Category: Minimum Wage

Wages, typically known as salary, play a great role of significance in the lives of employees employers, and economies around the globe. Within different economies, it can be easily seen that even the workers who get the lowest salary have a fixed salary that cannot be reduced than that this can be simplified in two words- minimum wage. The concept of minimum wage is quite simple as it describes the lowest wage any company or employer can give to any type of employee. The USA follows a national minimum wage of $7.25 per hour. It was $0.25 per hour when started by FLSA in the year 1938 under President Franklin D. Roosevelt. Apart from USA united kingdom started the minimum wage low in 1909 Davis-Bacon act in the united states became an issue as it basically stood for discrimination between white and black workers moving further minimum wage has certain pros and cons it leads to better employee satisfaction moreover it may help in the reduction of poverty, on the other hand, it can cause job loss to many employees in this way minimum wage impacts employment as well as inflation let us go through its impact on employment and inflation respectively.

The minimum wage is one of the leading factors that affect employment through different aspects. These effects can be either negative or positive and normal or abnormal. However, they somehow affect the economies and lives of those related to them. To cite an example, had national legislation for minimum wages in 1999. The main purpose was to increase the minimum wages for all types of workers. Many studies found that the best thing was that everything was almost positive. Almost every worker in the labor market was happy with the legislation as it provided them with a better standard of living. This is because the act provided workers with equal wages. So, the belief in inequality started disappearing. The workers, especially the low-income workers, saw themselves living with better social facilities. Even though the majority of workers were happy, part-time workers faced certain negative effects and lost their jobs. Another major topic in this series is regarding formal and informal sector workers. The formal sector refers to the major sector that stands for the rest of the works. When the minimum wage is increased for the formal sector, it can lead to a major reduction in poverty. This can especially help low-income homes where only one person earns for the whole family. This would give the whole family a better standard and facilities for their lives. This all can be done by increasing the rate of minimum wages. Moving to the next side of the coin, if the act of increasing the minimum wage fails to cover each and every part for implementation, it can lead to failure and may have a negative effect. In Addition to this, with higher minimum wages, employers may try to reduce the strength of workers leading to a great rate of loss of jobs.

Furthermore, another thing we have to discuss with regard to minimum wages which is inflation. The first thing to note is that with raised minimum wages, the prices of goods, as well as services, would also get raised eventually. In addition to prices, there is a great difference between the effects of large raises in the minimum wages and small or minor raises in the minimum wages. Large raise basically results in an increase in the rate of inflation. Whereas, small raise may even reduce inflation on a small scale, as per some studies. There is a report prepared by researchers MacDonald and Nilsson which states that the food prices in restaurants from the year 1978 to 2015 had very little raise in their prices. The rise was just 0.36% and that for every 10% increase in the minimum wages of the employees. In the USA, the time around the 1940s to 1960s saw a period where the minimum wages increased as well as the productivity in the economy and the rate of inflation as well. In 1968, minimum wages stopped increasing though. So, the purchasing power of the minimum wage has kept declining since 1968. In 2009, it was $8.70 which is 17% less than that in 1968. Moreover, today it is 31% less than in 1968 with its rate at $7.25. It was $10.54 in 1968. There is another report from the Congressional Budget Office (CBO) which basically states that if we go with the minimum wage at $15 per hour, there is an estimation of around 1.4 million loss of jobs by the year 2025. This report was criticized by Mr. Arindrajit Dube from Massachusetts University. He stated that CBO has taken the number of job losses to a great extent. The rate of job loss would be just 5 lakhs or less than that. This has been supported by Dr. Daniel Kuehn, who is a researcher at The Urban Institute. As per him, minimum wages, if raised, may affect prices but that would be like nothing. Therefore, there are always debates regarding that. Does this also raise a major question would only raising the minimum wage to increase help workers survive in inflation? Simply because if minimum wages increase with inflation side by side, money would grow with the same purchasing power. On the other hand, if it grows with productivity in developing economies, the workers surviving on minimum wages have a chance to get better over time.

To conclude, minimum wages are closely associated with employment and inflation too. There are certain facts, theories, studies, and figures to make clear our minds regarding the rate of minimum wages in different countries and economies. There are a few pros and cons with regard to that. In the last, it makes us think broadly and makes me reach the fact that if thing is within the limit, it is all good. At the perfect rate, we can make out much more benefits and fewer disadvantages from minimum wages, and that too with keeping employment and inflation level in mind.

The United States has varied opinions on the question of the minimum wage at both federal and state levels. Legislatures and workers are all keen on the decade-long quest to have wages raised. Significant amounts of workers prefer wages as high as $15 per hour (twice the wage floor of $7.5 per hour). Such a wage floor help regulate the labor market, giving workers and employers a fairground for operation. Without a minimum wage, employers may take advantage of employees, leading to high rates of unemployment and a high labor surplus. A deviation in the minimum wage affects American households and firms at such microeconomic levels as disposable income and employment decisions.

Minimum wages affect the business’s ability to negotiate wages for its employees. When the government through the influence of labor unions solicits for minimum wage increases, businesses are at a loss over the wages to pay their employees. They are forced to increase the minimum wage to a new price floor, thus increasing the expenses of the business. Employers or business owners, therefore, have to choose between letting go of some workers or paying all the workers at the new rate and facing the risk of a loss. Employers, therefore, have a say in the setting of the minimum wage by ensuring that the new wages set do not lower their economic profits. Since most of the businesses in the United States operate in free markets, they are price takers, and therefore labor wages are a great way of manipulating their profits. It is through such variable costs as labor that they can increase the profit of the business. Businesses that employ unskilled labor, given a minimum wage law, experience diminishing profits and increasing expenses that challenge their economic growth. A sensible move for such an employer is to employ skilled labor that maximizes the quality of output and increases the sales revenue of the business.

The minimum wage has been a contested topic across the United States, given the one-size-fits-all mandate of the $7.5 per hour minimum wage. The different states within the United States have varying costs of living that need to be considered when setting the minimum wage. Urban and coast-bound states tend to have high costs of living as opposed to the Midwestern states. Increasing the minimum wage within such states, therefore, gives the locals more disposable income to sustain the high costs of living within these regions. For example, the cost of living in Iowa and New York. New Yorkers are bound to spend more on food, rent, and healthcare as opposed to Iowans. The United States, therefore, needs an increase in the minimum wage with consideration of the cost of living within each state. A common minimum wage floor for all states may put more money into the pockets of one household while burdening another household under a similar firm. The wages should, therefore, vary depending on the state across the industries.

