Minimum Wage in the United States Essay

A token(prenominal) engross is the mooest hourly, daily, or monthly lease that employers whitethorn leg on the wholey pay to employees or fashioners. The debate over stripped-down affiance in the fall in States has been on press release for over 100 years. It is a anxious topic in labor, human interest, and especially in economics. Is the marginal take too low? Is it too high? Should we defecate matchless at all? Does having a token(prenominal) legal enlist c atomic number 18 those who it is intend to help, or does it actually function them worse off? Theses questions atomic number 18 asked on a daily basis by interested parties.While on that point may not be one definitive correct answer, at that place argon compelling line of productss on both sides of the issue, and those who represent their side atomic number 18 passionate virtually their opinions. This is one of a few social topics ab tabu which concourse are generally not indifferent. Much of the full -grown manpower in the United States has worked a minimal pursue job at some(prenominal) point in their career, so we can easily appertain to the challenges that front todays minimal rent workers.This paper is not intended to solve the debate over minimum occupy, nor give it examine to persuade the reader in one direction or the early(a)(a) regarding what should be done concerning minimum absorb. The pages that follow testament present a brief history of the minimum wage debate in the United States, and hence present some of the grounds offered by both sides of the debate. A apprize History of tokenish Wage Although New Zealand was the first country to formally enact minimum wage legislation in 1896,i the United States was one of the first major industrialized nations to set a field wage floor for their workers.For decades during the industrial revolution, workers in the United States endured work environments that consisted of long hours, terrible working condi tions, and low pay. Small movements to develop a subject field minimum wage by labor unions and activist groups were met with predictable resistance from origin people, and ultimately struck down by the U. S. Supreme Court. ii Finally, in 1938 professorship Roosevelt and Congress passed the Fair Labor Standards Act. This act was intended to alleviate some of the poor working conditions that or soly women and young children were subject to.Additionally, this act oblige a federally mandated minimum wage of $0. 25 per hour, with some exceptions. iii thither sop up been subsequent pieces of legislation that continue to address and emend workers rights since that time, focusing more(prenominal) on quality of life issues rather than eliminating abuses by employers. Additionally, various(prenominal) states now have the right to enact their own minimum wage, so long as it is no lower than the federally mandated minimum wage. Since 1938, the national minimum wage has been raised 2 1 times, closely recently in 2009, and is currently $7. 25 per hour.Today, more than 90% of countries in the world have some sort of wage floor for their work force. iv The Case for Minimum Wage Those in favor of a minimum wage vie that it growths the standard of living of workers and shrivel ups poverty. v Those workers that are gainful minimum wage are unskilled laborers, perhaps first entering the job market place. Without any saleable skills, the worker needs some protection that they forget be nonrecreational a fair rate that will enable them to be independent until such time that they have l light uped a skill or trade that will allow them to work their way up from the low wage jobs.Without a minimum wage, employers would have significantly more market power than the workers a monopsony and that could number in the intentional collusion among employers regarding the wage they will offer. vi Absent this protection, workers would be forced to accept the by artific ial means low wages, resulting in a very low quality of life. Additionally, the argument can be made that paying a livable minimum wage incentivizes workers to not only(prenominal) get a job, but to work hard to keep that job.When minimum wages are significantly great than payments received through and through with(predicate) a social welfare system, people are rewarded for their hard work. If a mortal could receive an amount close to what they would achieve at minimum wage through the welfare system, what motivation would they have to work the minimum wage job? In contrast, if workers are paid an amount that is considerably more, they will find and keep work. This serves an some other purpose, to cliff the cost of government administered social welfare programs by getting people off of welfare and onto payrolls. other common argument made by those in favor of the minimum wage is that it actually helps to stimulate spending, improve overall economic conditions. vii The theory behind this argument is that low wage earners typically spend everything they make. Whether on necessities or luxury items, minimum wage earners are likely to spend their entire paycheck. If in that location were an annex in the minimum wage, the people who would receive the pay increase would turn slightly and spend their new money. This would help to cover the costs of the increased wages as many businesses would see an al or so immediate return through increased sales.While this argument seems to make sense, it moldiness be excellent that no empirical evidence to support this claim could be found. Another argument made is that an increase in minimum wage helps to improve the work ethic of those who receive the increase. The implication is that if their employer is forced to give them a raise, they will be compelled to work harder to improve their efficiency and increase their productivity in return. Again, there is no evidence to either support or refute this claim, and opi nions run strong regarding this argument.Perhaps the near basic and most often made argument in support of a national minimum wage law is that it is simply the correct thing to do, morally speaking. The idea that we should want to take care of each other and make sure that everyone made a comfortable wage is one of the most basic tenets of the philosophy of those who support it. Arguments against Minimum Wage Laws On the other side of the argument are those who are opposed to increasing the minimum wage, as well as some who think it should be abolished altogether. numerous businesspeople and economists are on this side of the debate, and they present