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The Minimum Wage Debate

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The idea of minimum wage, and all its facets, has been controversial since its inception. Franklin Delano Roosevelt instated the Fair Labor Standards Act of 1938 as part of the New Deal, which established minimum wage; this bill came during a time of tremendous need: the Great Depression (“Fair”). During this time, businesses were grossly underpaying and overworking their employees in order to make a larger profit margin, in the long run this stifled the economy and only made things worse. Minimum wage allowed low class families to contribute more to the economy, perhaps helping the country out its economic downturn (Elliot). Twenty-two times the minimum wage has risen in order to compensate for inflation and other factors (“Minimum”). Recently …show more content…

Economists suspect higher wages will make the idea of dropping out of high school more attractive to young adults who are eager to make some quick cash (Coats). Another phenomenon is more racism in the job market. As employers have less money to spend on employees some of the more racist proprietors may be biased towards “their own people” (Coats). Finally, there is the most dangerous of the possible results, automation. Companies, especially manufacturers, will turn toward automated replacements (Karsten, and West). These replacements will cost more overhead, but since they do not need to be paid, company revenue will increase. This is the worst result of a wage increase, as people will lose far more jobs than …show more content…

According to Grand Valley State University, “The corporate income tax rate is a graduated tax topping out at 35% for taxable income above $18.3 million. That official U.S. corporate income tax rate is the world’s highest. For example, rates in China and Brazil are 25%, Russia is 20%, and India is 33.9%.” Companies often argue that if they do not have to pay as many taxes they can expand, hire more workers, and possibly increase wages. As stated by The Tax Foundation “A reduction in the corporate income tax rate to 25 percent would increase the size of GDP by 2.3 percent at the end of the adjustment period.” Higher corporate tax rates have caused some corporations to move their headquarters out of the United States, or to hold their money in offshore accounts (Hoogstra, Dimkoff, and Sundaram). The only downside with this compromise alone is it does not require companies to increase the wages of their

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The article, “Republicans Take New Tack on Taxing Companies’ Overseas Profits”, written by Richard Rubin and posted on Wall Street Journal on Aug 21, 2016 talks about the GOP candidates, Donald Trump may adopt the House plan to impose taxes on companies. Currently, the U.S. attempts to tax the companies on income they earn globally, but it doesn’t work really well in practice. The companies don’t need to pay taxes on the profit they earned overseas until they bring their profits back to the U.S. later. Therefore, there are rooms for companies to accomplish tax avoidance by keeping the profits in low-tax countries and borrow the money if they need cash.

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We should consider this treason. The tax laws must change. Any company sheltering overseas should be fined heavier than if they simply paid their taxes! Like him or not Obama proposed a tax cut for the businesses that would

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It proposes an interesting suggestion to increase the income for the middle class by introducing corporate tax rates. The article also details the fact that middle class workers have not seen much of a pay raise in the past few years, despite the fact that the economy is at least growing after dealing with such an awful recession. I agree with the facts and suggestions provided in this article. Corporate tax rates can be beneficial to the economy and to middle class workers because it would stimulate economic growth greatly and acts as a middle class tax cut, which can cause the United States economy to increase its GDP

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Companies paying taxes will make it so that more of that money can go to public projects such as funding schools or other government buildings. US right now pays around 2 trillion dollars in imports per year, with “over $1 trillion of which were ingredients for U.S. production—such as chemicals, minerals and machine parts” (Ikenson). Two disadvantages are that this will lead to less companies starting in the US and starting in a different country, and also it would hurt companies that are already doing this by making them pay more. If a company wanted to start in the US and transfer into a different country, they wouldn’t be getting the same benefits if this passed and they might hesitate to start their business in the US. Also this would make it so that if a company was struggling this loophole closing would cause them to maybe go out of business because of the increased

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If the company boosts the wages, the employers may be satisfied and feel more hopeful for their future. They may be able to move into the better place to live and afford better education for their children while they go out for work. However, the company may not be able to make the profits as usual so that it will cause many workers to be fired and unemployment rate to increase. High unemployment rate would significantly hurt the economy that would eventually cause the decline in GDP. Thus, the stakeholders can be the entire economy, not only 900,000 McDonalds’ workers.

