Minimum wage – Employment Summary

Minimum wage has been a continuing matter since its first establishment, and it is something everyone faces. Though, the recurring problem being brought up again and again is the issue of being underpaid, and is the set minimum wage fair? And will raising minimum wage be more beneficial or harmful in the long run? Through its history can society better understand and find a solution to this problem. Minimum wage was not instituted in the United States until the 1920s, and the idea of wages being determined by the hour was introduced in the 1930s.

The Fair Labor Standards Act was born and passed through the Supreme Court in 1938, as well as the Wage and Hour Division. Raising minimum wage has promoted fairness in the work area, and has helped workers earn money for themselves and their families. Through these fairness and equality had been brought about, though its problems have risen throughout after its establishment, questioning its fairness and equality. With the unemployment rate so high, this matter needs to be looked into, as it could potentially save jobs.

While many support the idea of raising minimum wage, those opposing the idea claim that raising the minimum is rather detrimental than beneficial to workers and companies, as there is a higher risk of one losing their jobs and items becoming more expensive. It is seen by that raising minimum wage, it costs more to keep an employee, and when a company cannot afford to keep that employee any longer, they lay them off.

Director Michael Hicks of Ball State University’s Center for Business and Economic Research (CBER), illustrates this by providing a study in which it was found that between the ten year span of 1999 to 2009, the minimum wage increase to $7. 25 affected some businesses, whom had to “scale back on filling vacant positions or eliminate jobs altogether” (Hicks). Additionally, The Reason Foundation points out that “economists generally agree that increases in the minimum wage cause unemployment even when the economy is prospering…” (Reason Foundation).

These take a look how while the United States is fruitful on the outside, but what goes on the inside to fulfill that prosperity, is costing the citizens and their employers. James Sherk, a Senior Policy Analyst at the Heritage Foundation, claims that “…only workers who benefit from a higher minimum wage are those who actually earn that higher wage” (55). Raising the minimum wage threatens to reduce employee’s working hours as well as job opportunities.

Those in poverty will not gain as much, and in raising minimum wage for those who poor and not working, is not beneficial and does not help anyone. It also claimed that with a particular percentage interval increase of “10 percent” in minimum wage, it affects employment by reducing it to “2 percent” (57). These claims demonstrate the effect of raising minimum wage, as it costly to keep employees, creates a decrease in the employment rate, and does not help those in poverty.

In a rebuttal against the opposition, there has been much evidence to support that raising minimum wage is not necessarily beneficial, but rather there is not a real significant effect on employment. Robert Pollin, Mark Brenner, and Jeanette Wicks-Lim, authors of A Measure of Fairness wrote a chapter, entitled “Employment Effets of Higher Minimum Wages”, in which looked at the statistics, empirical explanations, and cause of raising minimum wage, and its effect on employees and companies between the years 2001-2005.

In previous chapters, they explored various cities’ minimum and living wage stats, and found that in those scenarios, raising the minimum wage actually helped the businesses where they were able to “absorb the increased costs resulting from the higher minimum wage, primarily through a combination of raising prices and improving productivity” (216).

Furthermore, they found that in the eleven states whose minimum wage rates are higher than the federal wage, (Alaska, California, Connecticut, Delaware, the District of Columbia, Hawaii, Massachusetts, Oregon, Rhode Island, Vermont, and Washington), “experienced an average annual rate of employment growth of 0. 57 percent” (218) compared to thirty-three states whose minimum wage was set at the federal rate, “experienced…employment growth rate of 0. 52 percent” (218).

This basically means that those with a minimum wage set higher than the federal faced a higher employment growth, while the states with the minimum wage set at the federal rate experienced a slightly lesser growth rate. Looking at retail and restaurants, typically minimum wage jobs, they looked at variables such as “the fraction of work directly affected by the minimum wage increase, the change in the state’s employment/population ratio, the change in the state’s unemployment rate, the change in the log of the average adult male’s wages, and regional effect” (221).

In the end, they found that with a required minimum wage increase in the retail and restaurants, “employment…tends to increase, not decrease, all else remaining equal” (221). On the contrary, in the hotel industry, this increase impacted employment was negative, and insignificant in terms of statistics. Overall, through their analysis, they found that raising minimum wage bears no dramatic significance on the employment rate, and if it affects it at all, the impact is not that significant.

