MINIMUM WAGE
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Isabel Jurado-Blanco 1
Does Increasing Minimum Wage Help Workers?
Isabel Jurado-Blanco
Santa Fe College
Isabel Jurado-Blanco 2
Does Increasing Minimum Wage Help Workers?
One of the most disputed arguments in America is whether the minimum wage should be
increased to $15 per hour. According to the Labor Law Center, the average minimum wage for
workers in America is $7.25 per hour. The legislature that is being considered suggests that the
minimum wage be increasing as the years go by until it reaches $15 by 2025. Vast research has
been done to understand whether increasing the minimum wage in America is the best choice for
its citizens. However, before getting into the evidence let’s understand why and how America
had its minimum wage established. According to the Legal Information Institute, the federal minimum wage was formulated
by Congress in 1938 under the Fair Labor Standards Act (FLSA). It was originally set at $0.25
per hour and has been increased by Congress 22 times, most recently in 2009 as it went from
$6.55 to $7.25 an hour as stated in the U.S. Department of Labor. The minimum wage was
originally made to alleviate the post-depression economy and protect the laborers in the
workforce. This hourly payment for labor was designed to make a minimum standard of living to
care for the health and well-being of the workers and prevent people’s exploitation. However, as
the monetary value drops with inflation, the minimum wage is said to not be enough to sustain
the minimum standard living conditions of a person. Because of this, most people support a $15
federal minimum wage. The Pew Research Center conducted a study and surveyed 5,109 adults.
They concluded that “about 62% of U.S. adults surveyed say they favor raising the federal
minimum wage to $15 an hour, including 40% who strongly back the idea. 38% of adults,
however, opposed the proposal. But what side of the coin is correct? Advocates of a higher minimum wage explain that the current national minimum wage of
$7.25 per hour is too low for anyone to live on and therefore should be increased to $15 per hour.
Isabel Jurado-Blanco 3
These people believe that the increased minimum wage will aid in the creation of jobs and the
growth of the economy. These proponents also reason that the declining value of the minimum
wage is one of the primary causes of wage inequality between low and middle-income workers.
Also, they explain that increasing the minimum wage would increase worker productivity. The opponents of the raise suggest that if the minimum wage is increased, businesses will
not be able to afford to pay their workers more, will be forced to close, lay off the workers, and
reduce hiring. Moreover, the increases have shown that it will become more difficult for low-
skilled workers with little to no experience to find a job. Adversaries of this wage increase claim
that poverty levels would rise, young adults may be shut out of the workforce, high school
enrollment rates would decrease, and drop-out rates rise. Let’s start with why raising the minimum wage would spike job growth and improve the
economy. In 2013, the Economic Policy Institute stated that “minimum wage increases from the
current rate of $7.25 an hour to $10.10 would inject $22 billion net into the economy and create
about 85,000 new jobs over a three-year phase-in period” (Cooper, 2013). So, imagine what it
would do if the minimum wage was raised to $15 an hour. It would be twice the amount.
Furthermore, economists from the Federal Reserve Bank of Chicago predicted that a $1.75 rise
in the federal minimum wage would increase total household spending by $48 billion the
following year,
hence boosting the gross domestic product (GDP) and leading to job growth.
Moreover, the Congressional Budget Office shows that the income gains resulting from the wage
increase to $15 an hour are substantially greater than the reduction in income from job losses,
lifting nearly a million people out of poverty, and therefore improving the economy. However, there is the belief that raising the minimum wage would force businesses to lay
off employees and raise unemployment rates. In October 2020, the Employment Policies
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Related Questions
The minimum wage law may distort the market for non-skilled labor. To reduce the distortion, some economists suggest a two-tier minimum wage system, where employees over age 19 have a minimum wage and employees under age 20 could earn wages below that figure. Give two reasons why economists think the minimum wage affects the under-20 labor market more than others
arrow_forward
Suppose you were preparing a memo for the White House on the effects of a large increase in the
minimum wage. What would you write about the effects on employment, unemployment, job
training, and working conditions? Who benefits and who loses from a higher minimum wage?
arrow_forward
Twenty-nine states and the District of Columbia have a state minimum wage higher than the federal minimum wage of $7.25. A number of states and cities have increased their minimum wage to as high as $15 per hour. Suppose that North Carolina lawmakers are considering raising the North Carolina minimum wage to $15. Would that higher minimum wage be A Good Thing or A Bad Thing for you? If you could vote on this proposal, would you vote to raise the minimum wage or would you vote to keep it where it is? Justify your answer. Be sure to incorporate positive economic analysis (that is, the economic effects of the higher minimum wage) as well as normative economics (your opinion about whether this would be Good or Bad).
arrow_forward
Find an article on either the current or attempts to raise the minimum wage.
