In 1938, Franklin Delano Roosevelt first introduced the federal minimum wage. He set the first wage at twenty-five cents per hour, which works out to about four dollars in today’s money. Since 1938, the minimum wage has been increased twenty-two times and in 2009, the federal minimum wage was raised to seven dollars and twenty-five cents per hour, which is where it sit to this day; however, some workers feel they are not receiving a wage high enough to sustain and provide for a family. They are demanding a higher minimum wage; a wage at fifteen dollars per hour. Even though there would be benefits to families working at a minimum wage level, the costs of raising federal minimum wage that high would outweigh the benefits.
An increase in the minimum wage to fifteen dollars per hour will hurt America’s lower skilled workers. Raising the price floor of labor will make jobs much harder to find. David Neumark, an economics professor at the University of California, Irvine, estimated that “raising the federal minimum wage to $15 would reduce employment among the least skilled by 5 percent to 10 percent”
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According to Matt Hawk, Ph.D. in economics, “some companies may have large enough profit margins to not raise prices, most businesses will not be able to afford increasing the minimum wage without raising the prices of products or services. Costs of goods will most surely have to rise in order to pay employees or alternatively companies who can not raise their prices will have to resort to layoffs or go out of business altogether. If prices rise in order to help pay for increased wages, we will see inflation.” Hawk also stated, “If the minimum wage increases from $7.25 to $15.00, the macro economy may take a big hit. There would be a significant supply shock to the left, which may cause prices to rise and GDP to fall”