Raise Minimum Wage Research Paper

Raise Minimum Wage to Address Social Inequality
The 2008 Financial Crisis was a long-lasting nightmare for the general public. The Great Recession, as International Monetary Fund concluded, is the worst since World War II (IMF), and has negatively impacted almost everyone around the world. During the years of recession from 2007 to 2009, real world GDP has declined. As a result, international trade has dropped sharply, unemployment rate has raised, and commodity prices have slumped. Moreover, the income gap has been widen year by year. According to the 2015 Stanford Poverty and Inequality Report, poverty rates in the United States range from 24.3% in Mississippi to 8.8% in New Hampshire in the year of 2015. More surprisingly, since 2009, “95%

Smith would suggest that today’s inequality gap is unhealthy to both people and society as a whole, and raising minimum wage is a solution to address the current social inequality issue.
Labors must earn wages that will sustain their and their families’ basic life. However, in the process of determining wages, capitalists are usually the decision-makers. On one side, they tend to make labors’ wages as low as possible to generate more profits, and sometimes even lower than labors actually deserve. On the other hand, labors seldom have the bargaining power to negotiate wages with their employers. Rather, their efforts to raise their wages could be fairly hard (Smith 76). Therefore, the balance on labors’ wage-setting power is heavily on employers’ side. The bottom line is that employers should not “reduce wages below a certain rate, namely, subsistence for a man and something over for a family” (Smith 77). Otherwise the wage would not be sufficient to maintain sustainability in the society. In today’s world, the minimum wage for a full-time worker in the United States is $14,500

It is not created by either capitalist, landowners, or labor, but the structure of market. In his book the Wealth of Nations, he states that capitalist are those who make the decision of what to be brought to the market, while land owners decide whether to rent the land or not, while labors do not have decision-making power at all. Decision of overall production in the economy is in the hand of capitalists (Smith Chapter 1). Everyone acts based on his self-interest and the invisible hand ensures everyone acts under the structure of the market: “…he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention” (Smith Book IV, Chapter II). Without capitalists, the economy would not be moving. If capitalists lose, labors would also