Minimum Wage

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The concept of minimum wage is to ensure that employers do not pay wages below the mandated level. However this does not always happen instead this policy ends up hurting these workers and the economy in terms of lower job opportunities. This is because the increase of labor costs keeping all other things constant would eat into the net profits of the company. Therefore in order to offset the decrease in profits, the need for low skilled labor decreases and companies look for higher productivity workers. The groups that are directly affected by the minimum wage consists of young workers or teenagers, part-time workers and workers from non-poor families. According to the Bureau of Labor Statistics, 1.8 million paid-hourly employees were paid the federal minimum wage of $7.25 in 2010.5 These 1.8 million employees can be broken down into two broad groups: Roughly half (49.0 percent) are teenagers or young adults aged 24 or under. A large majority (62.2 percent) of this group live in families with incomes two or more times the official poverty level.6 Looking just at the families of teenaged minimum wage workers, the average income is almost $70,600, and only 16.8 percent are below the poverty line.7 Note that the federal minimum wage applies to workers of all ages.8 The other half (51.0 percent) are aged 25 and up.9 More of these workers live in poor families (29.2 percent) or near the poverty level (46.2 percent had family incomes less than 1.5 times the poverty level).10However, even within this half of all minimum wage employees, 24.8 percent voluntarily work part-time, and just 34.3 percent are full-time full-year employees.11 Only 20.8 percent of all minimum wage workers are family heads or spouses working full time, 30.8 percent were children, and 32.2 percent are young Americans enrolled in school.12 The popular belief that minimum wage workers are poor adults (25 years old or older), working full time and trying to raise a family is largely untrue. Just 4.7...
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