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The Pros And Cons Of Raising Minimum Wage

1089 Words5 Pages

Robert Xu
Mrs. Smith
Economics
16 July 2015

The Great Recession and Minimum Wage In 2008, disaster struck. The stock market tumbled, plunging America into a recession which many feared would bring our economy to its knees. The government frantically attempted to stop the bleeding by pumping money into the economy and bailing out the big corporations. Operating on the principles of Keynesian Economics and Monetarism, government officials then reasoned that cutting taxes and lowering interest rates would encourage consumers to begin buying and borrowing again, which would jumpstart the economy. However, a promising alternative existed that officials did not pursue: raising the minimum wage, which would inject money into the economy and raise …show more content…

However, a multitude of studies contradict their assertion. One such comprehensive study by the Center for Economic and Policy Research not only concludes that minimum wage changes do not lead to employment changes, but also offers an explanation: “The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms' overall costs...employers have many other channels of adjustment. Employers can reduce hours, non-wage benefits, or training” (Schmitt 22). The study notes that the cost of a minimum wage raise is often balanced with reduced labor turnovers, so that little to no discernible effect is present on employment. Watchdog sites such as Politifact also agree, citing that modern research tends to show that raising the minimum wage has little impact on employment. Another common argument is that many minimum wage workers are teens, so raising the wage won’t necessarily help the working class. However, data gathered shows the average age of a minimum wage worker is 35 and that over 80% of minimum wage workers are over 20. On average, these workers must provide half the income for their family, a situation that they struggle with, considering that the minimum wage is rarely enough to keep a family out of poverty. Several studies conducted by the University of Cambridge, IRL Review, and other institutes show that as minimum wage rises, poverty decreases. The acquired data strongly suggests that there are workers earning minimum wage, yet still in poverty. If the minimum wage isn’t enough to make a living, workers obviously won’t be active consumers. Consequently, raising the minimum wage will naturally boost consumption by raising the standard of

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A recent study involving three hundred fifty thousand small businesses and the IRS proved that by raising the minimum wage, proved that by raising the minimum wage in cities, actually created jobs (Meyerson A.19). The survey showed that the cities with a higher minimum wage had more jobs come to the area, aiding in job growth (Meyerson A.19). Another argument that leans toward the raising of the minimum wage involves people in poverty. Studies have shown that by raising the minimum wage, more people can live above the poverty line (Meyerson A.19). By raising the minimum over nine hundred thousand people would be

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The federal minimum wage has been increased twenty-two times since President Franklin Delano Roosevelt signed the bill into law in 1938. President Roosevelt was an avid supporter of a federal minimum wage as he says that “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” Raising the federal minimum wage has many pros and cons, but is a necessity to thrive in society. People have argued that raising the minimum wage will cause inflation, but it will create various economical benefits, income benefits, production benefits, and improve racial justice.

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The American Action Forum believes that raising the minimum wage can do more harm than good and hurt the people it’s supposed to help. Job loss in the millions would happen if the wage was raised from $7.25 to $15. People in poverty before the increase would have trouble finding jobs because companies would have to have less positions to counter the wage raise. Komlos, John. " Column: Why Raising the Minimum Wage Is Good Economics."

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In the last few years, the topic of the minimum wage has been a highly debatable subject. There are numerous perspectives regarding raising the minimum wage. “The concept of the minimum wage can be defined as the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period,” (ILO,2014). A few of the common disagreements are how unemployment rates will be affected, who will be most affected by a change, and what alternatives are available. In the article “Why the next president should raise the minimum wage” Roger Lowenstein argues that it is his belief that raising the minimum wage will benefit society by reducing unemployment rates and thus reducing the amount of the population living in poverty.

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According to the Economic Policy Institute, raising the minimum wage to $12 an hour would boost the incomes of over 35 million Americans which would allow people to not have to live in poverty or rely on government assistance to make ends meet. More than 600 economists, including 7 nobel prize winners wrote a letter to President Obama endorsing an increase in the federal minimum wage, stating that evidence shows that an increase in minimum wage shows no negative effect on job growth, and in fact increases consumer spending and therefore would increase demand and job growth, which disputes the idea that an increase in the minimum wage will lead to higher unemployment and helps to further the argument that a minimum wage increase is not only necessary, but actually healthy for the economy. Furthermore, according to NPR, the 13 states who raised their state mandated minimum wage at the beginning of 2014 all added jobs to their economy at a faster rate than states that did not raise their state mandated minimum wage. This fact disputes the claim made by the Congressional Budget Office in its report in 2014 that stated that raising the minimum wage, even to $10.10 would cost the U.S. economy arond 500,000 jobs. Economic research conducted by the United States Department of Labor and the Center for Economic Policy Research shows that increases in minimum wage sharply reduces employee turnover

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Does minimum wage really help our societies? In an episode of “30 Days”, the article “Serving in Florida”, and another article “Economists argue about minimum wages” these authors take different positions on their opinions of minimum wage. The argument of minimum wage has been a big conflict for years. Government leaders, celebrities, rich, poor, and anyone in between has stated their opinion on whether minimum wage is a good thing or a bad thing. These authors are just a few to begin with.