Briefly summarize the article.
Are there any positive effects of higher minimum wages mentioned in the article? If so, what are they? Does the article cite evidence, theory, or both?
Are there any negative effects of higher minimum wages mentioned in the article? If so, what are they? Does the article cite evidence, theory, or both?
Do you support a $15/hour minimum wage? Explain your reasons. Did the article influence your thinking at all?
Don't forget to cite your sources.
arrow_forward
Draw a supply-demand diagram representing the impact of a minimum wage in the labor market.
What does economic theory predict about the change in employment with the introduction of or increase in a minimum wage?
How does the prediction above vary with elasticity of labor supply and labor demand?
arrow_forward
Give reasons why there should be no minimum wage laws
arrow_forward
What are the possible effects of minimum wage increase to the economy?
arrow_forward
Q5 - Q9 are related to the labour market in Australia. The following graph represents this labour
market, where the vertical axis is the wage per hour and the horizontal axis is the number of
workers employed (in millions).
P
Supply
30
25
19.84
Demand
8
12
15
The current minimum wage in Australia is $19.84 per hour.
This minimum wage is a
[ Select ]
price floor. Under this minimum wage,
the market wage rate is equal to
[ Select ]
per-hour and the number of
workers employed is equal to
[ Select ]
million.
arrow_forward
Bill raising federal minimum wage to $15 heads to U.S. House floor
The bill to gradually raise the federal minimum wage to $15 from $7.25 by 2024 has cleared a legislative hurdle that sets it up for a vote by the House of Representatives in the coming weeks.
What will be the effects of a $15 an hour minimum wage?
If the minimum wage rate of $15 is above the equilibrium wage rate, then setting the minimum wage at $15 an hour will
O A. minimize the resources used in job search
O B. increase employment and eliminate any deadweight loss
O C. increase unemployment and create a deadweight loss
O D. create an efficient labor market
O E. increase the number of low-skilled jobs available
With a $15 minimum wage,
O A. all workers gain
O B. all employers and workers lose
OC. only small businesses lose
O D. all workers and businesses gain
O E. employers lose and workers who can't find jobs lose. Workers who find jobs gain
arrow_forward
Explain why it is important to differentiate between the "number of unskilled workers" and the "number of unskilled labor hours" when evaluating the impact on the market for unskilled labor of an increase in minimum wage.
arrow_forward
Need some help please and thank you
arrow_forward
According to the Heritage Foundation report, what are two possible negative effects of an increase in the minimum wage
arrow_forward
Consider the information below on the labor market in a given country.
Quantity
Wage
Quantity Supplied of
Demanded of
Rate/Hour
Labor
Labor
$4
400 workers
75 workers
$5
300 workers
125 workers
$6
200 workers
200 workers
$7
|140 workers
250 workers
$8
100 workers
300 workers
$9
70 workers
350 workers
$10
45 workers
400 workers
If the government wanted to implement a minimum wage, which of the following potential
minimum wage would be binding and affect the market?
$4
$5
$7
$6
arrow_forward
Chapter 06 News Analysis: Should the Minimum Wage Increase?
15
Labor Market
WAGE (Dollars per hour)
12
0
0
200
400
600
Labor Supply
+
Wage Rate
(Dollars per hour)
$11.7
Labor Demanded
220
Labor Supplied
780
(Thousands of
workers)
(Thousands of
workers)
Surplus Labor
560
(Thousands of
workers)
Labor Demand
Labor Demand Shifters
Tax Credit
0
(Dollars per hour)
800
1000
QUANTITY (Thousands of workers)
Suppose the minimum wage in this economy is $11.70 per hour. An unemployed worker is defined as someone who is willing to work at the prevailing
wage but is unable to find employment. Because the minimum wage lies above the equilibrium wage, it is binding, which means it is also the
prevailing wage.
If the wage is not allowed to fall below $11.70 per hour, the size of the unskilled labor force is
workers are considered unemployed.
workers, and
unskilled
The unemployment rate is defined as the percentage of unemployed workers in the labor force:
Unemployment Rate =
Labor Force
Unemployed x…
arrow_forward
True or false: minimum wage always increases the welfare of workers. Explain your answer with a graph.
arrow_forward
Directions: Please respond to the following question. Your response should be at least one paragraph long. Please discuss one reason or more why minimum wage is a good idea and at least one reason or more why it's a bad idea. Consider: who might a minimum wage help and who it might hurt (and why)
arrow_forward
How many states have increased their minimum wage since 2009?
arrow_forward
On page 104 of the third (2019) edition of Naked Economics by Charles Wheelan, Wheelan discusses the possible outcomes of minimum wage. Based on what Wheelan has written and the conversations about minimum wage in the class, which of the below statements is the LEAST likely to be correct if the minimum wage (a price floor) is placed well above the market clearing (equilibrium) wage?
