Minimum Wage and the Issues to Consider Within the United States labor system, the national minimum wage was introduced into law in 1938 during the great depression (History of the United States minimum wage, 2016). The Fair Labor Standards Act (FLSA) law was introduced so that there would be regulation to protect American workers from being exploited and treated unfairly within their working conditions. The purpose of having a federal minimum wage in place is to ensure that the standard cost of living for the necessary essentials can be maintained. To account for inflation, the FLSA is revised every few years to account for the cost of inflation and has also been modified so that individual states can set their rates for minimum wage. From …show more content…
The issue is that even though minimum wages can be set, it does not guarantee employment which can affect the very same people that the FLSA is regulating to protect. Since Employers have the decision to hire a certain amount of people, they must take in the consideration if the cost of the product to produce is less than what the employee’s minimum wage is. In these cases, a reduction in the labor force could be imposed and/or a decrease in labor hours to account for the production cost and how many units can be made while making a profit or to simply break even. In worse cases, employees may be laid off or the company may be forced to shut down. However, according to the US Department of labor, States that “ A person working full-time at the federal minimum wage of $7.25 per hour earns $15,080 in a year, which is 20% higher than the 2015 federal poverty level of $12,331 for a one-person household under 65 years of age” (Should the federal minimum wage be increased, 2016). They infer that increasing minimum wage would reduce poverty and could increase jobs which will help grow the economy. For other examples of pros and cons that are commonly argued for minimum wage refer to Table