Increasing the Minimum Wage in America

4185 words (17 pages) Essay in Social Policy

20/02/19 Social Policy Reference this

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Raising the lowest wages in America has always been a controversial topic. The Federal Government establishes the minimum hourly wages that a worker can be paid and as such, these standards of income impact the entire nation.  These standards of income or minimum wages were written into law to control the unfair practices of sweatshops and other capitalistic, manufacturing firms. However, minimum wage laws of today ensure that the employee being paid is provided with enough money to afford necessities (Edward and Gilman, 1999).  Nevertheless, with rising energy costs, no real affordable heath-care system in place and rising fuel and food costs the minimum minimally covers the average Americans necessities. The controversy and or problems associated with standard wages stem from both the positive and negative impacts that it imparts upon society. For example, as minimum wages increase companies are less likely to hire new employees, to train or retool current employees or to offer incentives and or job advancements.  In reverse, as wages decrease firms began to experience higher levels of employee turnover rates, incidents of accidents and often are left with less qualified applicants (Doyle, 2017). Seeing that much of this countries workforce is made up of hourly employees these minimum wage imbalances typically disrupt the main source of income for many households in America.   

Technology and various factors of life have changed over the years and has greatly advanced. However, what has remained stagnant; is the increases to minimum wages. As such, many people in America are unable to properly provide for their families. Poverty rates have increased as well as the number of the homeless, yet the Federal Government reports that our economy is improving. Nevertheless, many of this great, Nation’s citizens are unable to provide good and nutritional food for themselves and their families. Because of this we are now facing a rising epidemic of poor health and illness in this country. Due in part to the; depression, obesity, poor nutritional lifestyles brought on by poverty (T.H.G,2014). Throughout the years there has been research that has proven that workers who make more than minimum wage tend to be well and in good health. However, the Federal Government feels that by increased minimum wages create heightened levels of unemployment and that if minimum wages were increased above ten dollars per hour that these rates would elevate drastically. Truth be told, if minimum wages could increase as much as $25 an hour and firms and organizations would continue to grow and prosper because their inputs would always be higher than their outputs. Thriving companies like Amazon wouldn’t stop hiring and neither would they have to raise the prices on their goods to compensate for increased wages. Ideally, if wages were raised it would essentially grow the middle-class and low-income worker would be less reliance upon government assistance programs. As a result, hard working Americas are speaking out and protesting for a substantial increase to the minimum wages. This in essence is warranted because over the last few year’s inflation has increased however income has not. According to different reports given by the Labor Board, “2007 amendments increased the minimum wage to $5.85 per hour which took effect on July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009.” Throughout much of this time America was fighting 3 wars, losing several companies to foreign barters, dealing with a real estate crisis as well as an extreme recession. So, these relatively menial increases were not in alignment with gas prices, inflation nor overall citizen expenses. Statics show at the beginning 2017, twenty-nine states have a higher minimum wage than the standard federal rate. Implementing a minimum wage increase would promote equality among the nation, while also paying workers a living wage which will aid in one being able to live a decent and healthy life. Despite the hesitation from employers, many American households live off minimum wage, for this reason lawmakers should increase it; which will aid American families with the ability to afford the cost of living.

Problem

The bare minimum of anything is less than average and as such is subpar! Minimum wage in supposedly ‘Greatest and Strongest Nation’ in the world falls closer to the wages extended to citizens in less developed countries. America is ranked number 9 and has a greater military and infrastructure than at least two of the countries that out pay their citizens. Australia which is ranked number one as it relates to highest minimum wages paid to it’s workers and citizens yet this country founded in 1901 and America was founded in 1776, a whooping 275 years earlier (Papworth, 2012). America’s Minimum wage institution was established in 1933, and upon its inception citizens were paid twenty-five cents an hour. Eventually the wages were raised regularly in the years after, with the time between increases generally ranging between a year, and up to five and six years.  On Jan 1, 1981, the minimum wage increased to three dollars and thirty-five cents and it remains at the level until 1990. The current federal minimum wage has remained the same for the same amount of time. It was last increased on Sept. 1, 2010 at seven dollars and twenty-five cents. (Pollin, Robert; Wicks-Lim, Jeannette,2016).  Currently there are eighteen other states including the District of Columbia who have a higher minimum wage than what is typically required by federal law. However, there are still six states that don’t even  participate in minimum wage.  The reason why this is a global societal problem is because approximately half of the people earning the minimum wage or less are younger workers who are under the age of twenty-five.  Many of these worked still live with their parents.  Statistic show that forty-one percent stay with their patents while fifteen percent are adults, who are raising a family and twenty-three percent are adults who are barely able to take care of themselves. Although, poverty has been a huge problem for many decades (for all types of families), government officials feel that raising wages would have little effect on these group of people.