Group of answer choices
The higher the minimum wage is set above the market clearing or equilibrium rate the more likely it is benefit all workers, as everyone's wages will have increased, and employers will not lay off workers because of the higher wages.
The higher minimum wage will benefit those who continue to have a job at the higher wage, but will hurt those who are laid off because employers will hire fewer workers at the higher wage rate.
In an era of global production and a global labor pool in which wages in the U.S. are higher than the wages paid to workers in countries such as Mexico, the…
arrow_forward
What impact does the minimum wage have on the economy?
arrow_forward
Analyze the impact of an increase in the minimum wage from the current level to $15 per hour. How would the following be affected?
a. employment of people previously earning less than $15 per hour
b. the unemployment rate of teenagers
c. the availability of on-the-job training for low-skilled workers
d. the demand for high-skilled workers who are good substitutes for low-skilled workers
arrow_forward
Which of the following is the most likely outcome of minimum wage
laws?
an increase in both the quantity of labor supplied by workers and the
quantity of labor demanded by firms
an increase in the quantity of labor supplied by workers and a
decrease in the quantity of labor demanded by firms
a decrease in the quantity of labor supplied by workers and an
increase in the quantity of labor demanded by firms
a decrease in both the quantity of labor supplied by workers and the
quantity of labor demanded by firms
arrow_forward
What are the pros and cons of increasing the minimum wage
arrow_forward
A case study in this chapter discusses the federal minimum-wage law.
Suppose the minimum wage is $7 per hour in the market for unskilled labor, as shown on the following graph.
Use the grey point (star symbol) to indicate the market equilibrium wage and quantity of labor in the absence of a minimum wage. Then use the purple point (diamond symbol) to indicate the level of employment at the minimum wage provided, and use the orange point (square symbol) to indicate the quantity of labor supplied at this minimum wage. Finally, use the green polygon (triangle symbols) to show the total wage payments to unskilled workers.
Market EquilibriumMinimum Wage OutcomeLabor Supplied at Minimum WageTotal Wage Payments012345678910109876543210Wage (Dollars per hour)Quantity of Labor (Millions of workers)DemandSupplyMinimum Wage
At the minimum wage of $7 per hour, the level of unemployment is
million workers, and the total wage payments to workers are
million.
Now suppose the…
arrow_forward
The graph on the right shows the demand for and supply of labor in a market
with an equilibrium wage rate of $8 per hour.
Show the impact on the graph if a minimum wage of $10 per hour is enacted.
1.) Using the point drawing tool, plot the point that illustrates the quantity of
labor demanded when the minimum wage is set at $10 per hour. Label your
point 'A.'
2.) Using the point drawing tool, plot a point that illustrates the quantity of
labor supplied when the minimum wage is set at $10 per hour. Label your
point 'B.'
Carefully follow the instructions above and only draw the required objects.
Wage
14-
12-
10-
8-
co
có
4.
2-
9
0
B
Labor supply
Labor demand
6
7
Quantity of labor (millions)
8 9
10
arrow_forward
Click on the icon to read the news clip, then complete the following steps.
The graph shows the market for fast-food workers.
Draw a point to show the wage rate and the number of fast-food workers employed
if the minimum wage is:
1) $13.00 an hour. Label the point 1.
2) $15.00 an hour. Label the point 2.
In the graph, at a minimum wage of $15.00 an hour.
wage of $13.00 an hour
OA. some workers are unemployed;
no one is unemployed and firms have all the workers they want
OB. some workers are unemployed;
firms cannot hire as many workers as they want
; and at a minimum
OC. firms cannot hire as many workers as they want;
no one is unemployed and firms have all the workers they want
D.
no one is unemployed and firms have all the workers they want;
some workers are unemployed
M
16.00
15.00-
14.00-
13.00-
12.00-
11.00-
10.00-
Wage rate (dollars per hour)
50
A
S
100 150 200 250 300 350
Quantity (thousands of workers)
>>> Draw only the objects specified in the question.
Next
arrow_forward
$30 a week boost to minimum wage
The government increased the minimum wage by $30 a week to $570 a week.
Unions wanted a $35 a week increase, but employers argued that a $35 a week.
increase was unaffordable.
