Effects Of Minimum Wage On Unemployment

In theory when an increase in minimum wage increases the cost of low-wage workers firms should want to hire less workers, however in reality this basic theory might be wrong according to Plumer B. (2013) While some studies found a link between higher minimum wage and higher unemployment level many others such as a recent paper from U.C. Berkeley that exploited differences across state borders did not find a link between higher minimum wage and higher unemployment.

One source from the Opposing Viewpoints Database called, “Raising Minimum Wage Increases Unemployment” argues against the minimum wage by suggesting it will decrease financial security and cause higher unemployment rates. The author provides unemployment statistics from the 1990s onward as evidence to argue against the minimum wage. The article says, “In 1990, Congress enacted another minimum wage increase.” “The month before the increase took effect, unemployment was 5.2%.” “With the increase, unemployment began to steadily increase and unemployment eventually peaked at 7.8%” (Jaarda). The article emphasizes to readers that increases in minimum wages and following increases in unemployment are not just coincidences by continuingly pointing at similar statistics throughout history.

Labor is an important service that must be available and balanced in an ever growing population. For example, there cannot be a larger number of residents than there is labor or else there will be a definite increase in poverty. In the United States, there is a set law of minimum wage, which has an effect on companies and how they manage their labor force. The increase of the minimum wages affects the overall distribution of hours available, therefore, hurting the amount of labor needed. Conversely, minimum wage also has a major effect on those who recetly entered the workforce. If the minimum wage rises, there will be an increase of the unemployment rate. Correspondley, as the unemployed suffer, the first to be affected will be incoming laborers who are looking for jobs and work experience which is essential for their future. However, the upside of increasing minimum wage is that for those employed who keep their jobs they will earn more income which may increase the

In the United States, the minimum wage was passed during the Great Depression in 1938 to protect the buying power of normal workers in a period in which the “unemployment rate was still a very high 19 percent” (Sklar, 2009, p. 1). Since that time, there has been significant debate about the controversial topic of raising the federal minimum wage. The federal minimum wage law was created to eliminate unfair practices of sweat shops and manufacturing companies during this time period. Thus, the minimum wage is defined as the smallest salary that an employer is legally allowed to pay employees for their work. Since the time of the Great Depression, minimum wage has been utilized to guarantee that employees are paid

Minimum wage is the minimum hourly wage an employee can earn from work. President Franklin D. Roosevelt signed the minimum wage law on June 25, 1938. However, the United States has not always had a minimum wage. The United States minimum wage has been in effect since the Great Depression. Before then there was no minimum wage and there certainly were not any legislation to look after workers from development. Many of workers had to work in awful environments such as factories and sweatshops and they were only paid a few pennies a week. The minimum wage started at 0.25 cents per hour and the maximum workweek at 44 hours in 1938. As of today, the federal minimum wage is at $7.25 an hour, part of the Fair Labor Standards Act.

Let’s start with the definition of the minimum wage. Minimum wage is defined as a legally mandated price floor on hourly wages, below which non-exempt workers may not be offered or accept a job (Minimum Wage 2015).

Proponents of raising the minimum wage claim that if the minimum wage was raised, then many economic and social problems would be alleviated. This contention is at odds both with economic principles and years of creditable research. The effect of raising or even having a minimum wage has been studied extensively and the majority of studies have proven that raising a minimum wage does not have the desired effect. Both micro and macroeconomic forces affect the results of raising the minimum wage. The secondary effects of raising the minimum wage are bad both for

In 1938, the Fair Labor Standards Act was created to establish a minimum federal wage to serve as a standard wage to reduce poverty and to secure economic growth is shared across the workforce. Today minimum wage is far below its historical levels and loses its value every year due to inflation. The minimum wage workforces are living close to poverty levels, and insist on the government raising the minimum wage. Sometimes the fight to raise the pay for workers goes unnoticed or unheard, so a labor union is formed. With a bargaining union handling the employee’s best interest, the workers usually improve their wages and quality of life. In this paper we will discuss minimum wage laws and labor unions.

