As stated in the introduction the question in which this data presented in the literature review is answering is what are the economic effects of raising the minimum wage on American citizens. Through researching by a content analysis method I was able to investigate detrimental aspects to the American economy if the minimum wage is increased. Multiple plans of action have been proposed that focused on the minimum wage being increased. The aspects evaluated in this paper that would be affected vastly by an altering include high school completion, the current work force, and effect on teenage employment.
An assortment of economists and politicians have developed strategies on reviving the American economy through amending the minimum wage.
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The initial plan by President Barack Obama was established in November of 2008, according to an article by Alexander Cockburn called The Most Vital Issue in American Politics Today. The article reads,” In November 2008 President-elect Obama promised to “raise the minimum wage to $9.50 an hour by 2011 and index it to inflation..” This plan never got passed through either house of congress and the American people saw no changes through their state legislators in reaction to Obama’s plan. Conjointly in the article there was a drastic plan proposed by Senator Tom Harkin. The article said that ,” Senator Tom Harkin’s Rebuild America Act, which he introduced on March 29, calls for raising the minimum wage to $9.80—a 35 percent hike—and pegging the wage to inflation.” Similar to Obama’s initial plan Harkin’s plan failed to gain much support and lead to additional plans to be proposed in the near future. The reasoning behind the index to inflation idea was that it was inspired off of the law in Oregon for the minimum wage. In a testimonial of the Commissioner of the Oregon Bureau of Labor and Industries he claimed,”After more than 10 years of implementation, we know that Oregon’s minimum wage law has been good for workers and businesses. By indexing the minimum wage to inflation, we’ve made sure that workers don’t lose ground as the costs of everyday goods increase.” Due to the success of one state has pushed multiple plans to include a clause about having minimum wage correlating with inflation and want to implement the idea on a national level. In 2014 a more recent plan of Obama’s that was mentioned in an article by Connor Finnegan called Obama pushes for minimum wage increase. It states,” Two recent polls show the public is behind Obama on this one. According to CBS News and Pew Research Center polls, 72% and 73% of Americans support raising the minimum wage to $10.10 an hour, respectively.” This commentary shows Obama plan of a $10.10 minimum wage which had much media attention. The plan never received much traction and produced no changes on a national level. Obama’s persistence carried on and Obama has released a more recent plan in 2014. In the scholarly article written by Terrance Wise, an employee at Burger King and Mcdonalds who introduced President Obama at the Summit on Worker Voice, endorsed Obama’s plan for a $15 dollar minimum wage because he believes the raise will assist in making his family better off than himself. The plan for the $15 dollar minimum wage sparked an abundance of media attention as well as a strong gather from the American people. Changes with the minimum wage have been noticed throughout the United States. In the article The Battle over the Minimum Wage, City by City by Peter Dreier we see change happening based off inspiration of Obama’s $15 plan. Dreier wrote,”Seattle Mayor Ed Murray used May Day 2014 to announce that business and labor had agreed to a historic plan to raise the minimum wage to $15 an hour”. This was a huge story due to change occuring in a major city and is a miniature version of Obama’s vision. Multiple plans have been proposed over the past 10 years on satisfying the American people’s need and helping make the American dream a reality. Nevertheless there are reasons why there plans continually fail and explain why the minimum wage not be adjusted. All the plans conflict with my view on the minimum wage because moving it to provide the workforce with more money will not be a long term solution. With the evidence provided American citizens will better understand that change is not always a viable solution and that it is essential resources provided now are used in an optimal manner. In a study by John Robert Warren and Caitlin Hamrock they examined the effects of the minimum wage on high school completion. Warren and Hamrock hypothesised the effects of minimum wages on high school graduation rates vary as a function of state's' unemployment rates. They used a model which was utilize as a formula to see the outcome of the continuing increasing minimum wage. Their study discussed the various data analysis implemented to see the effects of the minimum wage on high school completion. The result of this experiment was if the minimum wage increases then a minimal number of students will drop out because the wages outweigh waiting to be employed till after graduation.Warren (2010) stated,” These results are thus in line with other theoretical perspectives that emphasize the complex developmental, social and institutional factors that "push" or "pull" students out of school. From these perspectives, raising the minimum wage would only induce students to leave school under very specific (and perhaps relatively rare) circumstances.” (p.1390)The evidence supported that a shift in the minimum wage will not make a detectable change in high school completion rates which detest the claims a higher minimum wage decrease high school completion, but the transition has the potential to be a “push” factor for students that are in particular circumstances. Higher education is a critical factor to the American life. With less students graduating the United States will have a shortage of higher skilled workers. This shortage will lead to actions like outsourcing and hurt our economy. Even though the number that will drop out is minimal they are still able bodied Americans who are settling for less and the minimum wage should not be something an individual can settle for rather than pursuing an education. The reaction of the parties involved lead to an asstionaly argument dismissing the idea of raising the minimum wage.