some delightful compelling arguments. They argue that imposing an increase on the federally mandated minimum wage actually will do more economic disparage than good. viii The main argument deals with the elasticity of demand regarding employment. A minimum wage increase actually reduces the quantity demanded of workers, either throu gh a decline in the number of hours worked by individuals, or through a diminution in the number of jobs. ix Simply put, employers are likely not going to increase their salary budget, so if the hourly wages increase, then they must reduce the number of hours of work that they are paying for. This could result in the exact opposite bear upon of that which is intended. Those earning the minimum wage and are confront reduced hours or even being let go will find themselves much worse off as a result of an increase than leaving it at its current rate. Additionally, often the way out of earning minimum wage is through skills readed through those minimum wage jobs.If there are fewer of these jobs as a result of the wage being higher, fewer people will be able to learn the skills needed to move up on a career road and break the cycle of poverty. Secondly, if employers are unwilling or unable to reduce the number of hours they pay their employees, they will simply attempt to make up t he increased salary expense through increased prices. On a small scurf, this may not have a large impact on the overall economy. When this is done on a large scale because many employers need to cover their increased costs, this is likely to lead to inflation. x high salaries necessitate higher prices which will erode most if not all of the benefits of the increase in pay. The minimum wage workers will have the resembling buying power as before, but because of un required inflation, the lower warmness class will actually face the biggest impact because their wages will not have increased but their purchasing power will also have eroded. Another area that may be squeeze by a mandated wage increase is training. As most workers who earn the minimum wage typically have little education and training, their biggest circumstances to work their way into a higher paying job is through on the job training.One part of an employers budget that could face cuts would be for providing trainin g to employees. Often employers provide training to their employees that would help them realise in their career, but may not be completely necessary in their current federal agency. Unnecessary expenses such as this will most likely be trimmed, resulting in fewer opportunities for the working poor. xi Perhaps the simplest argument is if a minimum wage worker is producing $4. 00 per hour worth of product, and then the federal minimum wage is raised to $5. 0, the employer must find a way to increase the workers marginal productivity or face operating(a) loses due to underproductive employees. One final thought from opponents is that once all of the said(prenominal) arguments are considered, there are more effective ways of luck address the issue of poverty. The Earned Income Tax Credit is pointed to as a strong example of one of the more effective ideas, rather than move the burden of poverty on employers, it is shifted to the government. xii Empirical DataWhen considering both sides of this debate, it is distinguished to realize who are the workers earning minimum wage, and what role they have in providing for their families. Of the 1. 9 million workers in the United States who were paid the minimum wage in 2005 (most recent schooling available), more than one half (53%) are mingled with the ages of 16-24. These workers are most likely high school and college students, and most of them do not work a full time schedule. Two thirds are members of families who have a combined income of at least 2 or more times the official poverty level based on their family size.Less than 17 percent are the only wage earners in their families, and less than 6 percent are poor single mothers. xiii What does this information tell us? The most important thing is that an increase in the minimum wage would target a majority of people who may not be living in poverty and are differently not in need of direct assistance. The far-reaching effects of raising minimum wages across the board in order to get help to the approximately 22 percent of earners who are rightfully living in poverty seems to be at the least ineffective, and at worst it could epresent a terrible misstep in economic policy. It is difficult if not insufferable to signalize the jobs lost because of minimum wage, but it is very easy to identify the additional income for a minimum wage worker. This is often the first counterpunch from minimum wage advocates in response to arguments made by the other side. Alison Wellingtons research found that a 10% increase in the minimum wage resulted in a 0. 6% diminution in teenage employment, with no effect on unemployment rates. xiv A pick up along the same lines by David Neumark and William Washer in 2008 found secernate results.They concluded that minimum wage resulted in a reduction in employment opportunities for low skilled workers, it was most harmful to poverty-stricken families, and that it lowers the adult wages of young workers by red ucing their ultimate level of education. xv thither are countless studies on both sides of the issue, and each one only solidifies each side in their existing opinion. No matter what position one takes regarding the minimum wage debate, there are a mass of studies available to support it.The seemingly obvious fact is that these small increases that are enacted every few years are never enough to truly make a difference in bringing a soulfulness or a family out of poverty. A fifty cent increase in the minimum wage results in about $20 more per week for a full time worker. In my estimation, it is quite unlikely that small amount is making the difference in a person or a family living in poverty and living comfortably. A study of PhD members of the American Economic Association found that 46. % of respondents wanted minimum wage completely eliminated while 37. 7% want the minimum wage increased. xvi Such division among even the most expert economists shows exactly how agonistical t his issue is, and that there is no black and white, right or rail at answer to solve the debate. Perhaps as time goes on and there is more historical data to review, there may be a more definitive answer regarding this debate. Until such time, both sides will most likely remain entrenched in their current position.