Minimum Wage Law the Topic

Minimum Wage Law

The topic that I have chosen for my argument-based research is minimum wage law in the country. I firmly feel that minimum wage law must never be repealed because it tends to benefit the poorest section of the society. The law has been heatedly debated in many legal, social and political circles as the opponents hold views that are strictly negative in nature and they maintain that minimum wage legislation is only adding to country's numerous economic problems. Therefore it is important to discuss both sides of the issue and see why minimum wage law has not been scraped. For the sake of maintaining objectivity, let us see both sides of the issue. It will automatically make it clear why we should keep the law.

Minimum wage law was enacted in 1930s when Roosevelt administration found that unskilled workers were not being paid the wages that they deserved and thus a minimum wage per hour was fixed in the Fair labor Act of 1938. But would we really believe that the first rate fixed was only 25 cents per hour and even this meager rate was disapproved by the Supreme Court of the United States. But Roosevelt administration at least took that first step to introduce fair practices in trade and business and laid the foundation for future labor laws.

Now after the introduction to the topic, it is important to understand why the legislation still encounters staunch opposition. The anti-legislation quarter is of the view that minimum wage law increases the rate of unemployment in the country. This happens because when there is fixed rate to be paid to labor, the job opportunities for unskilled workers shrink by a large margin. Let us understand why this happens. When employers know that they are required to pay a certain amount to their workers, they would naturally want to hire only those who have adequate skills and would also want to employ fewer people. This throws unskilled poorest section of the society out of work but we need to understand that this was the very section that government wanted to benefit from the legislation. From a low rate of 25 cents per hour in 1938, minimum wage rate has increased to more than $6 per hour, which is certainly a great improvement, but people are of the view that minimum wage legislation also gives rise to inflation in the country. This happens because it is believed that when people have more purchasing power, they are likely to bring more money into the market, which will increase prices of goods and this leads to inflation. Thus opponents feel that with higher minimum wage, poverty increases and this is certainly a valid argument but still it is important to see what proponents of the legislation have to say in this regard so that we can reach a balanced objective conclusion.

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 accelerates economic growth. We can understand this law better if we take into account consumer spending and its impact on the economy. In recent times, we have noticed that lack of consumer spending has speeded up the downward spiral of the economy and in its attempt to encourage people to bring more money into the market, government announced several tax cuts. Keeping this in mind, we can understand how increased purchasing power due to minimum wage law can bring positive changes in the economic conditions of the country.

Secondly, while minimum wage may not be able to improve the standard of living for every unskilled workers, still those who do manage to find a job in today's competitive market stand to benefit from this legislation because employers can no longer make them work for unreasonably low wages.