Top-Rated Free Essay

minimum wage

Powerful Essays
Should We Raise the Minimum Wage to the Average Pay Rate?
April Alston
Melisa Fennern
Sharon Grady
Nicole Huffman
Terika White
University of Phoenix
BCOM/275
September 30, 2013
Michelle Maldonado

“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 a raise. 43 percent of these workers have some college education and could use the extra money to pay loans off faster.”
People who earn minimum wage do not have the same recourses compared to people who have better paying jobs. Those earning minimum wage are more likely not be able to afford health care. Not possessing health care reduces preventive care, causing employee to take time off for personal illness or family members who become ill. “Insurance does not have society money - but it does appear to make people mentally and physically healthier” (Leonhardt, 2011).
Among minimum wage employees who have very limited financial resources besides health insurance coverage, they usually do not have paid vacation time and the most reliable childcare. Producing extra income can make a big difference in their personal and their family’s well-being. This would increase potential effectiveness in the workplace, by not missing work for personal appointments and lack of childcare. It would also encourage the employee to work harder. Changes in the workplaces are importance to employees. They can also increase positive business outcomes for employers, creating a potential win for both employee and employer.
Possessing money to pay bills, pay off debts only increases personal confidence. Personal confidence leads people to perform better in their jobs and businesses would increase in their profits. This would lead to more people buying more products. Then there would have to be more jobs created to produce the product being purchased.
Companies will no longer provide insurance benefits, or minimum wage to its employees. If the American minimum wage laws forced its businesses to increase the minimum wage, these companies will look into other options, including outsourcing jobs outside the United States, where labor rates are much cheaper. According to Boesler, (2013), @Q
Out of the 20 or more countries listed on The Economist’s Big Mac Index from 2012, the United States has the 7th highest minimum wage on an absolute basis, about the median number," say the strategists. "The absolute lowest federal minimum wage is in Sierra Leone where workers can expect just $0.03/hour. India is the lowest among larger economies with a $0.28/hour rate. Australia is at the opposite end of the spectrum with a whopping $16.88 hourly mandated wage.
Outsourcing occurs when U.S. companies hire foreign workers instead of Americans. When businesses outsource American jobs, they are trying to cut costs. A minimum wage causes companies to minimize business in America and also can create incentives for businesses to hire foreign workers in countries such as Canada, Mexico, and India. American companies may have to outsource out of the United States because they may lose revenue, or have to close their businesses if they cannot find better ways to cut costs to compete with foreign competitors. People in other countries do not benefit from outsourced jobs, and some companies often do not provide humane working conditions. Other countries may hire children to perform outsourced work. To stop companies from outsourcing jobs is to provide more incentives for doing business in America such as tax cuts. Reducing or eliminating minimum wage will improve the economy if companies would start hiring workers in the United States, which would cause unemployment to decrease, keep money circulating within the economy, and improve conditions.
With an increase in minimum wage, businesses from small to large will scale back to the minimum number staff needed to perform the maximum amount of work. Retail stores already impacted by the economy have eliminated full-time associate positions and reduced the number of managers needed to oversee different operations and departments. Larger companies are eliminating part-time jobs and utilizing temp agencies to produce the same amount of work without having to pay for insurance benefits. These cut backs have allowed companies to survive in this economy. Employees receiving the purposed increase in pay will in return be asked to take on more responsibility and duties from the staff reduction necessary to give them the increase. The wage earned should reflect the amount and quality of work completed. Companies will begin to dismiss low performing staff and employees with occurrences or attendance issues. “…an increase in the minimum wage above a competitive equilibrium causes an unambiguous reduction in labor demand.” (Dube, Lester, & Reich, 2011, para. 1). When companies have more to choose from and less available, they can afford to pick and choose more carefully and deliberately from the pool of applicants. When companies can afford to pick the elite applicants there is less need for as much supervision. The restructure of businesses across the country will take effect and result in less work available for those who were considered to have a skill or talent mismatch. Younger generations will find the job market nearly impossible to break into. Why hire a 20 year old high school graduate with no experience for the same amount of money it costs to hire a 30 year old college graduate with 10 more years of work experience? Business restructuring will occur as long as there is a business. Positive outcome or negative depends on the circumstance prompting the restructure.
History has proven that the more money people make the prices of goods and services go up. This is called inflation, and defined as, “a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to the available goods and services” (“Merriam-Webster”, 2013). Most of the industries that would be affected by an increase in minimum wage would be entry-level positions like fast food workers and cashiers at local businesses. There is a domino effect that will happen with these companies’ products, starting with their distributors. Their distributers will need to raise prices on their products because they will have to start paying their workers more money to produce these products, thus making the store raise their prices to cover costs to turn a profit. The U.S. government claims that they have factored inflation into the $1.75 minimum wage pay increase. With the extended period that there has been no adjustments in minimum wage, and with inflation increasing, the real value of the dollar has not increased (“Inflation and the Real Minimum Wage: A Fact Sheet,” 2013). There have been some adjustments made to account for inflation of goods and services but this just causes more inflation in prices. There was a substantial inflation increase when the minimum wage rate was raised from $3.35 (1981) to $3.80 in 1990, bringing the inflation rates from 87.5 at the beginning of 1981 to 132.2 by the end of 1990 (“CPI Detailed Report”, 2013, pg. 91, Table. 27). This is a lengthy period but, by looking at the referenced table (“CPI Detailed Report”, 2013, pg.91, Table 27) inflation prices go from intervals of .5 or one to intervals of 1.5 or two. Time has proven that raising minimum wage will cause inflation on Americas’ goods and services.
Our debate although would seem equal on both sides includes the argument that companies will have to raise their prices. What used to be the dollar menu becomes the three dollar menu, which still leaves us broke. The general consensus is that we should not raise the minimum wage due to fact that less government assistance needed or general enjoyment of the job, doesn't cover the fact that people won't have the jobs if they are outsourced to other countries or their hours are cut. When all is said and done people will be making the same money if not less. Wage laws have been fought for over a hundred years. It usually is discussed between minorities such as immigrants, women, or children. Franklin D Roosevelt fought for fair labor standards for everyone for over a year and before that cases went back to 1918 of Federal child labor laws. (Grossman 1978) Representative John McClellan of Arkansas supports our claim of not raising the minimum wage when he rhetorically asked in 1965, "What profiteth the laborer of the South if he gain the enactment of a wage and hour law -- 40 cents per hour and 40 hours per week -- if he then lose the opportunity to work?"(McClellan 1965)