Source: ABC Australia, February 11, 2011
The graph shows a market for low-skilled labor. If the minimum wage is set at
$570 a week,
If the minimum wage is set at $540 a week,
OA. some people who want a job can't get one;
everyone who wants a job has one
B. firms cannot hire all the labor they want;
everyone who wants a job has one
OC. everyone who wants a job has one;
firms cannot hire all the labor they want
OD. everyone who wants a job has one;
some people who want a job can't get one
590-
580-
570-
560-
550
540-
530-
520-
510+
9.8
Wage rate (dollars per week)
A
D
9.9
10.1
10
Quantity (millions of hours per year)
S
10.2
Next
Q
Q
G
arrow_forward
Using an appropriate illustration explain the impact of the minimum wage in the labour market
arrow_forward
10. What is the alternative to minimum wage? Show in the graph what needs to happen for the
equilibrium wage to rise, absent minimum wage.
arrow_forward
Q5 - Q9 are related to the labour market in Australia. The following graph represents this labour
market, where the vertical axis is the wage per hour and the horizontal axis is the number of
workers employed (in millions).
Supply
30
25
19.84
Demand
8
12
15
The equilibrium price (or wage) and equilibrium quantity in the Australian labour market is:
Price = $19.84, Quantity = 8,000,000
Price = $25, Quantity = 12,000,000
O Price = $30, Quantity = 8,000,000
O There is no equilibrium in this labour market
arrow_forward
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Related Questions
- The minimum wage law may distort the market for non-skilled labor. To reduce the distortion, some economists suggest a two-tier minimum wage system, where employees over age 19 have a minimum wage and employees under age 20 could earn wages below that figure. Give two reasons why economists think the minimum wage affects the under-20 labor market more than othersarrow_forwardSuppose you were preparing a memo for the White House on the effects of a large increase in the minimum wage. What would you write about the effects on employment, unemployment, job training, and working conditions? Who benefits and who loses from a higher minimum wage?arrow_forwardTwenty-nine states and the District of Columbia have a state minimum wage higher than the federal minimum wage of $7.25. A number of states and cities have increased their minimum wage to as high as $15 per hour. Suppose that North Carolina lawmakers are considering raising the North Carolina minimum wage to $15. Would that higher minimum wage be A Good Thing or A Bad Thing for you? If you could vote on this proposal, would you vote to raise the minimum wage or would you vote to keep it where it is? Justify your answer. Be sure to incorporate positive economic analysis (that is, the economic effects of the higher minimum wage) as well as normative economics (your opinion about whether this would be Good or Bad).arrow_forward
- Find an article on either the current or attempts to raise the minimum wage. Briefly summarize the article. Are there any positive effects of higher minimum wages mentioned in the article? If so, what are they? Does the article cite evidence, theory, or both? Are there any negative effects of higher minimum wages mentioned in the article? If so, what are they? Does the article cite evidence, theory, or both? Do you support a $15/hour minimum wage? Explain your reasons. Did the article influence your thinking at all? Don't forget to cite your sources.arrow_forwardDraw a supply-demand diagram representing the impact of a minimum wage in the labor market. What does economic theory predict about the change in employment with the introduction of or increase in a minimum wage? How does the prediction above vary with elasticity of labor supply and labor demand?arrow_forwardGive reasons why there should be no minimum wage lawsarrow_forward
- What are the possible effects of minimum wage increase to the economy?arrow_forwardQ5 - Q9 are related to the labour market in Australia. The following graph represents this labour market, where the vertical axis is the wage per hour and the horizontal axis is the number of workers employed (in millions). P Supply 30 25 19.84 Demand 8 12 15 The current minimum wage in Australia is $19.84 per hour. This minimum wage is a [ Select ] price floor. Under this minimum wage, the market wage rate is equal to [ Select ] per-hour and the number of workers employed is equal to [ Select ] million.arrow_forwardBill raising federal minimum wage to $15 heads to U.S. House floor The bill to gradually raise the federal minimum wage to $15 from $7.25 by 2024 has cleared a legislative hurdle that sets it up for a vote by the House of Representatives in the coming weeks. What will be the effects of a $15 an hour minimum wage? If the minimum wage rate of $15 is above the equilibrium wage rate, then setting the minimum wage at $15 an hour will O A. minimize the resources used in job search O B. increase employment and eliminate any deadweight loss O C. increase unemployment and create a deadweight loss O D. create an efficient labor market O E. increase the number of low-skilled jobs available With a $15 minimum wage, O A. all workers gain O B. all employers and workers lose OC. only small businesses lose O D. all workers and businesses gain O E. employers lose and workers who can't find jobs lose. Workers who find jobs gainarrow_forward
- Explain why it is important to differentiate between the "number of unskilled workers" and the "number of unskilled labor hours" when evaluating the impact on the market for unskilled labor of an increase in minimum wage.arrow_forwardNeed some help please and thank youarrow_forwardAccording to the Heritage Foundation report, what are two possible negative effects of an increase in the minimum wagearrow_forward
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SEE MORE QUESTIONS
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