Should We Raise the Minimum Wage to the Average Pay Rate?
University of Phoenix
September 30, 2013
“Should We Raise Minimum Wage to the Federal Average Pay Rate?” On the United States Department of Labor website it states that in 1938 it was decided that a federal minimum wage should be set. When it was set, it was set for the amount of $0.25 an hour. Now as of 2013 it is $7.25 an hour. (Grossman 1978. Washington’s minimum wage is the highest at $9.19 an hour, it joins its 18 other states with a higher wage. Almost half the states agree with the minimum wage; five have wage lower and another five do not even have a minimum wage. There is clearly a divide on the thoughts of raising minimum wage to make things more even. What our group wants to question here today is the raise of minimum wage to the federal average pay rate. In the United States after researching 426,448,460 people in more than a thousand occupations the average pay rate would be $20.60. (United States Department of Labor 2013) Thomas Sowell says it best, `“Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they lose their jobs or fail to find jobs when they enter the labor force. Making it illegal to pay less than a given amount does not make a worker’s productivity worth that amount—and, if it is not, that worker is unlikely to be employed.”(Sowell 2010) First and foremost, that it is right to ensure that each worker earns enough to live on. President Obama said, “no one who works full-time should have to live in poverty”. When a person is working a 40 hour week ($15,080) and not making more than the poverty threshold ($15,510 two person household) this is a problem. So raising the minimum wage will start by allowing working class people to rely less on government assistance. If a family isn’t making ends meet on their take-home pay alone, they have to rely on the community to fill in the gaps in the form of food stamps and state subsidized health care. The working poor’s shortfalls will has become all of our burden, a study by the National Bureau of Economic Research found the less purchasing power the working poor has, the more it contributes to an increase in income inequality. It makes common sense: if what one earns working full time isn’t enough to live on, it makes it nearly impossible to climb out of poverty. 3.8 million workers were paid at or below the federal minimum wage of $7.25 in 2011. Since minimum wage, in many cases, does not cover basic necessities of life, many people that survive on minimum wage spend all or virtually all of the money that they make. By increasing minimum wage families would not have to rely on government assistance; like food stamps and Medicaid, families would also be able to maybe save money and able to spend to increase our economy. The President's proposal to raise the minimum wage by $.90 would generate $1800 in potential income for minimum wage workers. Based on expenditure patterns of an average family, $1800 would buy: Seven months of groceries
One year of health care costs, including insurance premiums, prescription drugs, and out- of-pocket costs Nine months' worth of utility bills
More than a full-year's tuition at a 2-year college
Basic housing costs for almost 4 months
Raising the minimum wage would improve the economy thought the basic understanding of Economic law of supply and demand. The more money one has, the more product one would be able to purchase and consume. Iniguez (2103) states, “Raising the minimum wage boosts consumer demand, as low-income workers spend their higher wages at local businesses.” Iniguez (2013) goes on to say, “That under the new act, more than 30 million Americans would receive...
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