Page | 8

You May Also Find These Documents Helpful

  • Good Essays

    This nation has finally realized that the time to raise the minimum wage is long past due. Federal minimum wage has not been raised in over 8 years, since September of 1997. This is only the second time that the minimum wage has remained unchanged for such a long period of time, the other period being between 1981 and 1990. At this time, the minimum wage is now only equal to about 32 percent of the average wage for private, non-supervisory workers. (Wendland)…

    • 605 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Minimum Wage

    • 1906 Words
    • 8 Pages

    Minimum wage is defined as the lowest possible income that an employer can legally pay an employee. This ensures that all people are fairly paid and not defrauded by companies or businesses. Minimum wage is now a staple in 90 percent of countries in the world (Minimum). Even with these minimums, a person’s lifestyle is hard to maintain. Sustainability, in my opinion, is the ability to keep or maintain a certain amount of physical or mental property. In this light of sustainability, minimum wage is not a sustainable amount of money in which to survive with a basic quality of life. There are many supporters and objectors to the minimum wage debate. Supporters say that increasing minimum wage increases the workers earning power and wages. Objectors say that increasing minimum wage only leads to unemployment due to small companies’ inability to pay workers. Also the increased inflation rate of goods only hurts the economy, which leads to many jobs being lost, mainly the jobs held by minimum wage patrons. Although this is a heated debate there is one thing to which both sides agree; something needs to be implemented so that workers are not exploited by businesses. Economists are exploring the viability of minimum wage, the standard minimum wage payments, and if there is anything we can do to keep the world on an equal playing field.…

    • 1906 Words
    • 8 Pages
    Good Essays
  • Powerful Essays

    Minimum Wage

    • 1943 Words
    • 8 Pages

    Minimum wage has been a continuing matter since its first establishment, and it is something everyone faces. Though, the recurring problem being brought up again and again is the issue of being underpaid, and is the set minimum wage fair? And will raising minimum wage be more beneficial or harmful in the long run? Through its history can society better understand and find a solution to this problem. Minimum wage was not instituted in the United States until the 1920s, and the idea of wages being determined by the hour was introduced in the 1930s. The Fair Labor Standards Act was born and passed through the Supreme Court in 1938, as well as the Wage and Hour Division. Raising minimum wage has promoted fairness in the work area, and has helped workers earn money for themselves and their families. Through these fairness and equality had been brought about, though its problems have risen throughout after its establishment, questioning its fairness and equality. With the unemployment rate so high, this matter needs to be looked into, as it could potentially save jobs.…

    • 1943 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    rogerian paper-minium wage

    • 1015 Words
    • 3 Pages

    In President Obama’s 2013 State of the Union address, Obama advocated for increasing the federal minimum wage to $9 per hour. The timing of Obama’s speech comes at a time when income inequality has become the biggest economic issue in the United States of America. During the Great Depression, The United States of America designed a minimum wage as part of the Fair Labor Standards Act. Since its inception, the government required minimum wage has grown from 25 cents to $7.25 per hour. Unfortunately, the erosion of consumer buying power has decreased at a compounding rate and in America’s consumerist society the expected standard of living has also gone up with inflation. In response to rising inflation with the Federal minimum wage, states should be allowed to make the decision on price floors such as minimum wage.…

    • 1015 Words
    • 3 Pages
    Good Essays
  • Better Essays

    minimum wages are struggling to live on a salary that is below the poverty threshold. In 2012, the U.S census posted that in a family of three; their income is 18,552, (U.S Census). In most case, one member of the family is working on a minimum wage salary which is below 18,552, (U.S. Dept. of Labor). It has been almost a five years since congress has raised the minimum wage (Huff Post). Throughout my argument, I will share my thoughts as wells as facts on why congress should agree to raise the minimum wage. We the people of this nation are being held victims of the economic downfall. Give us a reason to rise out of this situation so we can move forward and provide better service in whatever way we may be able to do for our fellow Americans; give us an increase.…