The minimum wage should be high enough to allow workers to support their families. Some individuals earning minimum wages sometimes have to resort to food stamps as they lack the extra cash for eating out or for huge emergencies. A stretched wage is essential to allow workers to afford a quality lifestyle, save, and even invest. An increased investment plan increases the discretionary income of the firms and households.

Summing up, increasing the minimum wage benefits the majority of low-income workers in both the short and long term. In the short term, they have an increased disposable income, while in the long run, they have more than enough to pay taxes, meet their needs, and have enough to save.

Poverty is defined as the state of being poor. However, poverty is also defined in relative and absolute terms. Relative poverty is poverty about the economic status or well-being of others; you’re poor if you live under standards that aren’t in the context of how society views a ‘rich’ person. Absolute poverty is the failure to meet basic needs such as food, clothing, and shelter based off of money needs. [endnoteRef:1] Poverty is an outcome of the Racial Wealth Gap. The Racial Wealth Gap has plagued Americans for decades. The beginning of this gap began as early as the 1900s and still appears in our communities today. The gap is defined by the median wealth of a white family versus a black family, net worth. The family’s net worth is determined by adding total assets (cash, retirement accounts, home, etc.) and subtracting liabilities (credit card debt, student loans, mortgage, etc.).[endnoteRef:2] Sadly, with poverty, there come many more negative outcomes. Living in poverty increases poor health, higher crime rates, and a decrease in education. That’s poverty all over the world. [1: https://www.habitat.org/stories/what-is-poverty dtd 26 MAY 2019 Habitat for Humanity is a non-profit organization that builds and improves homes for families to call theirs. For communities to be strong and stable, families must be able to afford to live. This website provides readers with stories, donation links, about me, and so forth.] [2: https://www.forbes.com/sites/brianthompson1/2018/02/18/the-racial-wealth-gap-addressing-americas-most-pressing-epidemic/#4d4d7d6d7a48 dtd 21 MAY 2019 An article submitted that explains why races differ in terms of wealth. I learned what wealth truly means and not the societal definition.]

In the state of Texas, starting in the year 2017, a Hispanic or black child is three times more likely than a white child to live in poverty. The U.S. Census Bureau put the poverty rate down at 14.7% which is lower than the 2011 percentage of 18.5%. Also, 1 in 5 (20.9%) Texas children lived in poverty which took a decline in 2011 when 27% of Texas children were poor. Metro areas in South Texas and predominately Hispanic communities have been ranked the poorest areas within the state of Texas and the highest areas of child poverty. In the year 2017, the Texas median household income sparked up 5%, or $59,206. Texas falls behind 22 other states with them having higher median incomes. Women in 2017 had to work a full-time job, year-round just to be paid 81.4% of what a man would be making on his job.[endnoteRef:3] In 2018, Texas’s population was 27,676,343 and of that population, 4,076,905 are living in poverty. 14.7% of people had incomes below the poverty line in 2017 and 20.7% of children under age 18 lived in families with incomes below the poverty line in 2017. 20.7% Latino, 9.0% African American 17.9% Native American, 13.9% White, and 9.8% Asian Americans living in poverty. [endnoteRef:4] In Texas, the minimum wage is $7.25 per hour, which barely provides for one person, let alone an entire family. Between the years 2016 and 2017, the average total of workers in Texas who were earning at or below the federal minimum wage declined from 3.9% to 3.1%. The percentage of workers earning exactly the federal minimum wage decreased to 1.2% from 1.6%. Lastly, the percentage earning less than minimum wage decreased to 1.9%. Of the working class in Texas earning at or less than minimum wage, 56.5% were women and 43.4% were male. [endnoteRef:5] [3: https://www.texastribune.org/2018/09/13/texas-poverty-census-2017-lowest-levels-decade/ dtd 21 MAY 2019 A Texas article which provides statistics of poverty. Although 2017 has been proven to be a year of improvement for Texas, poverty was still a down factor. This site provides charts from the U.S. Census Bureau to provide a visual to represent poverty in numbers. ] [4: https://talkpoverty.org/state-year-report/texas-2018-report/ dtd 21MAY2019 Great website for statistics. This site provided me with a population of Texas in the year 2018. Also, this website provides me with percentages for different categories and rankings between states. ] [5: https://www.bls.gov/regions/southwest/news-release/minimumwageworkers_texas.htm dtd 26 MAY 2019 Bureau of Labor Statistics talks about minimum wage in Texas and percentage change of people making at or below minimum wage. Also, this page provides charts to back the information provided.]

Many low-income individuals and families live in public housing and receive SNAP benefits, Medicaid Health Benefits, Children’s Health Insurance Program (CHIP), Welfare, and many other government assistance programs.[endnoteRef:6] However, some individuals aren’t eligible for these programs. Everyone has heard of food banks and food pantries which provide meals to families. Also, there’s the U.S. Department of Housing and Urban Development which gives federal aid to housing agencies within states. These housing agencies provide housing to low-income families at affordable prices.[endnoteRef:7] These homes come with child protection, cleaning, and property maintenance regulated by the government and security precautions. I plan on starting a program that provides housing and meal packages for families. The housing portion of my project would persist in an apartment-like complex or duplex homes. Families will be able to experience the full feeling of having all the amenities that a regular home would have. The food portion would consist of a delivery system. At the beginning of every month, each family will receive a package based on the number of members in the family. The family food package will consist of a variety of dinner foods, drinks, snacks, and condiments. This will allow the adults to get themselves back on their own feet and eventually be able to provide for their families in ways they wish they could. [6: https://www.usa.gov/benefits dtd 26 MAY 2019 USA.Gov provides information on government benefits available to the people. On this website, you’ll find different food, healthcare, housing, and financial assistance benefits that you’re eligible to apply for. Lastly, there is a link to find out the requirements for each program. This is great for people who need assistance. ] [7: https://www.hud.gov/program_offices/public_indian_housing/programs/ph dtd 21 MAY 2019 HUG.GOV explains what public housing is. Also, it breaks down the different sections available to an individual.]

