Does the Minimum Wage Increase the Standard of Living for Low-Income People?

1391 WordsJul 10, 20186 Pages
The United States has maintained a minimum wage which was enacted since 1938. At the present time there is much political debate in regarding to increase the minimum wage to levels at the federal level, state, and local levels of government across this country. There are various theories regarding the minimum wage. Some believe it would circulate money into the economy faster which would negate and negative effects on employment, or even improve unemployment rates. Others point to the economic theory of supply and demand, and claim it will increase the unemployment rate. Both of these are simply theories and must be shown to have real life implications. Are moderate increases in the minimum wage above the equilibrium market rate an…show more content…
It begins with the most basic supply and demand explanation that states that a wage floor will cause more people to go unemployed and the remaining people to earn more, should it be above equilibrium. The exact amount in which it will decrease employment is dependent on the elasticity of labor market. These are the basics of supply and demand. Later it the paper states instead of immediately going to the firing of employees firms may often try to increase efficiencies. According to the work firms may also expect more from their employees. Other solutions may be to decrease the hours of the employees or increase product prices.(Brown, Gilroy & Kohen, 1982) I do find these to be compelling arguments. However economic theory must be tested to see if it holds out to be true in the real world. Other papers I have found argue for a different view point. “Raise the Wage Floor” make various arguments for the raising of the minimum wage. It goes into depth about how various disadvantaged groups, in particular women and single mothers are disproportionately affected. The entire article makes a very compelling argument that there is a need for better living standards for the working poor. Finally it argues that people having a higher wage will circulate more money in the economy. This they argue will negate
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