Minimum wage laws affect a wide range of employees to different companies and industries but on a wider spectrum it also affects the market economy. Being such a polorized and controversial topic, people have different ideologies on minimum wage laws. In the 1990s Katz and Kreuger argued that minimum wage increases may have little to no effect on employment. Later in the 19th century John Bates Clark argued that his ethical marginal productivity theory was an attempt to show; that people should only be compensated for the labor they complete. The ways this affects the market economy say otherwise though.
Background (information and what you learned about your topic) The market economy is a federal system in which production and prices are
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During the depths of the Great Depression, president Roosevelt persuaded congress to pass the National Industrial Recovery Act which allowed the National Recovery Administration to establish national minimum wages. Some will argue that increasing minimum wage and deeper refining the laws will reduce poverty and crime, and increase school attendance as well as a healthier population. On the other hand it is argued that raising the minimum wage will cause inflation making companies less competitive resulting in a loss of …show more content…
For example, employees of the Central Pacific railways were seen as victims under the abuse of these laws. In order to complete the western section of the "First transcontinental railroad" in North America, the Central Pacific Railroad was a railroad company that was formed by the U.S. Congress in 1862. Its goal was to build a railroad from Sacramento, California, eastward. Within two years, about 90% of the Central Pacific's staff was Chinese. The remaining employees were largely Irish and of European-American heritage. Between 10,000 and 15,000 Chinese were employed on the railroad at its height, up to 20,000 Chinese worked there altogether.(Gandhi, Lakshmi 2) Initially started by Crocker who believed that Chinese workers would be the solution to the company's labor issues. Numerous employees of Crocker who had previously worked for the Central Pacific were abandoning their positions with the railroad to participate in the gold and silver rush. Strikes and labor unrest frequently broke out in the worker camps, which gave owners and construction managers further trouble. When the war started in 1861, railroads lost their markets in the South, but gained an even bigger market, the military. Railroads paid a minimum wage of $0.40 per hour. It varied between that and $0.65 per hour during World War II. Even so, it fell short of the $1.26 and $1.38 per hour average