need to hire more employees to keep pace with the increased demand.

To conclude, the theory of the positive correlation between increased minimum wages and unemployment rates does not seem logical. On the contrary, it will broaden the economy by creating new job opportunities due to the higher demand for goods supply. Moreover, there are obvious benefits of providing the existing employees with higher salaries and improved quality of life. Thus, the increase in Massachusetts minimum wage rate will most probably give positive outcomes for the states working population.

Reference List

Minimum wage program (2020) Web.

Introduction and Summary

Introducing opportunities and creating a functional support system for those struggling to locate employment options is one of the central issues that the U.S. government must address. However, not all of the solutions that might seem effective on the surface will deliver the expected results. In his article My Turn: $15 an Hour Minimum Wage Would Slow Economy, Michael McMahan asserts that the increase in the levels of minimum wage to $15 per hour will only hurt those that experience poverty since it will lead to a drop in demand for labor, thus, minimizing employment opportunities for vulnerable groups (McMahan). Despite being rather one-sided and avoiding considering the arguments of the proponents of the wage increase, the article conveys an important idea about the nuances of relationships within the labor market, which makes the paper an important contribution to the discussion about the issue of wage raise.

Analysis

The article by McMahan contains several important points, yet the lack of focus on the specifics of the labor market and the theories behind its functioning weakens the assumptions that the author makes. Specifically, the main purpose of the article is to establish the urgency in reconsidering the regulation concerning the increase in the minimum wage rates. In other words, there is no specific key question that McMahan pursues in his paper; rather, he strives to convince the reader of the necessity to take immediate action to reconsider the proposed change to the current standards for minimum wage per hour (McMahan). However, one could claim that McMahans question is whether the government is capable of recognizing the problem that the suggested regulation will cause and whether the state leaders will amend the proposed law accordingly. Specifically, McMahan deploys what Elder and Paul referred to as the slippery slope argument (314). For instance, McMahan posits that higher wages will lead eliminate workers, which, in turn, will increase unemployment rates and, eventually, affect vulnerable groups.

When considering the factors that may have encouraged McMahan to write the article, one might bring up the gradual development in economic and political tension on a global scale. With the restrictions that the COVID-19 pandemic has created on the global trade and economic interactions between states, the need to consider the well-being of vulnerable groups has become particularly urgent (Warner and Zhang 177). Therefore, McMahan addressing the specified concerns in his paper should be regarded as a timely and sensible response to the alterations that may aggravate the current problem to the scale of a catastrophe.

What weakens McMahans argument slightly is the fact that h pulls most of his arguments from his experience rather than the objective analysis of the combined experiences of people in the labor force market. The latter approach would require conducting research in the target economic setting or, at the very least, consulting some of the existing research or reports, which McMahan fails to address. Overall, although the strategy that McMahan chose to approach the issue lacks substantiated evidence and provides s rather subjective viewpoint, his assessment of the situation appears to be quite legitimate. Therefore, the concerns that he raises are worth addressing.

Evaluation

Applying the framework of the elements of reasoning to the article my McMahan will show that it meets the key criteria, while slightly deviating from the established pattern. For instance, the paper has a clear purpose of discussing the problem with the increase in the minimum wage per hour (McMahan). Likewise, the issue, namely, the idea that the proposed change will do more harm than good, is established firmly. The key information is represented, although McMahan could have been more accurate in the statistical data that he provided, citing some of the recent trends in the labor market, specifically, the demand changes. Indeed, the lack of objective assessment and the constant reference to personal experience increases the subjectivity of McMahans judgment, which does not help to make the article more compelling. Similarly, the point of view is presented clearly, as McMahan argues that the suggested increase in the wage minimum will not have the desired effect. However, the article lacks inference, namely, the presence of alternative solutions that could help to amend the issue. Likewise, McMahans appeal to his own authority, as Elder and Paul define it, also makes his argument slightly weaker (314). Furthermore, McMahan does not detail which theories he applies to the analysis. As a result, some of the assumptions that McMahan makes could be seen as the result of taking the issue of wage increase for granted.

To understand the article better, readers might want to familiarize themselves with some of the key concepts related to the issue. For instance, the bargaining theory of wages might help explain the observed dilemma better. The specified theoretical framework introduces the reader to a large variety of factors that create the necessity to change the minimum wage rate (Baiju and Shamna 37). Therefore, the theory will shed light on the nuances of relationships within the labor market.

Conclusion

Although McMahans statement concerning the negative effects of raising the minimum salary considers only one aspect of the described change, specifically, the alterations in demand for the labor force in accordance with the exiting principles of demand and supply correlation, McMahan provides a very sensible commentary (McMahan). Therefore, despite the omissions of the essential discussions surrounding the nuances of economic interactions within the labor market, the article sends a reasonable warning that must be taken into consideration when introducing new regulations into the labor market setting. Although McMahan does use some of the manipulation tools, such as the appeal to authority when he credits himself for having a vast experience in business and economy, he still conveys an important point (Elder and Paul 314). Consequently, the author should be credited for rather thoughtful and deep criticism of the proposed change to the current regulations within the labor market.

References

Baiju, K. C., and Shamna, T. C. Determinants of Wage Differences between the Inmigrant and Local Labourers in the Construction Sector of Kerala. Econ Polit Wkly, vol. 54, no. 31, 2019, pp. 35-43.

Elder, Linda, and Richard Paul. Critical Thinking: Tools for Taking Charge of Your Learning and Your Life. Foundation for Critical Thinking, 2020.

McMahan, Michael. My Turn: $15 an Hour Minimum Wage Would Slow Economy. Gaston Gazette, n.d. Web.

Warner, Mildred E., and Xue Zhang. Social safety nets and COVID-19 stay home orders across US states: A comparative policy analysis. Journal of Comparative Policy Analysis: Research and Practice, vol. 23, no. 2, 2021, pp. 176-190.