Minimum Wage

Posted: March 26th, 2020

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Minimum Wage

Is the current minimum wage fair? How does the minimum wage help or hinder Americans?

The implementation of the minimum wage was meant to eliminate the exploitation of workers. States first responded to the idea because women were earning less than men were despite their hard work (Mathur and Strain). However, the implementation of the federal minimum wage covered both men and women. Workers have continued to demand for increased minimum wage. The current minimum wage is set at $7.25 per hour. Determining whether the minimum wage is fair would entail knowing how it affects the economy, the employees, and businesses. Many people who advocate for increased minimum wage cite the fact that it would give families more income and this would help to alleviate poverty.

Working conditions have improved significantly since the implementation of the first minimum wage. Labor laws have also improved for the benefit of the workers. Employees in this country can hardly claim to be exploited despite the fact that they are advocating for higher wages. They have more protection under the labor laws. However, the cost of living has continued to increase over the years. A person on minimum wage working full time earns $15,080. This figure is below the poverty level for a family of three, which was $18,552 in 2013 (Associated Press). A family of three headed by a single parent would not be able to live on the minimum wage as it is today. However, when examining the fairness of the current minimum wage, it is important to look at the perspective as it reflects the case for most Americans.

Although some households today are headed by one parent, this does not reflect the situation in the entire country. Two parents today cater for the needs of their families. The government also provides other forms of assistance to poor families, such as welfare. Therefore, even though a family of three is below the poverty level, that family can survive through sound financial management, especially if both parents are working to provide for their families. In addition, it is important to consider that more than half of those who earn the minimum wage are young. 50.4% of minimum wage earners are between 16 and 24 years, and 24% of then are teenagers. Moreover, 64% of them are part time workers (Desilver). Moreover, some of the people earning the minimum wage are not poor because they come from middle class families (Associated Press). Increasing the minimum wage would lead to loss of jobs. Employers would be forced to reduce the number of their workers so that they can accommodate the increased expenses. This would increase the number of unemployed people, and consequently increase the number of people depending on the help of the government. Increasing the minimum wage would also result to increased prices as businesses try to cover the costs (Mathur and Strain).

Those who advocate for the minimum wage have good intention. The minimum wage has helped to ensure that workers are not exploited in terms of the pay they receive. However, despite its good intentions, the minimum wage hinders Americans in several ways. The minimum wage for some states is more than the federal rates. However, these states have lower net job growth rates compared to other states in the country. The average net job growth rate of states with the minimum wage is 0.8% compared to 0.5% in states with higher minimum wages (Wilson). This means that these states fail to create jobs. In addition, they also realize higher rates of unemployment. The average rate of unemployment in states earning the federal minimum wage is 6.4%. This compares to 7.4% in states with higher minimum wages (Gitis). Any additional increase in the wage bill will force the employers to take cost saving measures including replacements of human labor with technology, reduction of benefits, reducing the number of workers, and increasing prices to cover the additional costs. In addition, employers will not hire any new employees (Wilson).

Other than unemployment, the minimum wage hinders Americans because it discourages them from continuing self-improvement and development. It encourages them to cut training and it reduces school attendance. Those who want to survive on minimum wage do not see the need of advancing their education. About 3.3 million people in the country earn the minimum wage and most of these are low skilled employees (Desilver). If the minimum wage were to be increased, many people would not see the need of advancing their education or going for further training. As noted, most of those who earn the minimum wage are below 25 years. This age group represents most of the people in colleges today. If many of the people in this group can survive on the minimum wage, they will not see any need of advancing their education and training. However, lack of minimum wage makes the market more competitive (Wilson). Those looking for jobs have to improve their skills to ensure that they get a position. Such competitiveness leads to progress.

The minimum wage laws have hindered employers since they cannot employ as many people as they would want. Because of the increased levels of unemployment, many people end up depending on government subsidies and other forms of assistance. Data from several European countries such as Denmark and Germany indicate that it is possible for countries to stay without a minimum wage and still provide decent source of income for their workers (Hanke). The aim should be to reduce the unemployment and poverty levels in the country. This would reduce the amount that the government spends on welfare and it would make it more possible for businesses to hire more people.

Works Cited:

Associated Press. “Minimum Wage Value Falling but Fairness is Debated.” CNBC. 31 Mar. 2014. Web. 19 Sep. 2015

Desilver, Drew. “Who Makes The Minimum Wage?” Pew Research Center. 8 Sep. 2014. Web. 19 Sep. 2015

Gitis, Ben. How Minimum Wage Increased Unemployment And Reduced Job Creation In 2013. 30 Mar. 2014. Web. 19 Sep. 2015

Hanke, Steve H. “Let the Data Speak: The Truth behind Minimum Wage Laws.” CATO Institute. April 2014. Web. 19 Sep. 2015

Mathur, Aparna and Michael Strain R. “Are Minimum Wages Fair?” American Enterprise Institute. 18 July 2012. Web. 19 Sep. 2015

Wilson, Mark. “The Negative Effects Of Minimum Wage Laws.” CATO Institute. Sep. 2012. Web. 19 Sep. 2015