To make this project a reality I would like to partner up with Feeding Texas and Volunteers of America as my private sector. I would like to partner up with the Texas Department of Housing and Community Affairs as my public sector. For starters, I intend for each of my partners to fulfill things of the nature that pertain to their organization. I intend to Feeding Texas to help families build a foundation to move toward food security. Within the last year, Feeding Texas fed roughly 500 million pounds of food to families of local communities.[endnoteRef:8] Next, I’d like for Volunteers of America to help me provide housing. Housing will be provided in all areas, which will allow residents to find jobs. Volunteers of America has committed to providing more than 40 housing communities all over the state of Texas and Albuquerque, NM.[endnoteRef:9] Lastly, TDHCA because it is the state agency responsible for affordable housing. TDHCA delivers $2 billion through profit organizations, non-profit organizations, and local government partnerships to provide housing, opportunities, and assistance. [endnoteRef:10] These partners would make the ultimate dream team to defeat poverty. The goal of my organization would be to slowly, but surely rid cities of poverty over time. The main focus would be to continue being consistent with the homes. Once the organization is off to a great start, my volunteers along with myself will continue to keep the housing up to par and accept critiques to better our organization. [8: https://www.feedingtexas.org/work/ dtd 26 MAY 2019 Feeding Texas is a non-profit food bank that provides food all over Texas. Their website provides ways to get involved, about them, latest works, teaching about hunger, and a way to donate.] [9: https://www.voatx.org/affordable-housing dtd 26 MAY 2019 VOA was a great source of housing. The website is straight to the point. Provides its mission, contact information, etc.] [10: https://www.tdhca.state.tx.us/au.htm dtd 26 MAY 2019]

However, during this journey, we will face many obstacles. For me to be able to build a house and provide food to families, the facilities must pass all inspections. For starters, the home must pass the Texas Real Estate Inspector inspection. This inspection will be checking the plumbing, condition of the yard, the interior and exterior of the home, and miscellaneous objects; smoke and carbon monoxide detector, heater/AC unit, and stair handrails. To stay on top of these major tasks, we will plan organize, and schedule days and times dedicated to each area to guarantee that the home is at an acceptable standing for the home inspection[endnoteRef:11] Next, to supply food to a family all volunteers must have a food handling certificate to give food. The facility in which we operate must pass inspection by local food inspection agencies. Therefore, the facility must have storage for foods at the correct temperatures, correct packaging, and a contamination-free environment. Lastly, all transportation must pass state inspection for food drop-off to be a success. To ensure that all aspects of this organization will be met, further research will be done to learn the rules and regulations to run this non-profit and make a change. [11: I found this information to be new to me and useful. I learned that TDHCA is what takes on the responsibility for affordable housing in Texas. It’s reliable because it provides readers with its history, therefore, we know it’s official and not someone who just up and made an agency. https://www.trec.texas.gov/become-licensed/inspector dtd 27 MAY 2019 This website provides me with what to expect if I ever wanted to sell my home or run a housing facility.]

In conclusion, as the state of Texas continues to change drastically, poverty changes alongside it. As our population grows, the percentage of individuals living in poverty changes, however, the physical being of poverty doesn’t. I’d like to study poverty to the root. What makes poverty a burden on a specific race? What makes a specific area more prone to poverty-ridden individuals than others? How does hourly pay change depending on job title, education, or work experience? These are all things that would make great research in terms of poverty in Texas.

[iChart 1. Percentage of hourly-paid wage and salary workers with earnings at or below the prevailing federal minimum wage in Texas, annual averages, 2007-2017] https://www.bls.gov/regions/southwest/news-release/minimumwageworkers_texas.htm dtd 12 MAY 2019 NOTE: This infographic shows the average wages an individual earns in Texas. This is proof of how hard making a living for themselves in Texas. As a working teen, a full-time college student who pays her car note and phone bill, making $7.25 per hour and getting paid biweekly barely gets me by. I never realized how little that pay gets anyone by until I was living that life. However, I now see why it’s important to have an education, the higher the education, the more money that goes into your pocket.

Have you ever wondered why our business world has made such a limited progress since independence? Have you ever thought why our nation still is in the list of N11 from last 17 years and still could not be a progressively developing nation? It is because of the limits we set in every sphere of our life. It is because of the fact that we have stopped thinking big. It is because we find our satisfaction in making both ends meet. Getting more specific, it is because we have set a limit of earning in our market, no matter if it’s a minimum or a maximum limit, which by the way is PRs. 17,500. Moreover, it clearly is not a suitable law for a developing country such as Pakistan as, because of this people make limited effort in their work and get lazy and careless, although there is no doubt about the fact that a higher minimum wage would lower the government spending on welfare still Increasing the minimum wage would force businesses to reduce their employees and unemployment would rise.

If we have a minimum wage in Pakistan, then a bunch of our workers would stop striving hard and become a dawdler. If someone is guaranteed a minimum income then he/she would lose motivation in their work. Imagine if you pay a worker as much as he works, without any limit. It would definitely motivate the worker to work more and more. This will definitely polish his/her capabilities and hence our nation would start getting skilled. Moreover, if workers have a minimum wage, they would only do what is necessary to maintain their jobs and that too half-heartedly. This will end up killing their creativity and making them a dawdler. This is due to a natural human psyche that when a worker knows that what so ever innovative he/she does they will still get the same salary at the end of the month, they will actually do nothing more than they actually have to for maintaining their jobs. This will also lower the work efficiency. Lastly when some innovative and motivated worker gets a minimum wage due to lack of experience, they at times get into crisis and their attention gets diverted from work. Eventually they also end up getting lazy towards their work. This is because crisis at times can kill creativity and motivation too.

Still a higher minimum wage can lower the government spending on welfare. When we have a healthy minimum wage, people would get less depressed due to economic crisis. It will be easy for people to manage their basic health expense. Also, that motivation and innovation of the work force will not fall prey to crisis. This will reduce the government spending on the welfare of the state such as making health cards and giving education scholarships to such a wide range of public. They would just then offer it to the few who left in the dusk.