Researchers have proven that various states across America have a minimum wage that is higher than what is required at the government level.  However, the federal government gives each state an opportunity to manage their minimum wage by law, but the worker will get the higher pay of the two. “Many economists do not like minimum wage for the simple fact it puts a stop to low-income workers who essentially cannot produce enough monetary worth in their work to cover the minimum wage. Often during various years such as 2008-2012, a worker in these situations has to consider the government, by looking at one’s neighborhood, education level, race, and age (24-65)” (Greory,2014).

 Another factor that could be essential to help increase minimum wage is the coast of living.  Although each state has the authority to have its own minimum wage, some states are less cost efficient than others which require more than the standard minimum. “Most of the global labor force, in any case, is the developing markets.  In addition, for some of these nations, initiating a minimum wage or raising it is unequivocally on the policy agenda. Yet, little is thought about the effects of minimum wages on labor and expectations for living standards in developing markets” (Gregory, 2014).  “The cost of living takes in to account the prices of different goods and services; whereas, housing affordability considers how expensive home prices are in relation to the median family income” (Cooper,2015). However, everyone feels that things are expensive and cost a fortune. After doing research, the states that have major metro areas (such as New York and San Francisco), often gain attraction for tourist and other perks which can make it least affordable.  If the cost of living is higher than minimum wage, it increases the ability to get another job or ask for government assistance. Statics also show that 30-50% of one’s income is spent on rent and utilities, which in some cases it is 90% of their household income.  “Although some people are rent-burdened, and cannot afford basics necessities, such as fresh fruits and vegetables; so alternatively, they consume un healthy food that eventual causes health problems”. (Tsao et al 2016). Most minimum wage worker due to the lack of income cannot afford the health benefits that they need to stay healthy. Nevertheless, their ailments worsen and often time an individual may start to have feelings of depression or feeling down about their situation, this type of mindset is also unhealthy for low income Americans.

Solution

A probable solution to increasing minimum wages is to guarantee basic income programs like Housing Urban Development also known as HUD.  “HUD is a public housing program for all sizes and types of families, which provides housing from houses to apartments, even for the elderly. This program was developed to provide housing and community development assistance and to make sure everyone has access to “fair and equal housing” (Reich,2015).   Another opportunity for low-income families is the government assistance program that helps provide food for low income families also known as the SNAP program. This program aids with food purchases for low-income or no income families; living in the United States. SNAP benefits cost about seventy billion dollars a year and provide for about forty-four billion people.  This number represents about fourteen percent of the population, which adds up to be $125.51 per month for each person. SNAP is one of the largest nutrition programs in American; for low income families.  After reviewing the article The Effects of Minimum Wage on Food Stamps, many government officials feel that one should not have it both ways, they should not be able to collect on both benefits. Their rationale is that if minimum wages increases, that the Snap benefits decrease.  This would have an adverse effect on one’s health or possible affect the children in that household.  Government officials have spent numerus of time on discussing the issue for the welfare plan. However; since 2014, there has been an estimated increase on minimum wages and a decrease in SNAP participation, by 3.95 percent.  These results indicate that the government is going in the right direction in saving taxpayer money (Reich,2015). Although these individuals receive SNAP benefits some households still are facing the greatest hardship and most likely face a decrease in food security, rather than people who are not receiving SNAP benefits. However, SNAP enrollment seems to increase in periods of prosperity.

Another solution to increasing minimum wages could be raising the child tax credit.  Families with children could really use the extra money that is provided form the benefit from child tax credit program. Many government officials are in favor of increasing the child tax credit, they say it is highly unlikely that it would be and increase in minimum wage. However, this strategy would help struggling families with children with the benefits and necessities that they need. Although most federal governments oppose of the minimum wage law they feel that there better solution for helping workers that only make minimum wage such as the earned income tax credit.  This tax credit is set up for a person who is poor and has earn a certain about due to his or her wages throughout the year.   The earn income tax credit has several advantages for the poor and it favors those who make minimum wage. “One argument often made by minimum wage advocates is that higher minimum wage is necessary to prevent or mitigate the reduction in market wages associated with the labor supply response to a more generous EITC” (Neumark&Washcher, 2011, p. 714).  The standard minimum wage does not cost the tax payer any money because of the higher income tax credit. This is one of the programs that was created so the government would not have to raise minimum wages, by only creating it for low income workers, who are eligible to receive it.  “Economist around the globe, feel that training programs are criticism of raising the minimum wage it is the pay rate of low-skilled people and entry level jobs”(Neumar&Wascher,2002).  The government could install training programs that could potentially improve employee outcomes and help them to be more successful in getting a high paying job.

