Minimum Wage: Pros and Cons

Only available on StudyMode
  • Download(s) : 1207
  • Published : December 12, 2012
Open Document
Text Preview
The following report explores the topic of US government regulation of the minimum wage, and its advantageous or disadvantageous affects if the wage is raised. This report will also analyze the claims of the benefits and harms of raising the minimum wage by examining the validity and foundations for each argument, as well as provide alternatives to raising the minimum wage in order to help the poverty-stricken and low skilled workers that raising the minimum wage supporters are aiming to do. Minimum wage has been a subject of many debates since its creation in 1938 as a part of the Fair Labor Standards Act.

Pros and Cons of Increasing the Minimum Wage
Minimum wage is a government-enforcedlaw in the labor market that does not permit employers to pay their employees below a certain wage, which is set by the federal and state governments. This antipoverty tool was set in the Fair Labor Standards Act of 1938 by the administration of President Theodore Roosevelt. As of 2011 in the United States, the minimum wage set by the federal government is at $7.25. Individual states are allowed to set their minimum wage according to how they see fit, as long as the wage is above the federal minimum wage. As of January 1, 2012, the state of California’s minimum wage was set at $8.00. (Katel, 2005) The motivation behind minimum wage is toprotect employees from being exploited by getting paid an extremely low wage, as well as to provide low-skilled workers with a decent enough wage to live at or around the poverty threshold. The issue of whether to raise the minimum wage or not is prevalent today between democrats and republicans, and its utilization and effectiveness are highly scrutinized. While those in favor of raising the minimum wage believe that the increase will aid the poor in earning a higher income, those against it believe that it will harm the very people it is trying to help. Relevant Stakeholders

Although some believe that the issueonly affects the employees receiving the wage, those who support or are against theraising of the minimum wage believe that it has a profound affecton not only the employees, but also their families, employers, businesses, and even the overall economy. Whether this profound effect has a positive or negative impact has been debated since the verystart of the government mandate.

Introduction of the Pros of Raising the Minimum Wage
Stakeholders who are in support of raising the minimum wage want the minimum wage to be raised because they believe it will alleviate poverty and to lessen the divide between low-income and middle class families. This reasoningsuggests that if the minimum wage were raised, then those low-skilled workers would be able to afford essential everyday items andestablish a minimum standard of living. Another reason to support the raising of the minimum wage is that it would act as an economic stimulus. If the low-income families were to receive a salary increase, consumer spending would increase as well and pump money into the economy. Introduction of the Cons of Raising the Minimum Wage

Those who oppose raising the minimum wage argue that increasing the minimum wage would lead to job loss and an increase in unemployment. If employers are forced to increase the wages for their employees, then the overall cost of labor will increase as well. In order to keep the business profitable, employers are then forced to lay off employees. Another reason to oppose a raise in minimum wage is that it will encourage students to devalue their education and quit school to work as a minimum wage employee. Analysis of the Pros of Raising the Minimum Wage

The main intention of the minimum wage is to alleviate poverty, and help the low-skilled workers to earn a wage they can live off of. Although alleviating poverty is a goal that is shared nation-wide, raising the minimum wage may not be directly affecting the target group that...
tracking img