Negative Effects Of Raising The Minimum Wage

Raising the minimum wage has become a controversial debate in the American political economy. Many disagree on the effects of raising the minimum wage, from economists to politicians. According to a November 2013 Gallup poll, 76 percent of the public supported an increase in the federal minimum wage to $9 an hour (Mejeur, 2014, p. 17). Those in favor argue that the current minimum wage is not enough to live off, and that raising the minimum wage will reduce income inequality, reduce the expense for social programs, stimulate the economy, and have no negative effect on

Even though Ms.Steele considers the down fall of raising minimum wage, Mr.Knight provides clear evidence that raising minimum wage would help the America's economy.A 2011 study showed that increasing minimum wage lead to higher consumer spending.Another study showed that in the first six months of 2014 states that increased minimum wage, increased in jobs also.Last but not least, in 2014 University of Massachusetts Ameherst found that increasing minimum wage would lift 4.5 million Americans out of poverty and 3.5 million from food stamps.

Talks of increasing the minimum wage in the province of Quebec have been faced with stern resistance from business owners. The argument against raising the provincial minimum wage from $10.75/hour to $15.00/hour is that this action will have dire consequences on the economy of Quebec. Out of the many protestors, a significant portion are employers and small business owners. Similar to the argument made in the textbook, raising the minimum wage will result in losses for small businesses, and some may be unable to afford to pay their employees. Furthermore, large corporations may be dissuaded from opening branches in Quebec because of the cost of human resources. Long term effects of such an action could consist of higher dropout rates from high

Suzanne perry discusses the effects of increasing minimum wage and how many organization take advantage of the system. She goes from a charity organization point of view, and explain how political leaders, especially republicans have blocked a minimum wage increase bill. Furthermore, states provide a budget for non profit organizations and by increasing the minimum wage the service and funding for nonprofit organizations will decrease This whole process will depend on state reimbursement.

Raising the minimum wage can be harmful to people who are supposed to be helped by the increasing of wage. Often seen as an effective way of giving raises to low income workers, it creates, like any price floor, a surplus. In the case of the given example, there would be a surplus of workers than there are employers would be willing to hire at the new minimum wage. So the answer is yes, there would be a change in the number of workers hired. Since employers would be “forced” to pay more per labor/hour, thus increasing the operational costs, the market price of goods and products would increase as well for them to keep the profits.

Some say raising the minimum wage will hurt the least experienced in getting hired, but in reality that isn’t quite the case. Increasing the minimum wage could have a negative effect on those who are new to jobs or have less experience than others. This less experienced group of individuals they speak about include teenagers, less fortunate others, and people changing jobs into a field they know very little about. Regardless of that fact there are many policies an official in the company could take to ensure that doesn’t happen. Even if this does have an impact it’s more important that those who need a minimum wage increase obtain it because it has to be instated to be sure nobody is left behind.

Ultimately the main concern for raising the minimum wage is the possible negative consequences that may hurt business. Small business owners must take into account whether raising wages could negatively affect their business. Even with that said, over a thousand business owners and executives including, Costco CEO Jim Sinegal, U.S. Women’s Chamber of Commerce CEO Margot Dorfman, ABC home CEO Paulette Cole, and many have are supporters of the previous raise in the minimum wage (Business). This shows the support the minimum wage movement is getting even by companies who will eventually have to pay more. It does not end here, though; in 2014 over 600 economists sign a letter in support of a $10.10 minimum wage. These 600 economists concluded,

Minimum wage is the lowest legal amount of money that a person gets paid for each hour the work for. For many years, there has been many protests of people who want the minimum wage to rise, and think that by increasing the minimum wage it will give a lot more earnings for those who get paid a little bit. There are others who argue that if the minimum wage is raised, it will result in unemployment rate get bigger and lead to price increase.

Minimum wages, since their introduction to North America in 1918, have been subject to controversy; the idea of an increase of minimum wage has naturally sparked great debate. The assumption derived from economic theory is that an increase in minimum wage prompts businesses to cut employment. Countless studies have shown that throughout the world, a rise in minimum wage induces a consequential rise in unemployment (Campolieti, Gunderson, & Riddell, 2006). However, there is a great amount of research that shows an increase of minimum wage has a diminutive effect on increasing unemployment - sometimes even a decreasing effect (Neumark, Salas, & Wascher 2014). The purpose of this paper is to explore the different impacts of raising minimum wage on unemployment.

When the minimum wage was raised by .25 cents in a year, a number of jobs were lost. Due to inflation, the minimum wage peaked at eight dollars and sixty-eight cents. The federal minimum wage decreased to seven dollars and twenty-five cents an hour, currently what it is presently. Given how economically advanced the United States is, it is widely expected the American would be able to pay at least twelve dollars an hour, minimum.

Minimum wage was created in 1938 to stabilize the post-depression economy by supporting the workers in the lower class. This minimum wage provides money so a living could be made and the workers are healthy. Starting at just 25 cents an hour, which is equal to $4.19 today, minimum wage has increased to $7.25 and now the rate is continually going up. In 2016, California and New York approved of a gradual increase to $15 which is double the amount of the current minimum wage. This increase in minimum wage would not benefit the economy because there is no new money made and it is instead shifting towards one group of the overall population. As this money shifts to the lower class, the middle and upper class would have less money so, as a result, they will also want an increase in their wages. In order to reduce the effect of these changes, businesses will seek ways to reduce labor in their daily operations. Minimum wage increases will have a negative impact on the American economy and will hurt a majority of the lower class population instead of helping them.

The federal minimum wage was set on July 24th, 2009 at a rate of 7.25 per hour. Many attempts have been made to raise the federal minimum wage to 9.25, and then to 10.10, but have all been vetoed by former governors and Republicans. An increase in the current federal minimum wage will force companies based in the United States to turn to outsourcing individual job departments or outsourcing the company as a whole due to undesired financial circumstances. Low-skilled as well as disabled workers are automatically put at even more of a disadvantaged in the work place when their skill sets don’t meet the standard of a higher minimum wage. Unemployment and poverty rates will skyrocket, isolating areas already suffering from high living cost and expenses and forcing them further into depression. In contrary to what many people believe a higher minimum wage would not provide beneficial changes to the economy, instead, the effects of increased minimum pay would cause an unnecessary amount of harm to the country and divide among people.

On the ladder of economic success, minimum wage is the bottom rung. Raising the wage can put the rung out of many people’s reach and take away any chance at all for them to climb their way up. Many people believe raising the minimum wage will reduce poverty levels and that the wage has not caught up with inflation; however, the raise would have more negative than positive effects on the economy. These negative effects include unemployment and an increase of the price of consumer goods.

The Fair Labor Standards Act, brought about in 1938, establishes the minimum wage that must be paid to all employees. After the great depression, people were asking for a change. The minimum wage issues have been changed plenty of times since 1938, mainly for expanding coverage or increasing the hourly wage. Since then, it has been raised 22 separate times. The most recent increase was in 2007, which raised the rate to its current 2017 level of $7.25 per hour.

Pressure on Congress to increase the minimum wage has surged in recent years. Policy makers are proposing that an increase would be beneficial to the economy and its recipients. However, a policy as stated would be harmful. Research predicts that businesses would respond negatively by deducting benefits for workers. Additionally, an increase had only minimal benefits on the economy. Therefore, a minimum wage increase policy would hurt the people it is intended to help.