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History of minimum wage essay
Negative effects of raising the minimum wage on the economy
History of minimum wage essay
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Congress enacted the federal minimum wage in 1938, during the Great Depression. Congress had two goals; keeping workers away from poverty and boosting consumer spending for economic recovery. Today, there is a debate, whether we should increase the minimum wage again. Increasing the minimum wage is useful for several reasons. First, the current minimum wage has failed to keep up with inflation. Second, a higher income level reduces employee turnover and increases efficiency and ultimately, raising the minimum wage does not reduce employment. Even with high unemployment rates, the minimum wage is useful for the economy.
Today "the federal minimum wage" is $7.25 per hour since July 24, 2009. It has failed to keep up with inflation. The real value of the minimum wage rose steadily from 1938 until its value reached a peak in 1968. Thereafter, it suffered severe erosion as Congress failed to adjust for the inflation over time. The minimum wage of $1.60 an hour in 1968 would be $10.47 today when adjusted for inflation. This means that the purchasing power of the minimum wage has decreased significantly over time. The current minimum wage is no longer enough to protect workers out of poverty. A person who earns the minimum wage and works full-time (40 hours/week, 52 weeks/year) only earns about $12,000 in a year. This is almost $7,000 below the poverty line for a family of three ($19,090) according to the federal poverty guidelines. As a result, the gap between poor and high-income families is continuously increasing, and taxpayers have to pay more for public assistance such as food stamps and Medicaid. Increasing the minimum wage can increase the annual income of low-income families and reduce the public assistance expenditures by g...
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...litical Science, London, UK.
Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania; David Card and Alan B. Krueger, The American Economic Review, Vol. 84, No. 4 (Sep., 1994), pp. 772-793
The Effect of the Minimum Wage on the Fast-Food Industry; Lawrence F. Katz and Alan B. Krueger, Industrial and Labor Relations Review, Vol. 46, No. 1 (Oct., 1992), pp. 6-21
Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties; Arindrajit Dube, T. William Lester, and Michael Reich, Review of Economics and Statistics (2010) 92:4, 945-964
Do Minimum Wages Really Reduce Teen Employment?; ALLEGRETTO, S. A., DUBE, A. And REICH, M. (2011), Accounting for Heterogeneity and Selectivity in State Panel Data. Industrial Relations: A Journal of Economy and Society, 50: 205–240. doi: 10.1111/j.1468-232X.2011.00634.x
Poverty continues to grow in America. The average minimum wage in the United States is $7.35 an hour- far too low in today’s society. Key expenses, for example, gas and housing prices, have gone up significantly since the minimum wage was last changed in 2007 (Wagner 52). The laws creating the minimum wage were intended to improve the standard of living and decrease poverty. Raising minimum wage is a vital step in decreasing poverty and giving every family the opportunity to survive and succeed. Millions of hard-working Americans are below the poverty line and need an increase in pay. Minimum wage must be raised because it will diminish poverty and assist the working class to support their families.
The United States minimum wage is not indexed to inflation. Due to this fact, the purchasing power of minimum wage falls as the price of consumer goods increases. The current hourly minimum wage is set at $7.25, however many states do pay above this rate. One example of this is in Michigan, the current hourly minimum wage is $7.40. The last time a change occurred to raise minimum wage was in 2009. President Obama has put out a proposal that is designed to raise the federally required hourly minimum wage to $10.10 in 2015. The public opinion of this proposal is all over the board ranging from a positive outlook to a negative one. Some of the negative remarks are that it would dampen the economy and shrink the hiring done by small businesses. “The Household Survival Budget for the average New Jersey family of four is $58,500 and for a single adult is $25,368 in 2010. These numbers highl...
Obviously minimum wage has increased significantly since 1968 where it was at $1.60 but, how much has it really increased in connection with inflation and rising prices of things such as food, gas, land and etc? That is what's really lost in the whole conversation of increasing minimum wage to give people more money doesn't necessarily mean you can buy more. Senator Tom Harkin made a great statement regarding inflation senator Harkin said "today, tens of millions of hardworking Americans who are earning at or near the minimum wage can’t even aspire to live a middle-class life or achieve the American Dream. Instead, they are falling further and further behind" (Harkin). This is because of inflation, although minimum wage has increased from $1.60 in 1968 to $ 7.25 in 2013 we actually have less buying power. What that means is that $1.60 in 1968 would get us more food than $7.25 would in 2013. People are tricked into thinking that small incremental increases are good because we are making more, guess what we're actually making less. If we kept that $1.60 wage today and indexed it to account for inflation minimum wage should be at $10.56 in 2013.
According to familiesusa.org the poverty line is a single individual who lives alone with no dependents making $11,490 a year. The annual salary goes up by $4,020 for each person you add to the household. Minimum wage is mainly used for part-time jobs, and part-time jobs are not meant to support a family full-time. These jobs are meant for teenagers or people who have others to rely on for income. People who live on minimum wage typically live alone and can support themselves. If a woman has a dependent child she either is receiving additional monetary compensation through ch...
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.