The opposition has offered about the same amount if not more of solutions compared to those in favor of raising minimum wage. While the opposition believes that raising minimum wage is rather harmful than beneficial, they offer policy recommendations and ideas that could help solve the issue. For instance, “creating lower minimum wages for students and new hires could preserve jobs” as “the student minimum wage would permit employers to hire season workers without bearing the full cost of adult employment” (Hicks).

It is also suggested that after employed unskilled workers work for “more after 90 to 120 days of employment”, they can gain a paid more than from when they started working. This policy could spare the training of those unskilled workers by other employee. These recommendations suggest that instead lowering minimum wage for full-time and long-time employers, lowering the rate for students and new employees and sparing the employees from training unskilled workers could essentially save a company money, while establishing a fairer work environment.

A solution that workers themselves can implement, is improving their skills in the work force and outside of their working environment. “After improving skills, minimum-wage employees receive raises at a rate nearly six times higher than everyone else” (Berman), which means that if employees were to improve on their skills inside the work force and outside the work force, such as reading or showing up for work in a timely manner, and it shows in their work, they will be paid more and given raises due to their quality of work becoming more refined.

A company will want a skilled worker, and will be more willing to pay more for those that are skilled, such as the case with Tomoyuki Iwashita, who experienced in Japan, how the companied he worked for where a personnel manager told him: “We want excellent students who are active, clever, and tough…” (Iwashita, 198). These sound policies, theories, and ideas could possibly prove to be beneficial and gradually resolve the economic issue.

This cartoon depicts two guys, one who is worker telling his friend about how what good news it is that the minimum wage had increased, however, the foreboding down side is that because since he will be making more money now, he will have to pay more in income taxes. It can be seen that the one the right assumingly works at a minimum wage paying job, like working at a fast food restaurant. The cartoonist’s audience is the general public and those working, as it shows a common working citizen.

Giving the character on the right an identifiable uniform can connect the audience to the cartoonist, as they understand and are aware of the economic problem today, and know that many of those working at a fast food restaurant for instance, are normally paid minimum wage. And in today’s society, it is common for many to look down at working a fast food restaurant, as it is not a high paying job and so, many think that uneducated people will flock to this kind of job as it seemingly does not require much work to be done.

The cartoonist created a minimalist setting, as there is merely a white background, and there is nothing surrounding the two characters. Omitting a background can be compared to the character on the right, as he seemingly does not have much money, and will not have much money after paying income taxes. The cartoon is relevant to the issue, as it depicts a common citizen of the United States, who makes an earning off of minimum wage, set by the government. And it mentions the raise of minimum wage and its possible consequences, a topic discussed by workers, economists, and the government.

It is a cartoon many can identify and sympathize with, as the increasing minimum wage has been an issue for decades and will impact future generations. Through personal stories can the opinion raising minimum wage be better understood. Morgan Spurlock is known for his documentaries, and show entitled “30 Days,” where he basically lives in the shoes of people dealing with a particular issue, such as minimum wage, for thirty days. In 2005, he and his girlfriend set to see what it was like to live on minimum wage. They found living to be difficult, as they had started off with not much money, no vehicle, and minimum wage paying jobs.

Even with two jobs, they found that paying for full meals, going to the emergency room, and even paying to see a movie for one day, it proved to be stressful, agonizing, and tough to do it all and pay it all off with money made simply from minimum wage. Minimum wage does not and cannot cover every need and necessity, like health items such as prescriptions or trips to the doctor, food, and bills for electricity or air conditioning, as these two experienced. Raising minimum wage or somehow improving the standard of living can positively impact those under or just barely on the poverty line.

Minimum wage will be a continuing factor in our economy, and will affect the nation’s citizens for years to come. It has affected millions in the past, and it will affect millions in the future, so ideas and solutions of fixing the minimum wage problem must be studied and put into practice before the problem grows. And many see this issue through cartoons, documentaries, as well as through personal stories. While opposition claims that raising the minimum wage could deplete jobs than create them, a sufficient wage needs to be implemented to give people stable jobs, keep people out of poverty, and keep the unemployment rate down.

Suggestions given by the opposition could potentially save and create jobs. Minimum wages were set to battle unfair working conditions and provide a fair environment in the working place. In such a wealthy and prosperous nation, an adequate regulation must be set to help its citizens, so they can provide for themselves and their family. Citizens working day-to-day only deserve a fair wage and a fair working environment, and they ask for nothing more. Only with equality in the work place can the employment rate in America prosper and grow, providing for future generations.