In the year 2011a source was published by the Associated Press, one of the largest and most trusted sources of independent newsgathering, constructed a video that examined the effects a wage hike in San Francisco would have on all the parties directly involved. The video contains testaments from an employee, a business owner, and a public official all stating their opinion on San Francisco's wage hike to $10.24 an hour, which road on the coattails of Obama’s $15 minimum wage plan. The employee supported the hikes because the extra spending money and keep up with the high cost of living in the area. Any person would react in this manner if the knew they were receiving more money. The owner refutes the increase of the minimum wage due to the excess expenditures he will have to account for now. The politician stated how the increase had potential to spur economic growth in the city. The owner of the local business was the reaction that was of a great deal of importance. The owner was flustered by the hike and stated that it would be a huge financial burden on his business. He said that he would have to cut employees and their hours. This would result in employees not earning as much income as they expected and hindering the people that the bill aimed to help. Veterans of the fast food industry feel negatively about the hikes in concurrence. In a study by the Assistant Editor for Editorial Partnerships at Guardian US, evaluates the success of the $15 dollar minimum wage movement in the past few years and how they have achieved wage hikes in major cities. Like the video from AP the reactions vary dependent on the personnel and how the hikes will affect them in different ways but the managers feared the worst. In the Guardian article the owner of a startup pleaded, “ At this point, as a startup, it would put me out of business. It would also hurt my
employees. Right now, my workers are all high school kids who are cutting their teeth on their first jobs. If the minimum wage went to $15, I would have to hire someone with management experience, which would take the kids out of the running. I don’t think that entry-level jobs should be paid a minimum wage. We can’t go that way without a major overhaul to the economy.” The hikes would be detrimental to small business that are critical to the American economy working efficiently. The loss of business will put employees like the teens out of a job. A survey was conducted by the Employment Policies Institute ( EPI) examined the effects of the New York mandate which requires fast food workers be paid $15 dollars and the effects of this mandate on attitudes in the workplace between veteran employees and entry level employees. The study surveyed 301 employees who earn $12-$15 an hour, 46 percent opposed a law that would require entry-level employees to be paid the same wage that they earn. According to the article ,a majority of these employees surveyed for the poll had two or more years of job experience and at least some college education, suggesting they wouldn’t be thrilled at a new law that allows people with neither of these characteristics to earn their higher wages. The raise would cause a great deal of conflict in the workplace. With an unstable working environment the quality of consumer goods and services and plummet leaving businesses with an abundance of economic turmoil.
Many people against raising the minimum wage create arguments such as, “it will cause inflation”, or, “ it will result in job loss.” Not only are these arguments terribly untrue, they also cause a sense of panic towards the majority working-class. Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has consistently increased, even when the wage has been
“Franklin Roosevelt’s 1937 impassioned speech calling on Congress to help the one-third of Americans who were “ill-housed, ill-clad, and ill-nourished” heralded in the Fair Labor Standards Act of 1938 and with it a national minimum wage. Echoes of that speech are still heard today. Senator Edward Kennedy (1989: S14707), in his criticism of the most recent increases in the minimum wage, declared:
Understanding the basic concept of minimum wage is important for every single individual. We all live in this world together and it is obvious that there is an order. In order to continue our lives and afford our basic needs, we all need to work and gain wealth. As the old adage says ‘‘There ain’t a such a thing as a free lunch.’’ We need to give up on something that we like to get something else that we like. That’s why, every single individual in the society face trade-offs. However, people have different status. Some people work as employees and some work as employers. In that case of minimum wage the trade off is between employees and employers. Employees work for employers in order to gain money and afford their minimal living expenses whereas employers give up on their money and pay for employees because employers take care of their need of labor. Employers pay for their workers who we call employees and employees gain hourly money. The calculated minimum money that they gain in an hour base called minimum wages. Besides, there is this cycle that everyone actually works
The article that I am studying is Zeynep Ton's A minimum wage hike could help employers, too, in the Harvard Business Review. This article is a speculative piece about the effects of proposed minimum wage increases at the federal level. The author takes a look at companies that superior wages and benefits for their industry. The underlying theme is that this is juxtaposed against a common argument that raising the minimum wage will be universally harmful.
