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
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.
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.
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
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
Minimum Wage Raising minimum wage would affect the world all around but not so much as the people wanting it would like. It would mess up all of the economy; to prices going up, insurances, employment rate, and how many people per job site. Minimum wage has been a thing since 1938. It all started with the Great Depression in 1938. It started at twenty-two cents an hour.
However, big businesses may collaborate with small businesses since they are able to produce and earn more than they did before. In this case both big and small businesses will be satisfied. From this perspective, raise of the federal minimum wage provides more job opportunities and reduce
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
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
According to Hoagland (2017, p.17) young adults may delay their entry into the workforce deciding instead to focus on education. This factor may initially have an affect on the size of the workforce, this effect is temporary as these young adults do eventually enter the workforce and do so better educated and skilled increasing their productivity. Hoagland (2017, p.18) goes on to state that this increase in productivity could counter a shrinking
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.
Many politicians, business owners, and citizens hold fast to the belief that heightening the salary attached to minimum wage positions will yield negative benefits for our society. This opinion is supported by three vital view-points. The first can be found in the news article, “The Argument Against Raising Minimum Wage.” It expresses how the enlargement of this payment will take a toll on employment. The document reasons that if the amount of money employees earn is expanded, companies will be less likely to hire as many workers (Huppke).
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.
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).
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.
There has been quite a heated debate the last couple of years about the effects of increasing the minimum wage in both Canada and the USA, the question still remains “Is it better to pay above-average hourly wage?”. Despite the possibility of negative effects from a higher than average hourly wages, the positives results of such practices outweigh said negatives. Most businesses believe the conventional wisdom that a high hourly wage can run the risk of driving up production costs and decrease revenue from potential sales. In reality increasing wages and paying new employees above minimum wage can create more positive solutions for a company instead of problems.