Evaluation of the Evidence

The evidence used here is all justifiable and dependable and without bias. The various of sources used here are scholarly, peer-reviewed articles which make the information justifiable. There are a few sources used here that would be considered popular sources.  After reading the article, American Journal of Public Health, the authors (Tsao et al 2016) worked with the New York Department of Health and Mental Hygiene, they referenced their work and without bias. This article helped shed light on the health of low-income families. It also helped to explain how beneficial it would be if there was and increase in minimum wage and the effects it would have on and families.  The Effects of Minimum Wage on Food Stamps, is a credible scholarly source to show how the government reasons for not raising minimum wages but should create more programs to help individuals who are suffering with low-income or no income at all.  As a result, the article proved that the government is going in the right direction in saving taxpayer money.  This article is essential to research because it sheds light on the way minimum wages affect people who are less fortunate.  It also takes a closer look at those who have to use government assistance programs in order to support their families.   Statistical data provided gives rationale for raising the minimum wage and to utilize the table of data. Once again, this source is reliable, valid and unbiased.

Several of the sources provide statistical data that need to be illustrated. “The statistic from this graph clearly shows the percentages of families’ income and of those who would be affected by a minimum-wage increase on a generally low to moderate level.  Nearly, 70.7 percent of affected families have a total family income of less than $60,000, and nearly a quarter (23.6 percent) have total family income of less than $20,000. Among all U.S. families, the median family income in 2010 was $60,395” (Current Population Survey, 2010) . Some of the surveys results are incorrect due to lack of education and inaccurate information being provided at the time the survey was given. The source Neumak and Wascher, shows support on finding a solution to help low-income workers.  They were able to shed light on how poverty has affected workers which have low-incomes.  Cooper explains, the percentages of youth and adults that are targeted by the fast food industries and that have no education (2015). This source explains why the government will not increase minimum wage because of the targeted age group.

Ethical outcomes of Solution

Some journalists have stated negative impacts, such as turnover rates and untrained workers for small businesses if wages are increased, the positive aspect of raising wages would have, overall.  After reviewing the statistical data, it shows that mostly teenagers are targeted when mentioning minimum wage, this is because they are one of the largest group that is affected by the minimum wage, which makes it effects more discernable.  After reading the article Pay Equity and the National minimum wage, the author points out that reservation wages of younger workers, which is lower than adult workers. Citizen throughout the country have had many concerns about the status of minimums wage getting abused form primary earners in poor families, more than for the wages of teenagers and other secondary earners form higher-income families. It also raises arguments on why young workers are receiving such low pay and sheds light on the national minimum wage.  The theories of wage control vary, but details pay levels and pay dispersion; thus, proving that pay differs around the world.  These differences are based on job requirements.  Younger adults are also targeted by the fast food industries because of no job experience and lack of education.  Most young adults are just trying to earn extra money rather than trying to take care of a family.  “The average age of affected workers is 36 years old. A larger share of affected workers is age 55 and older (15.3 percent) than are teens (10.7 percent). About two-thirds of affected workers are 25 years old or older” (Cooper, 2015).  There have been numerous of research obtain to show that most teenagers will not be affected by the increase because most teenagers only work part-time because they attend school. Teenagers could also learn these lessons from many other activities or discussions.  Young adults should not just rely on minimum wage; but continue their education, which would lead to an opportunity of getting a better job, when they become an adult.  They will not only have job experience but know the value of money and how it can help provide for their families.   There is various reason on why minimum wage should be increase because society feels like worker are less likely to quit on higher-paid jobs. Sheposh explains how minimum wage has the lowest rate of pay that was set out for mostly the fast food industry.  The government or union negotiated and calculated hourly, weekly and monthly incentives to come up with the first national minimum-wage law.  He presents the establishment and timeline of minimum wage and how it affects certain parts of the country. States like Alabama, Louisiana, Mississippi, South Carolina and Tennessee do not implement the minimum wage law.  According to this article each state and municipality can set its own wage.  “Minimum wage has always been a controversial issue and will continue to be an issue as the cost of living is always rising” (Sheposh, 2016).  However, minimum wage was not meant for workers to rely on as a permanent career, but to only use as temporary financial support. 

There are many reasons that minimum wages should be increase for a worker. The standard minimum wage pay for participating states varies between $7.25 and 9.00; which in today’s society typical family of three people, would barely be able thrive.  However; from a business perspective, the employer gains profit by paying the workers less, but still has the exception for that worker to work hard and come to work every day.  In the article Santa Monica’s Minimum Wage: Assessing the Living Wage Movement’s New Frontier,it mentions that Santa Monica proposed a plan that would raise the minimum wage to $12.25 per hour (2005). After reviewing the statistical data of this source, it shows that many businesses would close due to the increase.  Studies also show that some business relocate, this is done so they will not have to pay the workers more money. It is unfair that some businesses cheat their employees out of money, so they can make more profit. 