Till now, more than 95% of all countries around the globe have adapted minimum wage as their primary wage policy. The objective of minimum wage is to allocate income without rescinding the jobs of low paid employees. Nevertheless, there is no agreement about the effect of minimum wage on employment. A large number of studies on the impact of minimum wage on unemployment suggest different findings and result on ho minimum wage affect the level of employment in both developed countries and developing

Minimum wage increase has been a very hot topic in the past few years and even more now. Multiple factors are involved with making the increase, such as whether or not the companies are going to be forced to layoff workers due to the increase in wages being paid. The minimum wage has been researched and reviewed on 64 different studies by the Labor Department. The Department found "no discernable effect on employment." We look at history to predict our future and expectations and in 1949 the federal minimum wage increase 88-percent in one year and that did not increase the unemployment but decreased from 5.9 percent in 1949 to 2.9 percent in 1953. The current unemployment rate in the United State is 5.3 percent as of July 2015 According to

Government decided to increase the minimum wage because of complains of employees about amount of minimum wage. I am sure that government did not intend this problem, but it is going wrong way. As minimum wage increases, unemployment rate of young people goes up. Entry-level job is very important for young people to get experienced. However, these jobs are getting substituted by robots. So, increment of minimum wage made unemployment rate rise in

At one point or another, minimum wage is a term that most American people will familiarize themselves with. The topic of minimum wage can sometimes be a particularly controversial one, so it is important that we understand the true effects that this has on our nation’s economy. Before the fall of our economy and the increase in prices of everyday necessities, such as monthly bills, groceries and gasoline, a family could have found it easier to survive off of this wage; however, as the prices continue to rise in today’s economy, it is harder for the working family to “get by”. As of 2015, the national minimum wage is $7.25 per hour or a little more than $15,000 annually and for a working family in today’s economy, it may be difficult. This paper will focus on the effects of raising the minimum wage and discuss how it will affect our economy and the American people.

Furthermore, imposing an employer mandate to comply with paying a higher minimum wage will have negative consequences on the labor market. What makes this topic important is that former President Obama passionately rallied for a hike in the federal minimum wage which never actually happened, but generated pressure on the states to take action. However, the major reason the new wage hike is going nowhere on a federal level is that the net effect costs jobs by businesses handing out layoff notices to the least productive employees and reducing working hours to compensate for the higher wages.2(p15) According to the data, "The typical study finds that a 10 percent increase in the minimum wage depresses teenage employment between 1 and 3 percent.” 3(p13) Consider the scenario where a teen is applying for his first job. He has no work history and has few technical skills. At the minimum wage rate of pay, he may find entry-level work, but at fifteen dollars an hour employers will look for already skilled workers with more experience. Indeed, Professor Holzer, a graduate of Harvard University in American economics, verifies that “Many employers will be very reluctant to pay high wages to workers whose skills … are so modest.”4 Increases in hourly wages do not work well as an anti-poverty measure considering that monetary incentives will attract highly-skilled workers, which leave less-skilled workers not only without a job, but also with less of an

Since this is one of the civil right defenses, the legislation is one of the most important and major weapons to safeguard that the workers are appreciated by receiving a fair wage for his services. Research shows there no such evidence that a higher wage will results in unemployment as the opponents have opposed of increasing the minimum wage argues. In fact, it is appropriate evidence to prove that higher federal minimum wage does not result in unemployment but it does help in improving the living standards of families and individuals (Meer, & West, 2015). Additionally, by raising the wage will associate the productivity increase in which far more individuals will be willing to work and concentrate on their jobs instead of trying to engage

One main finding of the economic principle and practical research over the past 70 years, is that minimum wage increases tend to reduce employment. The higher the minimum wage relative to competitive market, results in a greater employment loss that occurs. Although minimum wages presumably