The Federal minimum wage was first introduced to the United States in 1938 under President Roosevelt to try to curb the effects of the Great Depression. Since then the minimum wage debate has been highly politicalized two sided debate that has a huge implications on America businesses, the labor force and the economy as a whole. Right now the base line pay, federally enforced since 2009 in the U.S.A, is 7.25 an hour. The argument of the minimum value on a labor unit is argued on both moral and economical viewpoints, debating the net good and consequences of raising this rate. One of the loudest arguments in this debate is what would a pay increase due to the overall labor force. One of the main argument against raising the wages of minimum wage employees is that it would mean job cuts due to employers having less marginal capital to pay the same workforce. This is backed up by a survey conducted by the national budget office. The survey states that of 1,213 Business and human resources …show more content…
This argument focuses on that job availability follows a supply and demand curve. For example if lower level employees; who typically spend a higher percentage of their earnings, have more disposable interest; more money will flow throughout the economy creating more demand and more jobs. Contributing to this point, Economists from the Federal Reserve Bank of Chicago predicted that a $1.75 rise in the federal minimum wage would increase household spending by $48 billion the following year, boosting GDP and leading to job growth. To back up this data with real world analysis, through a study done in 1994 when New Jersey raised their minimum wage; when compared to neighboring state Pennsylvania, there was no indication of job lost in food preparation market that makes up 50% of minimum wage