The Fight on Minimum Wage Minimum wage. The lowest amount of money regulated by the government in which businesses must pay their employees. Minimum wage is slowly on the rise, with dramatic proposals in the last few months. However the raise in minimum wage could cause great harm to the United States economy. The minimum wage should not be raised because it would increase the price for the consumer, it could harm the small businesses of America, and it could cause millions of minimum wage workers to be laid off. If the minimum wage were to increase, consumers could see a rise in prices in their products. A majority of minimum wage workers are in a high competitive market, where the companies make smaller profit. In order for companies to …show more content…
In order to make a profit off of a product a company must make more than they are spending. So when it comes to spending on wages companies cannot be paying them more than their income. If companies were forced to raise the minimum wage many of them would find themselves laying off workers, especially those of the lower skilled employees. As much as a 3% reduction of low skilled workers can be projected with an increase of 10% in the minimum wage (Negative Effects). An American Apparel store in Los Angeles had to lay off 500 workers because of the recent city increase to $15 an hour (Sherk). This number is shocking, and American Apparel responded saying, they cannot start pay at $15, instead wages should increase as the amount of sales increases. This makes since, for a company cannot spend money they are not receiving. After extensive research and studies, economists have concluded that for every 10% increase in minimum wage, the country could see a 7% decrease in unemployment (Sherk). This could cost the United States over 7 million jobs. The relationship between unemployment and minimum wage can best be seen in American Somoa. Here they are required to have a starting wage of $20. After two years of its implication unemployment rate went from 5% to nearly 36% (Sherk). This shows how minimum wage greatly affects employers, and employees alike, because it causes businesses …show more content…
It has been shown that when employers are required to pay their workers more it will force many to put off hiring, cut back the hours, and even lay off employees, just to keep labor costs down. A brewing company in North Carolina pays all of their 44 employees the minimum wage, but the owner estimates that with an increase in the minimum wage their company would have costs of up $40,000 (Quittner). Since costs would increase, small companies would be trying to find ways to compensate that pay. First they would have to cut back on the number of hours someone works, because they would not be able to keep paying the workers to be at work. It is necessary to balance their intake and outtake on money. In a study at New York University it is shown that the lower rated restaurants easily went out of business with the increase in minimum wage
In the article, “Minimum Wage Hikes Hurt Low-Income Workers,” Jame Sherk debates how an increase in the minimum wage would impact workers and corporations. Sherk builds his argument by first explaining the recent history of an increasing minimum wage and how much it has risen. Following, he argues why it would hurt businesses and low-income workers. Lastly, after illustrating the consequences, he offers statistical evidence to support his claim and to prove to the reader why the hike would only hurt both businesses and low-income workers. Sherk’s use of evidence and explanation offers a strong argument and a clear stance.
A vast majority of individuals started their life with a minimum wage job. It provided entry to the market in order to gain helpful skills as well as knowledge that facilitated them to move up the ladder. However, it consists of a small subsection of the labor force. According to Card and Krueger (2016), putting more money in the pockets of the poor did not help the poor however; it cost them their jobs. The higher minimum wage also had a negative impact on the minority employment mostly due to differences in level of skills and
Minimum wage would raise the wages of many workers and increment benefits what disadvantaged workers. An estimated 6.9 million workers would receive an incrementation in their hourly wage if the minimum rage were raised to $10.15 by 2015. Due to the spill over effect the 10.5 million workers earning up to a dollar above minimum wage would withal be liable to benefit from an incrementation. Women are the most astronomically immense group of beneficiaries from a minimum wage increase. Sixty percent of workers who would benefit from an incrementation are women.
A minimum wage increase from “$7.25 to $10.10 would result in a loss of 500,000 jobs”. ("The Effects of Minimum-Wage Increase on Employment and Family Income”) This claim is better because it shows how raising the minimum wage will decrease job growth instead of increasing it. But, the minimum wage should be increased because increasing will also increase economic activity and spur job growth, decrease poverty, and improvements in productivity and economic growth have outpaced increases in the minimum
raise the price of minimum wage? Will the economy prosper by providing lower skilled workmen with higher paying jobs? Many Americans are all for raising the wage whenever they think it is needed. However, raising the wage has many negative impacts and has created a weaker economy. Continuing to raise minimum wage has caused people to become complacent and give up on their dreams.
Introduction More numbers of state are joining to take action to raise the minimum wage to $15 per hour in a few years even though there is a high disputing controversial all over the nation. The federal has set the minimum wage level to $7.25 on Jan. 1, 2015. In less than a year the index number of the minimum wage is going up automatically with cost of living. And eventually it will be likely to increase year by year with automatic and expectation index.
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.
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.
Since the Great Depression, there has been a minimum wage in America, but this minimum wage has changed 22 times since the Great Deprnbession. Many people say minimum wage should stay at $7.25 like it has been since 2009. Meanwhile, other people believe that minimum wage should be $15.00 so they can have more money to live comfortably. People think that a higher minimum wage will help, but it will hurt more people than it will help. If America makes the minimum wage $9.00, people will no longer be in poverty and it will make the economy balance out.
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.
Should Federal Minimum Wage be $15 an hour? The Fair Labor Standards Act of 1938 states that workers will be given a livable wage. By definition, a living wage is the minimum income necessary for a worker to meet basic needs. In the words of congress, it is “the minimum standard of living necessary for health, efficiency, and general well-being.”
However, other politicians and economists’ dispute that raising the minimum wage would decrease job opportunities for unskilled workers. By raising the minimum wage, it will force companies to make decisions about which workers are the most valuable due to their now limited funding. Employer’s verdict can result in less skilled workers losing their jobs, this shift in the job market can arguably ruin the current state of the economy and have a detrimental effect on employment. There are so many questions and uncertainty surrounding minimum wage that many economists have begun looking at ways to study past and present data to determine how the minimum wage affects an
(Mankiw, 2008) But it is bad for those employees who get laid off (i.e. become unemployed) because the employers now find it expensive to hire them due to the minimum wage legislation. (Besanko, David, Dranove, & Shanley, 2000) Thus, minimum wage leads to a rise in inequality. This would be explained using a hypothetical example.
Back in the 1990 economist wisdom was that increasing minimum wage would destroy jobs, but since 1995 new studies have discovered different results. According to Krueger the chief economist of the United States, stated, “much of the existing literature was flawed”. (Maniing). It seems
Paying people a monumental $15 dollars per hour for a minimum wage job will cause an economic crash in the United States of America. thefreedictionary.com, defines minimum wage as “the minimum hourly rate of compensation for labor, as established by federal statute and required for employers engaged in businesses that affect interstate commerce.” This essay is being written to better define minimum wage, and how it differs from common misconceptions. Minimum wage affects every single American employee and employer in one way or another. Some people earn minimum wage, and others have their wages set relative to the minimum wage.