Persuasive And Informative Essay: Minimum Wage

This article goes into detail on the effects of minimum wage on employment and businesses. In the article it gives facts on how business are willing to increase pay because the employee productivity will increase. The article also talks about how the business will yield more products making the company more money, with an end result being able to raise their minimum wage.

Concerning the wage rate, the United States government has intervened to maintain a lower limit on the hourly wage rate of a worker’s labor by implementing a price floor known as the minimum wage rate. This legal floor on the market price of labor sets a minimum hourly pay rate for workers in the United States. Effective July 24, 2009 the federal minimum wage rate is $7.25; in states that also have minimum wage laws the employee may be subject to both federal and state minimum wage laws, in which case they are entitled to the higher minimum wage rate (U.S. Department of Labor Wage and Hour Division, 2011). Since the Fair Labor Standards Act (FLSA) was created in 1938 the federal minimum wage rate has gradually increased from $0.25 in 1938 to $7.25 present (U.S. Department of Labor Wage and Hour Division, 2011). Although continuing to increase the minimum wage rate may include potential positive factors, it would hinder the U.S. economy overall.

The minimum wage has been an important element on the United States labor system and has sparked debates between employers and workers to this day. The main argument against raising the minimum wage is that the harmful effects raising the minimum wage would create do not justify the small-scale benefits generated by the raise. Business owners and conservatives claim that raising the minimum wage will result in job loss, hurt low skilled workers, and may result in higher prices for consumers. In a 2012 paper published in the peer-reviewed Industrial and Labor Relations Review (ILRReview), economists Richard Burkhauser, Benjamin Hansen, and Joseph Sabia, state that while some low-skilled workers living in poverty do see their incomes rise when the minimum wage increases, many others lose their jobs or have their hours significantly cut. Their study concluded that New York’s 2004-2006 $1.60-per-hour minimum wage hike was associated with a 20.2 to 21.8 percent reduction in the employment of younger, less-educated individuals, with the largest effects for those ages 16-to-24. Conservatives believe that even though teenagers are

“I finally got a raise!” Todd exclaimed “They raised the minimum wage!” “Actually Todd, raising the minimum wage ruins the economy,” said Christine popping his bubble of excitement. Christine is right, raising the minimum wage will damage the economy and leave businesses closed and people jobless. Prices will sky rocket and leave families struggling to buy now overpriced groceries. Leaving the people it is meant to help in worse conditions. Although raising the minimum wage sounds great, with a plethora of research it rips the economy into pieces.

While the minimum wage may also have negative effects on employment as “some employers respond by reducing their use of low-wage workers and [shift] toward other inputs” these effects may be overestimated. This response by employers can be downplayed, as alternative methods to regain costs are effective. The CBO acknowledges this may not be the case as employers “might respond in ways other than boosting prices or substituting other inputs for low-wage workers”. Another assertion is that “conventional economic analysis might not apply in certain circumstances” such as a raise in the minimum wage. This claim is supported by “more than 600 economists, including 7 Nobel Prize winners [who] wrote...that increases in the minimum wage have had little or no effect on employment”. The CBO also acknowledges this possibility saying, “the overall reduction in employment could be smaller or larger” indicating the effects of an increase in the minimum wage on employment are unknown. Because of the minimized effects raising the minimum wage have on employment predicted in Minimum Wage Mythbusters, along with the increases to low-wage worker’s income, raising the

Now after raising the minimum wage to $7.25 six years ago, there has been a great deal of inflation between then and now that has pushed the issue of raising it once again. This particular issue has led to a serious debate that has divided economists into a 50/50 on going disagreement. Since there are already so many problems with the current minimum wage and even more problems that can occur if it was to be increased economist have taken many different aspects into consideration. About half of the economist studying this issue believe that while increasing the minimum wage can be beneficial, the current $7.25 minimum wage should not be increased due to the reasons

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

The minimum wage is one of the problems that has hit the middle class and the low income of the United States with irreparable damage. The first problem these families face is the lack of income to provide basic living facilities that include housing, spending, and other human needs such as health insurance, and so on. The second problem for these low-income families is the non-payment of the cost of continuing education for themselves or their children because they can only spend on food and feed their families and there is no way to save money for family development and continuing education. So the future of these families is unknown. The third problem that these families have in average is that if they lose their jobs, because of their

Tim Worstalls claim that “if we raise the price of labor then we expect people to purchase less of it. That is, a rise in the minimum wage will cause job losses” is a pretty common fear among the uneducated but is also completely unbacked by economists.

The minimum wage is a form of government intervention that leads to inefficient outcomes because it distorts the allocation of resources. An increase in minimum wage discourages companies from seeking employees, therefore increasing the rate of unemployment. The outcome would be a surplus of labour available as workers are attracted by the high pay rates, while demand for labour diminishes. The diagram below shows the effect of a price floor on the

Over the past few years the Minimum Wage has become a controversial topic to people and politicians. As we all know people everywhere are talking about that we need to increase the minimum wage again. Some people don’t realize that increasing the minimum would have principal’s effects on low-wage workers. For instance, most low-wage workers would receive a higher pay that would increase their family income. Yet, some jobs for low-wage workers would probably be eliminated because raising the minimum wage takes away jobs from the low-skilled and young workers.

First of all a very high minimum wage can have its negative effects as well, discouraging employers to hire new stuff. On the other hand, if the

When politicians set a wage floor, they attempt to disrupt the nature of an economy and try to circumvent the fundamental laws of economics. The free market inherently needs separation from the government to thrive, and therefore, when the government interferes and mandates a set wage floor, the market will cease to maximize output and efficiency. Additionally, a direct consequence of a wage floor is increased unemployment rates, and economists generally use employment statistics to determine the health of an economy, meaning the higher the unemployment, the worse an economy’s wellbeing. While on the surface a minimum wage appears to boost the lower class, ultimately it destroys the economically disadvantaged by removing jobs from the economy and creating resentment against them held by the middle

reducing the marginal cost of labor. How could this be? We just looked at the supply and demand curve which shows us a minimum wage does the opposite, but this was assuming it was a price floor set above the equilibrium. If legislation sets the minimum wage at a market-clearing level if the market was competitive, employment will be maximized. Minimum wage laws are beneficial to society as long as it is set at a market-clearing level. This study found they could not find any evidence that minimum wages themselves have negative employment effects.

The supply and demand factors show significance towards growth of unemployment. It has been observed that the price floor above equilibrium wage should cause unemployment. There are many people who have provided their arguments against the fact. However, it has been observed that whenever there has been a rise in the minimum wage of workers, unemployment rate goes very high. For example, an organization has to maintain its expenses as well as its incomes. Due to rise of wage, Companies can become more selective. This situation is not appropriate because it excludes the low skilled employees from employment opportunities. Since full-time workers could get affected due to the minimum wage laws, it has been deemed necessary that the increase of minimum wage is not done. Furthermore, with the rise of minimum wage, greater number of people would show their desire to obtain jobs towards the minimum wage however there would be lower number of opportunities to get employment. This factor would result in maximum number of unemployment cases. Due to the rise of minimum wage the quantity of the number of low skilled workers would fall and finally it would affect the economic growth and stability of a nation.