Pros And Cons Of Minimum Wage

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In 1938, the United States Congress endorsed the first federal minimum wage through the Fair Labor Standards Act, (FLSA), which established a rate of twenty-five cents per hour. Originally the minimum wage only pertained to employees involved in interstate commerce, which consisted of the manufacturing, mining and transportation industries. But, in 1961 an amendment was passed to expand the minimum wage to other industries including construction, retail and service businesses. Since then, coverage has expanded to include close to 85% of the current workforce, and the wage rate has been increased 22 times. (Wilson, 2012). However, the minimum wage does not automatically increase in proportion to the cost of living because it is not indexed to inflation (Smith, 2009). The minimum wage prevents employers from paying wages below a certain level. It is the lowest hourly or daily compensation workers can receive. This also means it is the lowest rate workers can ask for their labor (Smith, 2009). The FLSA mandates employers to adhere to state minimum wage laws that could result in a state minimum wage rate set higher than the federal rate. At present, there are 45 states, along with the District of Columbia, that established their own minimum wage laws. Of those that do have their own minimum wage laws, 18 are at a higher rate than the current federal minimum. Five states do not have minimum wage laws established for their labor force, and therefore depend on the FLSA. (Wilson, 2012). The debate on the federal minimum wage is an ongoing issue. Both supporters and opponents to the minimum wage have valid arguments and multiple studies to defend their rationale. However, these studies and statistical reports may be concent... ... middle of paper ... ...ics of a minimum wage. TUTOR2U.com. Retrieved from: http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro- economics-of-a-minimum-wage Shemkus, S. (n.d.). Increasing the minimum wage: pros & cons. SALARY.com. Retrieved from: http://www.salary.com/increasing-the-minimum-wage-pros-cons/ Smith, L. (2009). The minimum wage: does it matter? Investopedia. Retrieved from: http://www.investopedia.com/articles/07/minimum_wage.asp Taylor, S. (2013, February 20). Why raising the US minimum wage will probably not raise unemployment. [Web log post]. Retrieved from: http://www.simontaylorsblog.com/2013/02/20/why-raising-the-us-minimum-wage- will-probably-not-raise-unemployment/ Wilson, M. (2012). The negative effects of minimum wage laws. CATO Institute. Retrieved from: http://www.downsizinggovernment.org/labor/negative-effects-minimum-wage-laws

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