However, in Pakistan increasing the minimum wage would force businesses to reduce their employees and unemployment would rise. Pakistan Institute of Labor Education and Research (PILER) Executive Director Karamat Ali says in an interview that “The increase in the minimum wage is insufficient…especially after the recent massive rupee depreciation and acceleration in inflation”. Furthermore, when a low skilled worker cannot make his both ends meet with this minimum wage, he simply thinks of getting migrated to some other country with a higher minimum wage to support his family. This is also reducing our work force. Even a small family of five members cannot conveniently run its kitchen and bear day-to-day expenditure with the revised minimum wage of Rs 17,500. Moreover, if there is a high minimum wage then many companies would prefer free lancers rather than permanent employees. This will again increase the unemployment will a larger rate. Especially our low skilled workers would suffer a lot to make their both ends meet. If the minimum wage is increased, companies may use more robots and automated processes to replace service employees. According to a psyche of a common businessman reduction of cost and increased revenue is the utmost ambition, no one cares if the rate of unemployment or inflation increases or decreases. This is why this doctrine of setting a minimum wage is completely destructive and against the flow.

Finally, to sum up, we as a developing nation need to re think on our practices. We need a motivation to work and an innovative work environment. This is impossible with setting a minimum wage as then no one will give their best. This will end up killing their creativity and making them a dawdler in their life. Still a higher minimum wage can lower the government spending on welfare. It will be easy for people to manage their basic health expense. Also, that motivation and innovation of the work force will not fall prey to crisis. However, increasing the minimum wage would force businesses to reduce their employees and unemployment would rise. Especially our low skilled workers would suffer a lot to make their both ends meet. If the minimum wage is increased, companies may use more robots and automated processes to replace service employees. Due to all these major reasons, we should take the risk of going against all the odds and get better day by day.

The minimum wage is a topic widely debated by both sides of the political spectrum in the United States. But first, what exactly is the minimum wage? Fair Labor Standards Act (FLSA) of 1938 enacted by President Franklin Roosevelt established the minimum wage. The original minimum wage was 25 cents per hour. This amount equates to approximately $4.04 spending ability (Wilson, 2012). Minimum wage is a timely issue, so as an economics student, I would like to discuss my position on minimum wage. The minimum wage should not be increased because there are many negative effects correlated with it including an increase in automation, a rise in prices of goods, an increase in unemployment.

An increase in the minimum wage will result in an increase in automation. The author of ‘The Unintended Consequences of Raising Minimum Wage to $15’ expresses that “Large corporations with big budgets will weigh the increased labor costs and elect to invest in technology to displace workers. This trend will soon become prevalent in the foodservice industry, hospitality, retail, construction and manufacturing” (Kelly, 2019). To further explain this, I will use an example from changes I saw in businesses to support Jack Kelly’s argument. Employers like Walmart are already using technology to reduce the number of employees in their organization. Many Walmart has renovated its stores and initiated self-out registers. Each one of those registers in use was once someone’s job. Seeing that Walmart has currently used this practice which already lowered the number of workers it hires, then automation will be used even more widely when the minimum wage rises. Raising the minimum wage means that firms like Walmart will be switching to cheaper alternatives that can accomplish the same task as an employee to minimize its cost; in this case, they will be more inclined to acquire more self-checkout to put to use. According to the author of ‘Minimum Wage Fallacy’, “With the advances in technology, a lot of these tasks which were earlier performed exclusively by humans are now being performed by machines. Hence, human laborers are not only facing competition from humans, but they are also facing competition from machines” (Juneja). Let’s say that there is a higher fix cost of obtaining the machine at first, but in the long run, it will be cheaper and more efficient. The reason for that is because technology does not require sick leave, take no vacation, does not require maternal or paternal leave nor any fringe benefits, it only requires regular maintenance. Human are not machines, we cannot do manual labor without resting like machines, therefore, it is more likely that employers will favor automation. Employers who switch to automation will not have to spend extra money than they have to. The goal of any business is to maximize profit. So, if options are available, businesses will always decide to go with the most cost-effective choice. Of course, machines cannot replace all human labor, but manual labor done by human can easily be replaced at lower costs.

Moreover, there will be an increase in the prices of consumer goods with a raise in the minimum wage. When a business must pay a higher wage for its employees, they will have to find resources to pay their employees which equates to pricing goods at higher prices. On the other hand, Bobby Scott, U.S. Representative argues that “Raising the federal minimum wage will also stimulate consumer spending” (Scott). This politician is saying that when people have more money, they will spend more which boosts the economy. However, according to Mark Wilson, former deputy assistant secretary of the U.S. Department of Labor and current heads Applied Economic Strategies, LLC, “If a minimum wage is partly or fully passed through to consumers in the form of higher prices, it will hurt the poor because they disproportionately suffer from price inflation” (Wilson, 2012). Assuming that consumers gain more money from the minimum wage raise, but then the product costs more.

As an illustration, imagine a raise in the minimum wage from $7.25 to $15. This is a 106.90% increase in the federal minimum wage. The government’s Federal Reserve printing out more money will be disastrous. Just imagine the hyperinflation of Germany post World War II, there was too much money flowing around causing German’s purchasing power to drop. There is no way that our government will just print money to subside employers to pay for employees. Now that the thought of business receiving subsidies is out of the way, the cost will fall on consumers. Wilson also revealed that “A 2011 study of quick-service restaurants found that two-thirds of the minimum wage cost increases were offset by higher menu prices and that higher prices rather than cuts in employment and hours were the most important channel of adjustment” (Wilson, 2012). Employers must raise prices to cover their expenses, this will lead to consumers paying higher prices to each product it purchases. For instance, McDonald workers earn an average of $9.93 an hour. When the wage of its employees increases to $15 (same as 51.06%), then it is likely that your $3.99 Big Mac will not have the same price anymore. Hypothetically, if this happens, then a 51.06% increase of the employees’ wages might cause maybe a 25% increase in the price of food (assume that McDonald did not reduce the cost of production by using inferior products, and customers receive the same product quality). A 25% increase in price is the equivalent of a 0.80 cent increase in the price of the Big Mac. Consumers will be paying roughly $4.79 for something that once cost $3.99. Hence, it is not better for consumers when they have lower purchasing power.