Minimum wage is a topic that has been popping up since the 1980s. From whether we should lower it, or even raise it, but now in the 2000s minimum wage has been the center of attention more than ever. There are two sides to this topic of minimum wage; whether it creates more jobs or does not create jobs. Those who argue that raising minimum wage will create more jobs will have a rebuttal which is that it does not only cause the loss of jobs but that it would make things much worse and vice versa for those arguing raising minimum wage will cause loss of jobs. There will be two authors representing opposite views, Nicholas Johnson supporting minimum wage will not cost jobs with his article “ Evidence Shows Raising Minimum Wage Hasn’t Cost Jobs”
One way raising minimum wage will be beneficial is that it could lift many Americans out of poverty. Raising the minimum wage in Illinois, would help the families of more than 1.1 million workers who work to meet their children’s basic needs and “reduce the adverse effects of poverty on a child’s well-being” (Fiscal Policy Center). Studies have shown that raising the minimum wage would help 1 in 5 Illinois families who are in poverty. By raising the minimum wage in Illinois, it would help workers with families spend money on food, housing, gas, and other needs without going into poverty. Along with puling Americans out of poverty, raising the minimum wage could also stimulate economic growth. Raising the minimum wage, is stimulating economic growth by worsening the income inequality and substantially reducing the employee turnover for the business. Increasing a person’s income would raise their yearly earnings by $3,640 and “Improve the economic security and reduce the economies poverty rate” (Fiscal Policy Center). Low-wage workers spend most of what they earn on their basic needs, which is quickly spent and does not leave the worker with much money left to spend on other needs. This boost in the minimum wage will stimulate the economy and help create opportunities for more people, by hiring more workers to keep up with the
Raising the minimum wage to $15 an hour has been extensively debated over the last year or so. Minimum wage is the undermost wage allowed by law to be given to an employee for their services. Introduced in 1939, its purpose was to stabilize the economy, which was healing from the Great Depression. Most importantly, it was designed to protect the health and welling-being of employees. Currently, the Federal Government 's minimum is $7.25 per hour ($14,500 per year). The ones in favor of the increase are saying that it used to be a living wage; however, now it is not and it now needs to be line with changes to the cost of living. In addition, an increase in minimum wage can increase the productivity and decrease income inequality and poverty. On the other spectrum, the ones who are against the increase are saying that the increased labor cost will drive up unemployment, affect small businesses negatively, and cause other workers from different
Jarred Bernstein argues in favor of raising the minimum wage he cites many positive aspects to raising the wage as well as how the cost for such an increase can be offset in a variety of ways, without the necessity of mass firing or even a hiring freeze. Kevin Hassett argues from the point of view that raising the minimum wage will help some and harm many more. The article presents a point comparison of the issue and each one of the points is placed side by side. The reader gets to choose which economist they prefer, however the article conveniently omits points that are proven such as the Ford Motor company from it, so it deals almost entirely in
Minimum wage is a difficult number to decide on because it affects different income earning citizens in different ways. According to Principles of Microeconomics, by N. Gregory Mankiw, minimum wage is a law that establishes the lowest price for labor that and employer may pay (Mankiw 6-1b). Currently, the minimum wage in the United States is $7.25 per hour. For many years politicians and citizens have argued on what should be the minimum wage that would benefit the economy and society in general. A minimum wage was first established in 1938 to increase the standard of living of lower class workers. To discuss what is better for the country and its citizens, people have to understand what is a minimum wage and what are its effects.
Fast-food workers have been protesting for a minimum wage of $15 dollars an hour and the freedom to unionize. The workers have organized numerous protests this year. During the protests they have walked out and chanted slogans regarding their pay. The main fast-food companies that are effected is McDonald's and Burger King. They both have stated that they will not press charges and indeed are allowing the workers to return. These workers that are participating in the strike doesn’t represent the majority of the fast-food employees. The people participating in the strike are not only youths but adults and elders as well. Due to the countries low employment rate many of these workers are supporting a family or other dependents. This is where most of the fast-food workers are getting their motivation to protest this industry. Unfortunately, many Americans are questioning the negative economic effects of their proposed wage and their lack of worthiness to receive that big of a pay raise. However, I believe that with some adjustment and research we can find a way to make everyone happy. My solution advises that we support Obama’s nine dollars an hour minimum wage proposal. It will give the fast-food workers financial support, release the burden of the taxpayer’s assistance, and keep inflation balanced.
Washington has the nation’s highest minimum wage at $9.19 per hour. Seattle is set to raise the minimum wage even further, to $15 per hour. More than fifteen millions people work for a minimum wage, which lead to about fifteen thousand dollars a year. These workers would earn a lilt bit below the poverty line for a family of two (Blankinship). Seattle Mayor Ed Murray is pushing this effort since December of last year. Some council members, like Kshama Sawant of the Socialist Party, also support this measure. The federal minimum wage is currently set at $7.25 an hour, with President Obama’s plans to push it to $10.10 an hour (Weissman). Faster workers went on strike in many cities to demand better pay and right to unionize. $15 an hour is part of their demand when they protested in August of 2013 across fifty cities. In this current economy, people ages 25 to 54 are the largest group to hold fast food jobs. Since these jobs pay so little, these workers qualified and used $243 billion in public benefit per year (Covert). Although this is a popular policy, economists and journalists are conflicted in their analysis of the effect of increasing the minimum wage. Some economists found the minimum wage hikes lead to small j...
"Bill Gates: Raising Minimum Wage Can Destroy Jobs." The Foundry Conservative Policy News from The Heritage Foundation. N.p., n.d. Web. 14 Mar. 2014.
Staff, NPR. "Raising Minimum Wage: A Help Or Harm?" NPR. NPR, 8 July 2012. Web. 20 May 2014.
Since its inception, the minimum wage has been a hotbed for debate. If today’s leaders could manage to increase minimum wage, millions of families would benefit.
Bernstein, Jared. “Would Raising the Minimum Wage Harm the Economy?” The CQ Researcher 16 Dec. 2005:1069.