    • 1187 Words
    • 4 Pages
    Better Essays
  • Good Essays

    Minimum Wage Effects

    • 1025 Words
    • 5 Pages

    The minimum wage in the United States of America sets the standard of living for all of its citizens by placing a price floor on what amount is acceptable to pay a person for typically unskilled labor. Minimum wage can be traced back to Fair Labor Standard Act in 1938. It was 60-75 cents per hour at the time. However, it has been revised upward due to inflation and pressure from trade unions and interest groups. Interest group argue that raising the minimum wage is a central tool in reducing poverty among unskilled workers in the US. Stigler (1946) argued that minimum wage legislation can be an instrumental tool in eradicating absolute poverty if it combined with other policy measures that are intended to create…

    • 1025 Words
    • 5 Pages
    Good Essays
  • Better Essays

    In 2007, President George W. Bush signed into law the Fair Minimum Wage Act of 2007. The act stated minimum wage would rise from $5.15 to $7.25 within two years following a three-step schedule. The steps were: from $5.15 an hour to $5.85 an hour on July 24th, 2007; from $5.85 an hour to $6.55 an hour on July 24th, 2008; and from $6.55 an hour to $7.25 an hour on July 24th, 2009. The federal minimum wage has since remained at $7.25.…

    • 1127 Words
    • 5 Pages
    Better Essays
  • Good Essays

    While some may argue that raising the minimum wage would help those who don’t have enough money to buy resources, the US should not raise the minimum wage because it will result in people losing their jobs and things getting more expensive. Raising the minimum wage directly affects society because if a lot of people get fired and everything gets more expensive it will be harder for people to get the things that they need to survive.This won’t help the economy it will worsen it. That is why the US should not raise the minimum…

    • 455 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Throughout the nation, a large debate is taking place. Should we raise the federally mandated minimum wage? Should we help out that single mother who can barely pay her rent and get food for her kids? Should we pay her wages that actually are enough to live on? Or will this hurt your local small business owner and tarnish the American dream; the very same American dream that America was built upon hundreds of years ago. These two viewpoints should not be taken lightly; they will determine whether or not the economic future of America is sustainable and prosperous.…

    • 944 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Minimum Wage

    • 873 Words
    • 3 Pages

    raise a family on a minimum wage job. A person living on his or her own cannot…

    • 873 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Minimum Wage

    • 2168 Words
    • 9 Pages

    State the purpose of this legal price, assess its impact on the market for labor, and evaluate the extent to which it achieves its purpose…

    • 2168 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    Minimum Wage

    • 601 Words
    • 3 Pages

    In this year’s State of the Union Address to Congress, President Obama recommended raising the minimum wage to benefit workers who cannot support themselves and their families with their current salaries. The articles, Why We Need to Raise the Minimum Wage and Why We Shouldn’t Raise the Minimum Wage tell us that there were some controversies in raising the minimum wage. As an economics major, I believe it is a bad idea to raise the minimum wage because it creates more unemployment, and it will reduce entry-level jobs. Since increasing minimum wage is not the solution to the poor people, the government should rather increase the earned income tax credit than minimum wage.…

    • 601 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Minimum Wage Proposal

    • 149 Words
    • 1 Page

    Proposal: “I wish I was paid less,” said no one ever while working at a minimum wage job. The raise of the minimum wage has stirred up quarrels in recent politics questioning whether or not it should be upraised or preserved. People all over social media have been discussing and taking sides on whether the minimum wage should be raised from $8.25 to $15. Also, Paul Davidson reported in USA Today that fast-food workers in over one hundred cities protested in favor of the raise (2015).…

    • 149 Words
    • 1 Page
    Good Essays
  • Powerful Essays

    A minimum wage is the lowest hourly, daily, or monthly wage that employers may legally pay to employees or workers. The debate over minimum wage in the United States has been ongoing for over 100 years. It is a hot topic in labor, human interest, and especially in economics. Is the minimum wage too low? Is it too high? Should we have one at all? Does having a minimum legal wage help those who it is intended to help, or does it actually make them worse off? Theses questions are asked on a daily basis by interested parties. While there may not be one definitive correct answer, there are compelling arguments on both sides of the issue, and those who represent their “side” are passionate about their opinions. This is one of a few social topics about which people are generally not indifferent.…

    • 2548 Words
    • 11 Pages
    Powerful Essays
  • Satisfactory Essays

    Caution! This story is not to make you go to sleep it is for you to understand about minimum wage. Minimum wage should be raised because some people need the money. Minimum wage was originally 25 cents an hour, which works out to about $4 per hour in today’s money. That minimum wage was introduced as part of the Fair labor Standards Act. The first federal minimum wage laws were passed in America in 1938. Minimum wage should be raised because of crime, medical, and financial reasons…

    • 424 Words
    • 2 Pages
    Satisfactory Essays

Related Topics