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Now that the positive effects have been discussed there is still an entirely different set of outcomes that have to be looked at and considered. How could this potentially hurt the economy? What types of effects will this have on small businesses and their employees? What do these changes look like for individual families making minimum wage and individual middle class families? It is clear that there is a universal goal to better America, reduce poverty, and maximize social equality.

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Here’s the deal, the government is debating whether federal income tax rates in American should be raised or not. Raising federal income tax rates in America generates resources rapidly, offsets cost of lower families, and creates a savings income. Raising tax reduction on the American people will contribute towards

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Your employers’ have costs to run their factories and home productions and those costs will increase and therefore they may not be able to pay as many people that are demanding minimum wage, thus leaving many people without jobs!

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Therefore a lot of the unskilled workers will struggle to find jobs in this market and will go from low waged workers to unemployed which will hurt them even more. In this case, overall it would be a lose-lose situation for the unskilled workers in poverty because although there will be a raise in the total money they can earn, it will be a whole lot harder to find a job for them due to their lack of skill, and maybe a more skilled middle class worker coming in their spot. For example, if the minimum wage goes up a person looking for someone to hire for their store will pick the person who can do the job better even if it is a little bit more money because the gap of minimum wage would not be that high so therefore the unskilled workers, who are usually already in poverty because they were not taught any skills when they were young because they grew up in

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This upward pressure may be positive for workers initially, but wages have a direct impact on the profitability and competiveness of business, especially in the global economy. Batalova and Lowell (2007), stated to meet the demands of the global economy internationally oriented business depend on a workforce that is highly skilled. In the face of a shrinking workforce, business turn to immigration to satisfy their demand for these highly skilled workers. This places additional demand on these highly skilled workers from less economically developed

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Although the increased pay raise is great it may come at a price to the employer. “The higher total compensation that union workers receive — $11.14 more per hour in September 2011, according to the federal labor statistics — is a cost to the company” (Douglas). This cost may lower a companies’ profit, but a union environment can offer an increase in productivity in workers. “According to the U.S. Department of Labor a 1997 report indicated that productivity in unionized workplaces was 10 percent higher than in comparable nonunion environments” (Joseph). The productivity of union workers can increase the business’s production rate and make up the cost the employer is losing by paying their employees higher wages.

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The minimum wage was first established in the United States as an institution in 1938 as part of the Fair Labor Standards Act. It was a $0.25 an hour wage, which would equal approximately $4.22 in today’s dollars (Cipriano). The FLSA also introduced a 44-hour per week maximum limit, guaranteed time-and-a-half for overtime labor, and prohibited most child labor (29 USC Chapter 8). Because of its unprecedented protections of the working class, the Fair Labor Standards Act was described by President Roosevelt as one of the most important pieces of New Deal legislation (Samuel 32). Roosevelt was a proponent of the legislation because instituting fairer labor laws such as, a minimum wage, were very much in line with his well-known progressive political philosophies.

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Economics 2010: Introduction to Microeconomics October 22nd, 2015 Bonus Assignment: Relating a News Article to a Class Topic Jordan Loder 201213535 Minimum Wage and Living Wage: Equivalent or Not? The recent election and the raise of minimum wage in several provinces across has sparked a lot of discussion on the topic of minimum wage, a topic covered in our course in chapter 6. More specifically, the classic question of “is minimum wage a liveable wage?” has been addressed several times in news media. For example, this was addressed in a recent news article by the Globe & Mail in a piece called Minimum wage increases reignite livable income debate by Richard Blackwell and Tavia Grant.

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This decrease in wages can be attributed to the fact that the supply of immigrants in lower paying jobs increases. Problems also arise from the large number of illegal immigrants that enter the country. The Heritage Foundation addresses this issue in their article about the problems of immigration. They explain that “when three out of every 100 people in America are undocumented, there is a profound security problem. Even though they pose no direct security threat, the presence of millions of undocumented migrants distorts the law, distracts resources, and effectively creates a cover for terrorists and criminals” (Johnson and Kane).

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Many people will try to state the fact that employers will simply pay an extremely low rate, but this is simply not the case. The reason we are able to infer this is due to the principle of supply and demand. With such large economic growth, there will immediately be a demand for labor. Whenever you have a high demand for an item, you will see an increase in price and a decrease in abundance. As the competition for labor increases, the laborers will end up with better wages then they had to begin.

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