Furthermore, the increase in minimum wage leads will also increase unemployment due to less demand for workers. From Econ 380 lectures, “the total number of workers hired by all firm equals the equilibrium employment level”. Consequently, an increase in the minimum wage will encourage more people to enter the labor force; this will expand the labor supply. Because there will be more people in the labor market, competition for the same job will be more rigorous because the supply is higher than demand (unbalance supply and demand), resulting in a higher unemployment rate. Wilson shares that “85% of the most credible studies point to negative employment effects, and the studies that focused on the least-skilled groups most likely to be adversely affected by minimum wages, the evidence for unemployment effects were especially strong” (Wilson, 2012). This point shows that there will be more competition among people, and the lower-skilled workers might be hurt because higher-skilled people have more to offer to employers.

Developing does not have strict minimum wage law as in developed countries. Therefore, it is cheaper for companies to move production overseas (Juneja). If businesses move factories outside of the U.S., then it will be even worse for employees because not only lack of job availability, they also lose jobs to foreigners. This means that there will be an increase in the unemployment rate as the employers would rather hire cheaper workers from other nations, potentially causing more human exploitation for non-U.S. workers. Besides, this scenario portrays, that businesses will always prefer to minimize the cost of production by picking the cheaper route. If the minimum wage raise is implemented, laws that limit business moving overseas are needed, because if not, considering the limited job openings, the ones that lose their jobs are U.S. minimum wage workers.

Conclusively, many factors should be considered when it comes to deciding whether to raise the minimum wage or not. Take into account the idea that technology is more available than ever causing employers to favor using automation than human, increase in the price of consumer goods lowering spending power, as well rise in unemployment, it is reasonable to believe that minimum wage should be unchanged.

The minimum wage is a fundamental labor policy that sets a legal floor for hourly wages, ensuring workers receive fair compensation for their efforts. This essay explores the impact of minimum wage on various aspects of the economy and society. By examining both the advantages and disadvantages of minimum wage laws, we can gain a comprehensive understanding of their effects on workers, businesses, and the overall economy. Ultimately, the goal is to assess how minimum wage policies promote fairness and contribute to economic stability.

Enhancing Worker Well-being

The implementation of minimum wage laws has a profound impact on enhancing worker well-being. One of the primary advantages of minimum wage policies is their role in poverty reduction. By establishing a baseline income level, minimum wage lifts workers and their families out of dire economic conditions. It provides them with the means to afford basic necessities such as food, housing, and healthcare, improving their overall quality of life.

Moreover, minimum wage laws address income inequality by narrowing the gap between low-wage and high-wage workers. This promotes a more equitable distribution of income, fostering a sense of fairness and social cohesion within society. When workers are paid a fair wage, it reduces the disparities in wealth and ensures that the benefits of economic growth are shared more equally.

Additionally, increased earnings from minimum wage laws provide workers with greater financial stability and personal and professional growth opportunities. With higher wages, workers can invest in their education, acquire new skills, and improve their employability. This leads to upward mobility and a pathway out of low-wage jobs, allowing individuals to pursue fulfilling careers and achieve their aspirations.

Furthermore, minimum wage policies improve workers’ overall well-being by reducing stress and financial insecurity. Workers who are paid a fair wage experience less financial strain, leading to improved mental health and overall well-being. This, in turn, has a positive ripple effect on families and communities, as workers can better provide for their dependents and contribute to the local economy.

By ensuring that workers receive fair compensation for their labor, minimum wage laws contribute to creating a more just and prosperous society.

Stimulating Consumer Spending and Economic Growth

Minimum wage laws play a vital role in stimulating consumer spending and driving economic growth. By setting a higher wage floor, workers experience increased disposable income. This additional income allows them to have more purchasing power and spend on goods and services, thereby bolstering overall consumer demand. Moreover, higher minimum wages create an expanding market potential. Low-income workers, with increased wages, contribute to a larger consumer base. This encourages businesses to cater to this market segment, fostering business growth and diversification. Contrary to popular belief, studies indicate that modest increases in the minimum wage do not significantly impede job creation. In fact, in some cases, they can even lead to increased employment opportunities, further stimulating economic growth.

Balancing the Cost-Benefit Equation for Businesses

Minimum wage policies also contribute to balancing the cost-benefit equation for businesses. While there may be concerns regarding the potential impact of increased labor costs on businesses, minimum wage laws actually promote a competitive and sustainable business environment.

Firstly, minimum wage laws establish a level playing field for businesses by ensuring fair wages across industries. This prevents the exploitation of workers and promotes healthy competition based on productivity rather than the ability to pay lower wages. By setting a minimum standard, businesses are encouraged to focus on efficiency and innovation to maintain profitability rather than relying solely on cheap labor.

Additionally, offering a reasonable wage to employees through minimum wage policies improves job satisfaction and reduces turnover rates. When workers are paid a fair wage, they are more likely to be motivated and committed to their jobs, resulting in higher productivity and overall business performance. Moreover, businesses can benefit from lower recruitment, hiring, and training costs as employees are more likely to stay in their positions for longer periods.

Furthermore, minimum wage policies incentivize businesses to invest in their workforce, leading to increased productivity and innovation. When compensated adequately, employees are more likely to feel valued and motivated to contribute their best efforts. This fosters a positive work environment where employees are encouraged to think creatively, propose new ideas, and drive business growth.

Potential Challenges and Mitigation Strategies

While minimum wage increases are crucial for workers, they may present challenges for small businesses. These businesses may face difficulties in adapting to higher labor costs. However, policy measures such as tax incentives and support programs can help alleviate this burden and assist small businesses in adjusting to the new wage standards. Critics argue that higher minimum wages may trigger inflationary pressures. However, research suggests that the impact on overall inflation is modest, as increased consumer spending counteracts potential price increases. Considering varying living costs across different regions, minimum wage policies should be flexible and adjusted to reflect local economic conditions. This ensures a fair balance between worker compensation and regional affordability, mitigating regional disparities.

