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There has been a lot of news and talk about the minimum wage as of late. The talk has come from government, the lower-wage workers of America and other people who happened to be interested in the subject for whatever reason. However, many people that are speaking on the subject seem too interested in spouting soundbites and are concurrently not focused enough on economics and realities as they exist. While it is true that the minimum wage has not budged all that much in the last generation or so, it is also true that it is not a fix-all and there are consequences inherent to raising the minimum wage too much and/or too fast.As noted in the introduction, the minimum wage has not moved all that much in recent years. It has gotten to the point that there have been times in the not-so-distant past that the minimum wage has been higher than it is now when adjusting for inflation. The peak of this occurred in the 1960's when the minimum wage was nearly $11 an hour as compared to the $7.25 that is seen now, both in 2016 dollars. Beyond that, the minimum wage has only changed twice in real dollars...
Indeed, it was raised from $4.25 to $5.15 in the late 1990's and then to its current level of $7.25 in the mid-1990's. Many people are demanding another shift at the federal level but it has not come as of yet. Many states and localities have adjusted their minimum wage on their own. Some are raising it as high as $15 an hour, either now or in the coming years, which is nearly double the current federal minimum wage (CNN, 2016).
However, raising the minimum wage is not a panacea. Meaning, it does not occur in a vacuum and changes to the federal minimum wage will have effects on the market in more than one way. Beyond that, the minimum wage should probably be different in some areas as compared to others given the fact that cost of living can be entirely different from place to plane. Further, the raising of the minimum wage can have a demonstrative effect on how many people are hired, by small businesses in particular, and what those people end up getting paid. When cities raise the minimum wage, many businesses react by shifting to the suburbs…
Minimum Wage Even though minimum wage has been around for many years, and was established to make sure that working people could survive and pay their bills, there are still many problems with it. This paper address both the pros and cons to raising the minimum wage, discussing not only how people can be helped by the increase in pay, but also how they are ultimately hurt by it to a
Minimum Wage Why the minimum wage should not be abolished in the United States. There are diverse issues that have been debated by politicians and critics concerning the minimum wage in the United States. Some say that the minimum wage causes an increase in the unemployment rate. In turn, it causes negative effects on the nation's economy. However, the truth on this proposition is still to be proven yet. Taking the side
The company can also allow a position to go unfilled for a time to increase its leverage; the unskilled worker would starve trying to stall for a higher wage. This again invalidates the argument that the free market can set wages effectively -- it cannot given the imbalance of bargaining power between workers and businesses. The minimum wage serves a specific economic role of balancing the bargaining power between
Economists have consistently argued that the very existence of a minimum wage reduces employment opportunities for low wage workers. A small business, for example, may have work that needs to be done but can't afford to hire a minimum wage worker; that is one less job that will be offered and, perhaps, willingly taken. Recent research has supported this contention (Turner, 1999). Reduction of poverty is the crux of any argument
" However, the theoretical evidence that is provided in this article, to disprove other people's theory on the impact of minimum wage on the economy, seems to have the opposite effect. Statements about the, "…simplistic observation that some of the states with high minimum wages also have high unemployment rates," (http://www.epi.org/publications/entry/briefingpapers_bp150) are not completely disproved with the evidence provided to show no correlation with minimum wage and the job market.
Opponents have failed to take into account the demand and supply side of the argument. It is true that minimum wage legislation has increased people's purchasing power but this positive impact of the law is likely to improve economic activity in the country. This is because when people have more purchasing power naturally they can afford more goods and thus increased demand of goods leads to increased supply and this