Minimum Wage Debate
Lexi Hayes
Mr. Reuter
Economics B4
22 May, 2014
Minimum wage debate
Minimum wage was first started in the early 1930’s, to make sure that even the lowest paid worker would get a sufficient amount of pay. On June 24th, Congress initially set the wage to .25 cents an hour which amounted to about $3.80 in current dollars. Over the 60’s and 70’s Congress would gradually increase in minimum wage to what we have now, $7.25 per hour. And now that there is discussion of increasing the wage even more to $10.10, there is a big debate. Below is a picture indicating how much minimum wage has increased over the years. As you can see, inflation rate has also rapidly changed over the years.
Raising the minimum wage could be good and bad. For families, yes, it would be a great thing. It would put them above the poverty line by having more cash in hand. Not many families can live off a minimum wage of $7.25. By raising the wage to $10.10, it could be much better for families in order for them to have their inelastic products and maybe some elastic. Granted, more taxes would have to be paid, I believe it would be a positive externality for them. The family would be happy and it would be good for the economy too because they would be spending their pay within the community. By increasing the wage, the number of people living in poverty would decrease by 4.6 million. Doing this could also promote the earnings of those people at the 10th percentile by $1,700. As for the United States as a whole, an increase in minimum wage has great potential to do well.
For businesses though, there are definitely pros and cons. Employees may work better and harder if they know they are getting paid more. Proving that having a price increase, there will be an increase inquality also. But, it could cause the company to not hire as many people because they are spending so much on just one employee, they would also have to increase their prices too. This might also cause for job cuts. By doing so, the company can save money on training and by keeping the same few employees even if the company is running scarce of workers. Though, going up in prices could really destroy or boost a company. Whether it’s something people would be willing to pay more for or to not pay at all for.
Since companies would be forced to fire a lot of their employees, unemployment would drastically increase. The total amount of employment could be reduced to about 500,000 total jobs. By increasing the wage people wouldn’t be able to keep their jobs and common jobs would be scarce. That would be a negative externality for everyone else looking for a job because no one would be hiring.
In conclusion, maybe raising the minimum wage so high wouldn’t be the best thing for our economy. People would be losing their jobs and prices would increase. Even though it’s only a $2.85 price increase, it could do a lot of damage to businesses and people’s lives.
“The case for raising the minimum wage” By David Cooper, Web. 10 May 2013
http://www.usnews.com/opinion/articles/2013/05/10/raisingtheminimumwagewillreduce
incomeinequality
“Economist agree: Raising the minimum wage would reduce poverty.” By Mike Konczal,
Web. 4 January.
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/04/economistsagreeraising
theminimumwagereducespoverty/?tid=pm_business_pop
Mr. Reuter
Economics B4
22 May, 2014
Minimum wage debate
Minimum wage was first started in the early 1930’s, to make sure that even the lowest paid worker would get a sufficient amount of pay. On June 24th, Congress initially set the wage to .25 cents an hour which amounted to about $3.80 in current dollars. Over the 60’s and 70’s Congress would gradually increase in minimum wage to what we have now, $7.25 per hour. And now that there is discussion of increasing the wage even more to $10.10, there is a big debate. Below is a picture indicating how much minimum wage has increased over the years. As you can see, inflation rate has also rapidly changed over the years.
Raising the minimum wage could be good and bad. For families, yes, it would be a great thing. It would put them above the poverty line by having more cash in hand. Not many families can live off a minimum wage of $7.25. By raising the wage to $10.10, it could be much better for families in order for them to have their inelastic products and maybe some elastic. Granted, more taxes would have to be paid, I believe it would be a positive externality for them. The family would be happy and it would be good for the economy too because they would be spending their pay within the community. By increasing the wage, the number of people living in poverty would decrease by 4.6 million. Doing this could also promote the earnings of those people at the 10th percentile by $1,700. As for the United States as a whole, an increase in minimum wage has great potential to do well.
For businesses though, there are definitely pros and cons. Employees may work better and harder if they know they are getting paid more. Proving that having a price increase, there will be an increase inquality also. But, it could cause the company to not hire as many people because they are spending so much on just one employee, they would also have to increase their prices too. This might also cause for job cuts. By doing so, the company can save money on training and by keeping the same few employees even if the company is running scarce of workers. Though, going up in prices could really destroy or boost a company. Whether it’s something people would be willing to pay more for or to not pay at all for.
Since companies would be forced to fire a lot of their employees, unemployment would drastically increase. The total amount of employment could be reduced to about 500,000 total jobs. By increasing the wage people wouldn’t be able to keep their jobs and common jobs would be scarce. That would be a negative externality for everyone else looking for a job because no one would be hiring.
In conclusion, maybe raising the minimum wage so high wouldn’t be the best thing for our economy. People would be losing their jobs and prices would increase. Even though it’s only a $2.85 price increase, it could do a lot of damage to businesses and people’s lives.
“The case for raising the minimum wage” By David Cooper, Web. 10 May 2013
http://www.usnews.com/opinion/articles/2013/05/10/raisingtheminimumwagewillreduce
incomeinequality
“Economist agree: Raising the minimum wage would reduce poverty.” By Mike Konczal,
Web. 4 January.
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/04/economistsagreeraising
theminimumwagereducespoverty/?tid=pm_business_pop
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