Conclusion

The minimum wage plays a vital role in promoting fairness, reducing poverty, and fostering economic stability. While it presents business challenges, the benefits outweigh the costs, leading to improved worker well-being, increased consumer spending, and a more equitable society. By carefully considering the potential challenges and implementing appropriate mitigation strategies, minimum wage policies can continue to uplift workers and contribute to a robust economy. As we strive for a society that values fairness and economic stability, minimum wage laws remain a crucial tool in achieving these goals.

Imagine if you were living off $15,000 per year. You would have a hard time to support your family and have little extra money to spend on enjoyments. You would most likely not be able to go to the grocery store and buy snacks simply because you like them. You would also not be able to go to a movie or go bowling with your friends for fun. These are just a couple of the enjoyments of living off more than just minimum wage. That is why the minimum wage in the United States should increase in the coming years. There are many reasons why, but the main reasons are to keep up with inflation, raise consumer spending, and to cut government programs.

One of the reasons to raise the minimum wage is to keep families inclined with inflation rates. The United States as a country has not kept up to date with the current inflation rate. The last time the federal government increased the minimum wage was in 2009. The rate was set at $7.25 per hour. This causes a monumental gap in the amount of income and the amount of outcome a family encounters. This decade span from 2009-2019 has had a lot of inflation, but we have not raised the minimum wage with the inflation rates since 2009. The minimum wage has only increased 22 times since it was first introduced (Doyle). Many of the States in the United States have their own minimum wage with most of them being above the federal minimum wage already, but if the states’ minimum wages can increase, so can the federal minimum wage. Once the federal minimum wage is increased, the states will most likely also raise theirs.

Another reason to raise the minimum wage is to maximize consumer spending. Right now, if you are a full-time worker who earns minimum wage, you will only receive $15,000 per year. If minimum wage would increase with inflation, the current rate would be $10.15 per hour. Full time workers earning a wage of $10.15 per hour would earn roughly $21,000 per year. This would be better than earning minimum wage but still not enough to spend money on needed items (‘Raise the U.S. Minimum Wage’). The U.S. economy does not allow a person who earns minimum wage to be able to spend as much money as they want on a product opposed to someone who earns more than minimum wage.

Another reason to raise minimum wage is it will cut government programs. When government programs are cut, it causes the government to use less taxpayer dollars. Workers who earn the minimum wage lean on government programs for financial assistance to survive. If the United States would increase minimum wage from $7.25 per hour to $15 per hour, it would increase over 40 million workers’ wages in the U.S. (Babic). Although the current minimum wage of $7.25 per hour is below the poverty line for a single parent with one child, earning $10 per hour is above the poverty line (‘Raise the U.S. Minimum Wage’). If the U.S. was to raise the minimum wage, it would narrow the gap between the rich and the poor. There would most likely not be a middle class anymore (Smith). According to the CBO (Congressional Budget Office), if we raised the minimum wage to $10.10 per hour, it would bring 900,000 people out of poverty. The poor would benefit magnificently from this (‘Pros and Cons of Raising Minimum Wage’).

Another pro of raising the minimum wage is that it will keep workers employed with the same company instead of looking for companies that pay better. This will reduce business turnover rates and it will cost less for hiring and training processes. The workers will most likely be happy with the company they are with because of the pay (‘Pros and Cons of Raising Minimum Wage’).

In every situation there is always tradeoffs. So, what are the tradeoffs of raising minimum wage? Well, the answer is simple. It could cause currency deficit in some major companies. Those companies are paying more for their workers, so they have less money to spend on technological advances. An estimated 1.3 million workers could lose their jobs. This layoff could affect areas already struggling with high poverty (‘Raise the U.S. Minimum Wage’). There are also tradeoffs on what would be hurt if the minimum wage were to be increased. The increase would hurt small businesses that have small profit margins. This increase would cause employee downsizing and increase cost of goods (Smith). People also speculate that by raising the minimum wage it will cause companies to pass that raise on customers by raising prices. Business may also stop hiring new workers and limit opportunities to new workers out of college. The same businesses might outsource to countries with lower minimum wage standards to produce more jobs. The Government would also have to update the Earned Income Tax Credit (EITC). The EITC is a tax credit for low-income workers. If the minimum wage is increased before the EITC, it would not help all poor families (‘Pros and Cons of Raising Minimum Wage’).

Therefore, the minimum wage in the United States should increase in years to come. There are many reasons as to why the minimum wage should increase but the main reasons are to keep up with inflation, to maximize consumer spending, and to limit the use of government programs. Right now, the inflation rates are higher than the minimum wage. This is causing a domino effect in minimum wage workers. When minimum wage is increased, it will cause workers to buy more consumer products leading to companies’ revenues to increase. This mass spending will bring in revenue across the country. Also, with a minimum wage increase, it will decrease the amount of government programs needed which will decrease tax revenue needed. To all situations there are also tradeoffs. Increasing the minimum wage would give Americans the tradeoff of losing some of their jobs. So, next time you are in a grocery store, imagine how bad it would be living off only $15,000 per year.

Works Cited

1. Babic, Mary, et al. “6 Simple Reasons We Should Raise the Minimum Wage Right Now”. The Politics of Poverty, 15 Feb. 2019, politicsofpoverty.oxfamamerica.org/2019/02/6-simple-reasons-we-should-raise-the-minimum-wage/.
2. Doyle, Alison. “Should the Minimum Wage Be Raised?” The Balance Careers, The Balance Careers, 15 July 2019, www.thebalancecareers.com/pros-and-cons-of-raising-the-minimum-wage-2062521.
3. “Pros and Cons of Raising Minimum Wage”. Toggl, toggl.com/pros-and-cons-of-raising-minimum-wage/.
4. “Raise the U.S. Minimum Wage”. Los Angeles Times, 18 July 2019. Sirsissuesresearcher, explore.proquest.com/sirsissuesresearcher/document/2285121088?accountid=44669. Accessed 4 Nov. 2019.
5. Smith, Lisa. “The Minimum Wage: Does It Matter?” Investopedia, Investopedia, 12 Aug. 2019, www.investopedia.com/articles/07/minimum_wage.asp.

