Essay On Federal Minimum Wage

The U.S. federal minimum wage was first established during the Great Depression, and it has risen from 25 cents to $7.25 per hour since it was first instituted in 1938 as part of the Fair Labor Standards Act (Wihbey). Currently, twenty-nine states and Washington D.C. have minimum wages above the federal minimum wage (DeSilver). The federal minimum wage is the lowest wage permitted by law. Those who support the increase of the federal minimum wage argue that the federal minimum wage has not kept up with inflation, promotes economic growth, and decreases poverty. Those who oppose the increase of the federal minimum wage argue that it would increase inflation, cause an economic decline, and increases poverty. Proponents of increasing federal

While a minimum wage hike would benefit millions of workers with higher earnings, it would also hurt millions of others who would lose earnings because they cannot attain or retain a job (Holtz-Eakin and Gitis). Higher federal minimum wage increases the cost to employers of producing good and services. Employers consequently produce fewer goods and services, so they hire fewer workers. A federal minimum wage increase raises the cost of low-wage workers relative to other inputs that employers use to produce goods and services, such as machines, technology, and more productive higher-wage workers (Congressional Budget Office). Estimates show that raising the federal minimum wage to $12 per hour by 2020 would affect 38.3 million low-wage workers and that raising the federal minimum wage would cost 3.8 million low-wage jobs (Holtz-Eakin and Gitis). Raising the federal minimum wage to $10.10 would cause a reduction of about 500,000 workers across the labor market, as businesses shed jobs. Raising the federal minimum wage to $9.00 would cause the labor force to see a reduction of 100,000 jobs