Minimum Wage Laws Essay

Minimum wage laws are laws that are enacted by the government to establish a minimum hourly wage that employers are legally able to pay. These laws ensure that workers receive a minimum standard of living, and are in place to protect workers from exploitation. In other developed countries they have a minimum wage in place that adjusts with inflation. Minimum wage laws have the possibility to reduce poverty amongst low-skilled workers who are less likely to make a liveable wage. Research suggests that increasing the federal minimum wage would bring millions of low-wage workers out of poverty (Congressional Budget Office). Increasing the minimum wage of workers may also work to reduce economic inequality by ensuring that the lowest of earners

When this happens, businesses will no longer be willing to hire as many people as they were before since it will cost them much more. On the other side of things, this increase in wages leads to an excess supply of workers in the market, which economic theory suggests will lead to unemployment. Changes to minimum wage, however, have the ability to bring millions out of poverty. Currently, in the US economy, inflation has been growing rapidly which has made it harder for families to afford their basic necessities. According to research done by the Robert Wood Johnson Foundation,“...it has the potential to bring great financial relief to families who need it most” (Robert Wood Johnson Foundation). It can also be a boost to the economy since low-wage workers are more likely to put their money back into the economy. “A raise in the minimum wage puts money into the pockets of low-income consumers, who immediately spend it at local businesses” (Raise the Minimum Wage). Another possible benefit of increasing the minimum wage is an increase in worker productivity. Workers are more likely to keep working at a company if they make good wages which is good for businesses. Employees staying within a company for a long period of time makes them valuable assets to the company since they are likely to be more efficient. However, changes to the minimum wage may also have negative effects on the labor market and economy. When there is an increase in the minimum wage, the cost of living goes up which makes it harder for the lowest earners to pay for their basic necessities. When companies have to hire workers for a higher price, they are likely to pass at least some of the costs onto consumers since the marginal cost will be higher. It may also lead to unemployment in the