Would you be able to envision yourself working 12-hours per day and just having enough cash to pay for lease and put nourishment on the table for your family? With working every one of those extended periods, you can scarcely stand to cover your utility tabs and from that point onward, you need more cash or time for extravagances like attire or get-away. You have no investment funds, in actuality, you are in tremendous obligation and you are living check to check. This is the narrative of a large number of American specialists, who are utilized on the lowest pay permitted by law. The stunning part about this story is that a huge number of Americans would be spared from this neediness life if the American government raises the lowest pay permitted by law. This would support the laborers, yet additionally, the economy since raising the minimum wage would place additional cash in the pocket of the lowest minimum wage laborers and additional spending would help reestablish shopper spending.

Very nearly 8 million Americans work all day and still fall underneath the destitution line. Some contend that raising the lowest pay permitted by law will just profit the laborers who may not require it. This contention is imperfect, as indicated by The Economic Policy Institute’s investigation, which shows that “most of the low wage workers live in low-wage households, and 84% of the workers in low-wage jobs are at least 20 years old” (LA Times, Stern and Camden). I additionally feel that raising the lowest pay permitted by law involves human pride in light of the fact that envision in the wake of a difficult day of work you check-in realizing that in spite of you buckling down extended periods, you can’t take care of your family, spread their needs and pay your living expense without government support. What sort of message does this send to an individual about the poise of their work and pride of assuming individual liability for your family? In my perspective, anybody that appears at work routinely and places in hard-working hours ought to be sufficiently paid to keep the person in question out of destitution.

Likewise, a few pundits additionally contend that raising the lowest pay permitted by law would expand joblessness immensely, in light of the fact that business will slice workers to keep the cost low. This has been refuted by an examination done by the Congressional Budget, which says “the potential employment and unemployment impacts of raising the federal minimum wage rate…are difficult to predict, but are likely to be small” (Congressional Digest, 12). Congressional Budget office additionally found that the increases in raising the lowest pay permitted by law should gauge the expenses. They found that raising the lowest pay permitted by law to $10.10 would rise cut the individuals living in neediness by 900,000 and would raise normal pay for families to multiple times the destitution line. The business would likewise profit by expanding the lowest pay permitted by law. As indicated by an examination done by the Institute of the Industrial Relations University of California, Berkeley, it found that yearly turnover among security screeners plunged from 95% to 19% when their time-based compensations were expanded from $6.45 to $10 every hour. In addition to the fact that turnover improved, 35% of the manager’s detailed enhancements in work execution and client assistance improved by 45% (Reich, Hall, Jacobs, 42). This isn’t only useful for business, yet additionally incredible for the economy. Raising the lowest pay permitted by law will decrease the joblessness rate because of representatives staying at their particular employment and not going on government joblessness benefits.

Moreover, the other explanation the lowest pay permitted by law ought to be raised is a direct result of the living pay. As per Pennsylvania State University, a living compensation is “the hourly rate that an individual must earn to support their family, if they are the single provider and are working full-time (2080 hours per year)”.

So, in conclusion, I am absolutely convinced that the minimum wage should be increased.

Minimum wage is the minimum hourly wage an employer is allowed to legally pay his or her workers a day. It was created as a direct result of the Fair Labor Standards Act in 1938 and provides a set minimum income. The current minimum wage in the USA is at $7.25 an hour. Although different states have varying minimum wages, the debate over whether to raise or lower it remains a current issue. The minimum wage should be increased to $15 an hour in order to decrease our poverty rate in the US and to benefit our economy.

Many argue that increasing minimum wage will lead to more job layoffs by employers and a higher rate of unemployment. According to Sklar, Holly, “The Congressional Budget Office projected that a minimum wage increases from $7.25 to $10.10 would result in a loss of 500,000 jobs”. This means that many people would have to lose their jobs in order to increase the minimum wage. Although this statement has been claimed many times, studies have shown that if minimum wage is gradually increased at a constant rate, it will have almost no effect on unemployment and may actually provide more job opportunities.

Increasing the minimum wage would greatly improve the American economy. When a person’s income increases, they tend to spend higher amounts on items and products while making more money. As stated by David Cooper, “A $15 minimum wage by 2024 would generate $120 billion in higher wages for workers and would also benefit their communities. Because lower-paid workers spend much of their extra earnings, this injection of wages will help stimulate the economy and spur greater business activity and job growth”. This means that since workers would have more money than before, more could be spent on buying items and products instead of having to save it all. As claimed by Bill Gardner, “Increasing the minimum wage provides an immediate preventive benefit to a large number of highly stressed people”. As a result, it would create a happier and more productive society. In short, increasing the minimum wage would spur business activity and create a happier American society with a greater living standard.

An increase in minimum wage would also lead to a large decrease in America’s poverty rate. As people make more money, they are more likely to afford the basic necessities and have a decreased chance of becoming broke. As mentioned by Molloy Aimee, “The Government expenses for social programs aimed at the poor would potentially be reduced. This would result in slightly lower taxes for other Americans”. In other words, since the American taxpayer could pay less for these social programs, they could save more money and be able to pay more bills and taxes as a result. As stated by Elise Gould, “The Congressional Budget Office reports that the Harkin-Miller Bill to raise the minimum wage to $10.10 would cumulatively boost incomes of people below the federal poverty line by $5 billion”. This implies that increasing the minimum wage would directly affect the poverty rate positively by lifting a large number of workers from poverty as a direct result and improve their standard of living. All in all, increasing the minimum wage would allow the American taxpayer to save their money by allowing them to pay less for the social aid programs and lift people many people out of penury since they would be earning a greater income.

In conclusion, the minimum wage should and must be increased to $15 an hour. It would also greatly improve our economy by supporting business growth and providing workers with more money. Therefore, allowing them to spend more on items and products. It would also directly lift many American citizens right out of poverty and decrease taxes for social aid programs for the people living in destitution. We must stand and fight together to increase the minimum wage if we want to see a better U.S. economy and the lower poverty rates in America.