It continues to be controversial topic around the globe that the less fortunate or low-income community would be better if the government officials would come together and increase the minimum wage.  This would be beneficial, instead of developing various programs such as SNAP, earned income tax credit, and federal housing. It gives them a chance at a better life and helps them take care of their families, especially those who have unaffordable health issues.  It is immoral and unjustifiable to make someone work forty hours a week and still not be able to live.  Everyone’s situation is different but giving them the opportunity to take care of their families is morally right and ethical. If the government will increase minimum wages and keep certain government programs, then add the installation of training programs to benefit low-income and uneducated workers, they will have the opportunity to get a higher paying job.  In turn, they would no longer need the aid of federal programs; thus, this will be a great solution for the worker, as well as, the government. Minimum wages were set to only help the younger workers while in school, and other adults with no job experience. Many economists argue that by increasing minimum wage does not only help low-income worker, but all workers. 

Conclusion

While increasing minimum wage will always continue to be a controversial topic around the world, the wealthy have argued that the poor would be better off if the government officials would not waste their time trying to increase minimum wage.  They should instead, create more programs that will be beneficial to workers to help them get better paying jobs.  Some feel that minimum wage will reduce employment, but not by as much as there are so many people who want to work, but can not due to health issue, education, and various other issues. Increasing minimum wages has benefits for all workers, not just the one that the government targets like young workers, single adults, and worker who are 55 and older.  President Barack Obama has stated on many occasion that increasing the minimum wage is very essential to addressing the income gap in America. Raising minimum wage does not just help families financially, but it helps them feel better about themselves.  Morale would increase because they would be able to take care of their families and develop good morals and standards. However, it can help take care of health issues and not use federal programs, because they will obtain a higher paying job, which will carry health insurance and that they can afford. Making more money with just a simple increase can give a household an opportunity to be successful and take care of one’s family.  Poverty in America is at an all-time high and the lower-class has been affected by the increase in the cost of living. We have to find a way for government officials to make the decision to increase minimum wages.

References

Brosnan, P. (n.d.). The Minimum Wage in a Global Context. The Handbook of Globalization, Second Edition. doi:10.4337/9780857931443.00020

Cooper, D. (2015). Raising the Minimum Wage to $12 by 2020 Would Lift Wages for 35 Million American Workers | Economic Policy Institute. Retrieved from http://www.epi.org/publication/raising-the-minimum-wage-to-12-by-2020-would-lift-wages-for-35-million-american-workers/

Doyle, A. 14 Dec 2017. Pros and Cons of Raising Minimum Wage. Web. https://www.thebalance.com/pros-and-cons-of-raising-the-minimum-wage-2062521

Edwards, P., & Gilman, M. (1999). Pay equity and the national minimum wage: What can

theories tell us? Human Resource Management Journal, 9(1), 20-38. Retrieved from http://search.proquest.com/docview/199448047?accountid=32521

Gregory, T. (2014). When the Minimum Wage Bites Back: Quantile Treatment Effects of a Sectoral Minimum Wage in Germany. SSRN Electronic Journal. doi:10.2139/ssrn.2567167

Meer, J., & West, J. (2016). Effects of the Minimum Wage on Employment Dynamics. Journal Of Human Resources, 51(2), 500-522.

Neumark, D., & Wascher, W. (2002). Do Minimum Wages Fight Poverty. Economic Inquiry, 40(3), 315.

Papworth, J. 26 Oct. 2012. How Good is Great Britian’s Minimum Wage? Web.             https://www.theguardian.com/money/2012/oct/26/how-good-britain-minimum-wage

Pollin, Robert; Wicks-Lim, Jeannette.  A $15 U.S. minimum wage: How fast-food industry

could adjust without shedding jobs.  Journal of Economic Issues (M.E. Sharpe Inc.). Sep2016, Vol. 50 Issue 3, p716-744. 29p. 10 Charts. DOI: 10.1080/00213624.2016.1210382

Reich, Michael. Industrial Relations. “The Effects of Minimum Wage on Food

Stamps”. Oct2015, Vol. 54 Issue 4, p668-694. 27p. 8 Charts, 1 Map DOI: 10.1111/irel.12105.

Sanders, R. H., & Williams, E. D. (2005, February). Assessing the Living Wage Movement’s                        

New Frontier. Santa Monica’s Minimum Wage:, 19(1). doi:10.1177/0891242404268705

Sheposh, R. January,2016 2p. “Minimum Wages around the World” Salem Press. Web. 26 Jan. 2016. http://www.wageindicator.org/main/salary/minimum-wageontier. Santa Monica’s Minimum Wage:, 19(1). doi:10.1177/0891242404268705

Tsao et al. (June 2016). Estimating potential reductions in premature mortality in New York City from raising the minimum wage to $15. American Journal of Public Health, 106(6): 1036-1041

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