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It was talked about how raising the minimum wage can affect businesses and even have jobs loss. When looking back the minimum wage has not been the same because the government “has changed it 22 times”(Labor, Department). This would not be the first time minimum wage was changed. Inflation would be what people worry about the increase in minimum wage, but an article mentioned “Congress sets the minimum wage, but it doesn't keep pace with inflation”(Labor, Department). Our prices could be high right now for the everyday worker and still earn the same amount of money and trying to keep up with the rising prices.

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Although a minority of workers will experience pay raise or may even be brought out of poverty, the majority of workers would face unemployment and, if not that, would only be allowed to work for a short period of time in order for their bosses to compensate for the raise in mandatory pay. Also, some economists dispute that raising the minimum wage will have little to no effect on poverty rates altogether. For these reasons, I do not believe the minimum wage should be

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At first glance, raising the current minimum wage seems like an outstanding idea and one may think, “Hey, it’s not hurting anyone.” In reality these good intentions will result in many unintended consequences such as causing businesses to hire fewer workers, it has no effect on reducing poverty and will decrease employment. A common misconception referring to minimum wage in the United States is that the current minimum wage is not enough to make a living and support a family. The majority of minimum wage workers are between the ages of 16 and 24 years old.

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The opposing arguments about raising minimum wage is the increase will force a strain on companies and force them to slash jobs. Around two thirds of low wage workers work for large businesses like McDonalds, WalMart, Burger-King, and ninety percent of businesses like these are profitable the increase of minimum wage would not have a huge impact on these companies where they would lose that great of

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Considering its role in setting remuneration standards, the minimum wage affects other factors of employment such as the availability of jobs and the citizens' purchasing ability. Therefore, it causes a decrease in employment to some extent and enhances the household, individual, and family income. The primary role of the federal minimum wage is to ensure that workers are not underpaid and that they are not exploited by their employees (Manzo, & Bruno, 2014). Actually, the determination of the

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Increasing the minimum wage does have its pros, but it also has it’s cons. One of those cons is by increasing the federal minimum wage, highschool dropout rates will increase. Since teenagers take up most of the minimum wage jobs, increasing the pay will encourage them to drop out. A study and survey has shown that about 43.7% of minimum wage workers are high school and/or college dropouts. Also, if the minimum wage was raised to $15 an hour, it will make teenagers think that they can live off of that job and don't see the need to finish their education.

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According to the business.com editorial staff there are pros and cons of raising the minimum wage. When looking at job growth and if it is going to grow “there is little evidence that a higher minimum wage will create more unemployment as states with a minimum wage higher that the Federal minimum have experienced faster rates of job growth than other states.” Salt Lake City, Utah’s CEO of Blast Moba Brett Bastian doesn’t agree with this evaluation. “As a business owner, my biggest expense is labor, its doubling it making it a huge burden to businesses and the cost getting pasted on to consumers. My business partner said he would have to increase his prices by 40 percent if it happens.”

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Also, it might take time for employers of many low-skill workers to learn how to economize on their labor costs. They will over time since the incentives to do so are much larger and that would be bad news for the very low skill workers the higher minimum wage is designed to help. Whenever increasing the minimum wage is discussed, there is always a concern that doing so might hurt job growth or imperil businesses that employ low-wage workers business they have to pay their works more and that could be hard for some business or companies. The effect of increasing the minimum wage on employment is probably the most studied topic in labor economics because the government has to worry about inflation and prices going up and also the consensus of the literature is that moderate increases in the minimum wage have little to no effect on employment.

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Though there are many Americans who believe an upsurge in the minimum wage is a constructive step for the federal government to initialize, the most recent wage push could result in some very harmful effects. President Obama stated in September 2014, “An increase in the minimum wage will boost income for the poorest workers without the danger of creating more unemployment.” Is this statement about an increase in minimum wage really as accurate as people believe? To break down the argument about whether minimum wage is a good or bad thing, let’s take a look at the two very distinct sides of the debate. The push for a minimum wage raise is a major issue in the world of economics and politics.

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