Work Cited

1. Gardner, Bill. ‘How to Improve Mental Health in America: Raise the Minimum Wage’. Gale Opposing Viewpoints Online Collection, Gale, 2019. Gale In Context: Opposing Viewpoints, https://link.gale.com. Accessed 11 Nov. 2019. Originally published as ‘How to Improve Mental Health in America: Raise the Minimum Wage’, New Republic, 4 May 2016.
2. Gould, Elise. ‘Increasing the Minimum Wage Would Help Reduce Poverty’. Poverty in America, edited by Tamara Thompson, Greenhaven Press, 2015. At Issue. Gale In Context: Opposing Viewpoints, https://link.gale.com. Accessed 5 Nov. 2019. Originally published as ‘Increasing Wages is an Effective Poverty Reduction Tool’, TalkPoverty.org, 18 June 2014.
3. Molloy, Aimee. ‘Low Wages and Limited Employment Opportunities Cause Homelessness’. The Homeless, edited by Jennifer A. Hurley, Greenhaven Press, 2002. Opposing Viewpoints. Gale In Context: Opposing Viewpoints, https://link.gale.com. Accessed 11 Nov. 2019.
4. Sklar, Holly. ‘Raising the Minimum Wage Will Reduce Poverty’. Poverty, edited by Roman Espejo, Greenhaven Press, 2012. Opposing Viewpoints. Gale In Context: Opposing Viewpoints, https://link.gale.com Accessed 11 Nov. 2019. Originally published as ‘Raise the Minimum Wage to $10 in 2010’, LetJusticeRoll.org, 22 July 2009.

“No man can be a good citizen unless he has a wage more than sufficient to cover his basic cost of living” (Roosevelt, 1910). This quote as used in a speech given by Theodore Roosevelt, when giving a speech about what he called ‘new nationalism’. In this speech he spoke about setting a minimum wage for employers that they must pay to their workers Since 2009 the minimum wage has been $7.25 an hour or about $823 after taxes. In 2016 president Barack Obama addressed the nation about raising the minimum wage to 10.10 an hour, after some time many looked at a good goal to be $15 an hour. While many argue that this is a bad idea, there are many reasons such as the loss of jobs, reducing incentive for education, and rising prices for consumer goods. These points can be disputed with a look at how the working class is currently being affected.

Firstly, it will make employers less likely to hire and lose about 500,000 jobs because of the higher rate of pay employers will be less likely to hire people they will have to pay more. An estimated 82 million people work for hourly wage, which comes to 59% of all workers in the U.S. From those people 4.9% have 2 or more jobs (Forbes, 2018). When doing the calculations that’s still a little more than 4 million workers. If the minimum wage were raised a good amount of those workers would no longer need 2 or more jobs and that would open more jobs for those who are unemployed.

Think about if there were a 22-year-old who works 2 minimum wage jobs, getting paid 7.25 an hour, working about 60 hours a week. At the end of the month after taxes the paychecks come to about $1,375 a month, after taxes, coming to about 16,500 a year. This still puts that 22-year-old well under the nation’s poverty line of $25,750 a year. This 22-year-old represent many of the workers in our country. If we raise the minimum wage to $15 an hour then many people will be getting about $1,860 a month for 40 hours a week. At 22,320 a year many of those people will be able to successfully live off one job opening many more jobs.

Secondly, it will reduce the amount of young people who will want to seek a higher education. Many argue that if the nation increasing minimum wage would make many people no longer want to seek higher education because they will be fine where they are and see no reason to seek further improvement. When it comes down to it 83% of Americans say they cannot afford college. Only about 16% of low-income families, or families who earn less than $39,500 a year, can afford to send their children to college. This is because many of those students cannot pay the tuition rates that often exceed their own yearly earnings, nor want to end up in debt from student loans. Raising minimum wage would allow more people to afford the costs of seeking higher education and moving to higher paying jobs. In the end raising minimum wage would also allow more people to have lower student loan debts and give more workers a reason to go to college including the growing number of younger people who are becoming independent and must pay for everything themselves.

Thirdly, increasing minimum wage would cause many employers to raise prices to cover the cots needed to pay employees. Many worry that if we raise minimum wage, it will make prices go up because the employers are needing to pay more to keep up with the minimum wage rate. the simple fact is costs of consumer goods are going to continue to rise anyway. In 2010 the cost of a burger at McDonald’s was about $0.89 in 2018 the cost of that same burger is now 1.09 and the sizes has gone down. Keep in mind that the minimum federal minimum wage has not risen, many states and cities have risen it, but in the end many workers still only receive this $7.25 an hour. Inflation has always been an issue and while increasing minimum wage may cause the prices to rise, they are rising anyway.

Think about it like this if a single mother has 4 children and works for minimum wage at 2 jobs for 70 hours a week. She will end up with about $1,660 a month. Even if she found a place to rent for $1,400 a month, being right under national average. With utilities being about $100 a month. She would only have about with $260 for all other expenses for herself and 4 children. Back in 2009 when the average cost of rent was $886 a month this made much more sense, yet even with no increase of minimum wage prices have continued to rise.

In conclusion, the federal minimum wage will cause change, but most of the change will be needed. It will allow workers to better support themselves, which was the idea first presented by Roosevelt when the nation first created minimum wage.

Works Cited

1. BECKHUSEN, Julia. “About 13M U.S. Workers Have More Than One Job”. The United States Census Bureau, 16 July 2019, www.census.gov/library/stories/2019/06/about-thirteen-million-united-states-workers-have-more-than-one-job.html.
2. Jitchotvisut, Janaki. “Here’s What a Fast-Food Burger Cost the Year You Were Born”. Insider, 28 Sept. 2018, www.insider.com/fast-food-burgers-cost-every-year-2018-9#in-2013-your-burger-cost-an-average-of-220-24.
3. Musto, Pete. “Low-Income Students See Low Graduation Rates”. Voice of America, 2017, www.voanews.com/student-union/low-income-students-see-low-graduation-rates.
4. “Pros & Cons – ProCon.org”. Minimum Wage, 2019, minimum-wage.procon.org/.
5. Slack, Megan. “From the Archives: President Teddy Roosevelt’s New Nationalism Speech”. National Archives and Records Administration, National Archives and Records Administration, 2011, obamawhitehouse.archives.gov/blog/2011/12/06/archives-president-teddy-roosevelts-new-nationalism-speech.
6. Stoll, Ira. “9 Reasons Why Raising the Minimum Wage Is a Terrible Idea”. Reason.com, Reason, 3 Mar. 2014, reason.com/2014/03/03/9-reasons-why-raising-the-minimum-wage-i/.