Do minimum wage workers deserve a better paying wage? Perhaps a wage that they are believed to be able to live off of? Will raising the minimum wage help those it really intends to? With unemployment pushing 8% nationwide and costs rising, nationwide people are pushing for minimum wage to be increased. The minimum wage was established by Franklin Roosevelt as part of the New Deal in the 1930’s. The Fair Labor Standards Act of 1938, as stated by Jonathan Grossman on www. dol. gov, is what ultimately established the minimum wage nationwide for all workers. The minimum wage guarantees workers a wage that is fair for all workers.
It is the lowest possible amount that an employer can pay their workers. Though it is believed that the minimum wage will help the lower class, raising it will not actually help those it intends to, but in fact raise living costs and many other expenses when the minimum wage is raised. The problem with minimum wage is that it is not kept up with yearly. As inflation across our country increases yearly, minimum wage stays the same. With unemployment at about 8%, many people are pushing for a higher minimum wage.
In “How raising the federal minimum wage would help working families and give the economy a boost” by Doug Hall and David Cooper, they believe that an increase of minimum wage will boost the economy. “Throughout the nation, minimum-wage increases would create jobs. ” (Hall & Cooper) Creating jobs would help the economy by helping the unemployed get off of government assistance, but raising the minimum wage will not help create those jobs. The underlying problem with increasing minimum wage is that when the minimum wage is increased, jobs will not be created but will in fact job loss will increase.
Employers will be forced to pay their employees more than they can afford, thus causing the employers to cut hours and even jobs to keep their business successful. Increasing the minimum wage can also price many out of the job market, as stated by James Dorn in “The Minimum Wage Is Cruelest to Those Who Can’t Find a Job. ” If employees cannot produce the amount of work for which they are getting paid, then they may be laid off. (Dorn) In “The $9 Minimum Wage That Already Exists” by Michael Saltsman, he states, “Another reason minimum wage doesn’t reduce poverty rates is that a hike in hourly pay doesn’t necessarily translate to an annual income bump. ”
Many employees across the nation will be affected by the minimum wage increase. Saltsman describes a fair point about the minimum wage and how it will affect workers. Just because they get a pay raise by the hour, does not mean that they will make more in the long run. A worker working full time on minimum wage makes about $15,080 yearly. Though an employee would expect their yearly income jump to about $19,000 a year, does not mean it will happen. An increase in wages for all low skilled workers will jump, and part time employees will eventually replace those full time employees.
Though promises made of increased annual income sound convincing, they most likely will not be made. (Saltsman) Raising the minimum wage wouldn’t also just hurt those who live off of it, but those employees that are coming into the job market. In “$9 minimum wage sounds good but it would be bad public policy” Jerry Bustamante states “Any increase in the minimum wage hurts the least skilled and first-time employment seekers under the age of 19. ” Raising the minimum wage would cause employers not only to have to cut hours and jobs of full time employees, but push them to where they will not be able to hire new, younger, and less skilled employees as Bustamante states.
This problem would hurt the incoming generation severely. Another problem with raising the minimum wage that affects the younger generation is that it prices them out of the job market. James A. Dorn in “The Minimum Wage Is Cruelest to Those Who Can’t Find a Job” states “The minimum wage is unfair to low-skilled workers with little experience because it prices them out of the labor market and prevents them from achieving the upward mobility that is the hallmark of a dynamic free-market economy. ” Leaving the young generation can affect the future of the job market and economy.
The kids out of high school who are not going to college and need work but cannot find it, could perhaps be pushed to the point of not being unemployed, but just out of the labor market all together. Having this happen will not help our economy recover and help us to be the best we can be. Instead of increasing the minimum wage, perhaps we should focus more on EITC (Earned Income Tax Credit). The EITC was created in 1975 by President Ford as a small wage supplement for low-income families (Saltsman).
The primary reason it is believed that raising the minimum wage will help the economy and job market is that it puts extra money back into the pocket of low wage workers. In “How to Save the Global Economy: Raise the Minimum Wage. A Lot” James K. Balbrath states “What would workers do with the raise? They’d spend it, creating jobs for other workers.
Also, in “How raising the federal minimum wage would help working families and give the economy a boost” by Doug Hall and David Cooper state “Raising the minimum wage puts more money in the pockets of working families when they need it most, thereby augmenting their spending power” and says workers will “Spend any extra earnings immediately on previously unaffordable basic needs or services. ” The belief is that raising it will put money back into the economy when consumers spend their extra earnings from the increase of the minimum wage. ISN’T THIS THE SAME OPPOSING REASON YOU IDENTIFIED EARLIER?
PLEASE DON’T REPEAT IDEAS. The reason minimum wage will not help those it really intends to, is because prices of goods and services will rise along with the minimum wage. In “The Minimum Wage is Cruelest to Those Who Can’t Find a Job” James A. Dorn states “Employers may charge higher prices to cover the higher minimum wage.
” Yes, raising the minimum wage will help some, but will eventually negatively affect all people in the states. Business owners will be forced to pay their employees more and in turn to make a profit will have to increase prices. One simple price increase will just make raising the minimum look stupid and would have been pointless in the end. Jerry Bustamante in “$9 minimum wage sounds good but it would be bad public policy” interviewed business owners and Buddy Heilig said this “‘It travels up the ladder too; guys making $12 an hour are going to expect a raise to continue to make so many dollars about minimum wage. ‘”
When companies have to raise not only the workers making minimum wage salaries’, but those who are already making more, it will cause prices to rise and jobs and work hours to be lost. A small change that gets bigger will only cause bigger and bigger problems to an already weak American economy. Raising the minimum wage may help those it intends to, such as single parents with several kids, or it may not. The best possible option would be just to get rid of it. Getting rid of the minimum wage would create tons of economic freedom in our country. As James Dorn states “Rich countries were first poor.
It was because of economic freedom and better institutions that they become rich” and “A ‘fair wage’ is a ‘free wage'”. I agree with both of these statements, the best way to make our economy stronger and put money in the pockets of the working class would be to eliminate the minimum wage. Yes a guided system for how much workers should be paid would help, but with more economic freedom our economy could reach equilibrium and would thrive. WHAT EQUILIBRIUM? THE CONCLUSION IS LIKELY NOT THE BEST PLACE TO BRING.