The Pros And Cons Of Raising Minimum Wage

Minimum Wage is the lowest wage an employer is legally allowed to pay its employee by law. It has been a fundamental part of our economic growth and has been first instated by congress in 1938 as part of the Fair Labor Standard Act. With about 14.8% of people in poverty, there has been much debate on whether it should be raised or not (Census). However with economic change and inflation, minimum wage has increased and also decreased in the past. Though raising it numerous times in the past, many economists still think it’s not enough to live on. The minimum wage was introduced on June 25, 1938 and was signed by President Roosevelt to combat poverty and prevent unfair wages. The starting minimum wage was about $.25 per hour, which is equivalent

Some business, in this case, would have to cut jobs in order to adjust to the wage changes, which could reduce employee benefits. Others business will even have to increase their price on goods. Many economists think that it will even intensify competition for jobs. For example, there would be more overly qualified individuals who would apply for a job that require little to no experience, which would push least qualify workers out of the job.

Most states already took the actions to raise the minimum wage with Washington having the highest at $9.32(Kurtz). That’s more than a 25% increase of the federal minimum wage. Washington has wanted to increase it to more than ten dollars an hour but due to inflation it has been halted it. There are more states that are considering minimum wage increase by ways of legislatures or through ballot initiatives. However, raising the minimum wage too fast would cause inflation, which President Obama suggests raising it to 10.10 an hour in a matter of a three year time period (Lee

Senator Patty Murray and Republican Bobby Scott have announced a plan on April 30, 2015 to start increasing the minimum wage to $12 by 2020. This would start in 2016, beginning with the wage at $8 and increasing it by $1 each year(Covert). Senator Murray voiced this concern and wants people to know that no one should be in poverty if they’re working full time jobs.

Senator Murray also states that minimum wage has fallen behind, as it’s been almost a decade since congress raised the federal minimum wage. The value of this has fallen to 21% and in which the costs of living, health care, energy and gas have increased significantly (Covert). This in turn has also put pressure on middle class workers. With that said, Senator Murray states that she can only imagine what these lower class workers face every day.

However, raising the minimum wage could cause employer to cut hours from employee, which will eventually destroy more jobs. These small businesses would be affected because they need to generate enough income to pay for the extra wage and which could cause the employer to pick up more hours. Many of the business seems to operate on a very tight profit margins and just a couple dollar increase on the minimum wage could put more stress on these business (Deutsch). Some of these business may be struggling to make enough income then there would be a lot of cutbacks in hours an employee