A federal minimum wage was first set in 1938. The first minimum wage was just 25 cents an hour in 1938. Can you imagine surviving off of 25 cents an hour? Now just over 70 years later the federal minimum wage is now 7.25. The question at hand is the federal minimum wage enough to meet the minimum requirement for a good, happy and healthy life? Some states and cities say no. While a select few states and cities have mirrored the federal minimum wage of 7.25, some states have placed their state or city/county minimum wage marginally higher than the federal minimum wage. So why would some states prefer to have a higher level than required by the federal minimum wage when some state have decided to match or even go below the federal minimum wage level. The answer to this question lies within each state city and county and how they perceive the cost of living in the presiding area. Minimum wage needs a makeover in America despite some of the negative effects that may come along with it. This paper will explore the reasons behind federal and state minimum wages and why some of them differ among states counties and cities across America.
The minimum wage today has a lot of issues; some people say it is not enough to live comfortably. Many agree that there needs to be an increase in minimum wages and by doing that it can help with our issues of poverty. Statistics show that a worker who is full time and earning minimum wage makes only $15,080 a year, which is under the federal poverty line for a family of two. (Gitis, 2013) The problem with that is $15,080 is not a sufficient amount that a person can live and grow on. “A family of two can consist of a mother and son or daughter, father and son or ...
The United States hasn't always had a minimum wage. Before the minimum wage was introduced during the Great Depression of the 1930s, there was no national minimum wage, or indeed any legislation to protect workers from exploitation. Due to this lack of regulation, tens of thousands of workers were routinely subjugated in sweatshops and factories, forced to work in horrible conditions, and for only pennies a week. Early attempts by labor unions to create a mandatory minimum wage were ruled unconstitutional by the U.S. Supreme Court on the grounds that they “restricted the worker's right to set the price for his own labor.” This allowed employers to continue abusing their workers through the Great Depression of the 1930s, when the incredible demand for jobs caused wages to drop even further to an all-time low.
Because the cost of living has sky rocketed, it has become almost impossible to raise a family on a minimum wage job. A person living on his or her own cannot survive on minimum wage job either. Their living expense would just be too much. The earnings of minimum wage workers are crucial to their families well being. Evidence from 2013 and 2014 minimum wage increase shows that an average minimum wage worker brings home more than half of his or her family's weekly earnings. In 2013 one million single mothers with children under 18 would have benefited from a minimum wage increase to $10.
Currently, in the United States, the federal minimum wage has been $7.25 for the past six years; however, in 1938 when it first became a law, it was only $0.25. In the United States the federal minimum wage has been raised 22 times since 1938 by a significant amount due to changes in the economy. Minimum wage was created to help America in poverty and consumer power purchasing, but studies have shown that minimum wage increases do not reduce poverty. By increasing the minimum wage, it “will lift some families out of poverty, while other low-skilled workers may lose their jobs, which reduces their income and drops their families into poverty” (Wilson 4). When increasing minimum wage low-skilled, workers living in poor families,
Minimum wage has been around for ages. Minimum wage employment was a temporary condition for people earning little payment until they moved on to a better paying job. These jobs helped build résumés, experiences, and skills for a better career. It has become the easiest way for people to receive easy pay. As years went on that idea began to demolish into a job that many families can get to survive and pay for their expenses. There have been many arguments going on, "Should minimum wage be raised or should it be lowered or eliminated altogether?" This action has its pros and cons. It can benefit many families as living cost has gone up, price for education is rising, and college students are in huge debts. It may increase poverty, but those
Congress created minimum wage with the Fair Labor Standards Act of 1938. The first minimum wage was only 25 centers per hour. Through history the minimum wage has increased a little at a time, umping a couple cents each time. The last time the United States changed the minimum wage was in 2007 which was a large jump from $5.15 per hour to $7.25 per hour. This jump of $2.10 was a large increase. Through the years it is evident that the minimum wage is constantly changing. “. It has averaged $6.60 an hour in purchasing power in 2013 dollars. But it has ranged from a low of $3.09 an hour in late 1948 to a high of $8.67 an hour in 1968(Sherk, J. (2013, June 25).
Today the federal minimum wage is $5.15, but should be about $8.50 if Congress had adjusted it for inflation over the past 35 years. While $5.15 may not seen that bad, when factoring in such variables as sky rocketing gas prices, budgets can get pretty tight. David Shepard, a sophomore at Wayne State University, worked at a Meijer Retail and Grocery Superstore for over two years while in high school. At the time Shepard lived with his parents and didn’t have to worry about paying rent or buying groceries, all that he had to pay for was filling up his gas tank and paying for his car insurance. Shepard recalled, “It was all I could do to pay for the basics like gas and bill’s, I barely had any money to have fun on the weekends”. This is only an example of a high school student that can nearly slip by on minimum wage with only a few expenses. There are 1.8 million people in America with children under the age of 18 that would benefit from an increase in minimum wage (Minimum).
Pyke, Alan. "The Minimum Wage: Myths & Facts." Media Matters for America. N.p., 15 Feb. 2013. Web. 18 May 2014.
Many critics claim that that raising minimum wage increases unemployment, especially for unskilled workers, and harms small businesses, including grocery stores and restaurants. The argument declares that companies such as these rely mostly on unskilled workers for labor, and if the minimum wage increases, then their profits and, therefore, hiring would decline, creating a...