Minimum Wage Good or Bad

Minimum Wage Good or Bad Rachel L. Hathaway Professor Myung Han Economic Problems and Issues – ECO 40500816 March 15, 2009 Whether minimum wage is good or bad, has been an ongoing debate since before 1938 when the government set the first federal minimum wage at $0.25/hr thanks to the Fair Labor Standards Act. The federal minimum wage is currently at $6.55/hr with yet another increase to come July 24, 2009 to begin the federal minimum wage up to $7.25/hr. Minimum wage was ideally set to help the working poor to stay out of poverty. Let’s do the math $6.55* 2080=$13624 per year. 2008 HHS Poverty Guidelines SOURCE: Federal Register, Vol. 73, No. 15, January 23, 2008, pp. 3971–3972 Well, based on the 2008 poverty guidelines if you are a single person you are considered above the poverty line, however, if you are a head of household say a single parent with a child you now fall below the poverty line. It is easy to see that minimum wage will not cut it to make ends meet and provide for just basic needs for food and shelter and the need for child care that you have to have in order to work for the minimum wage of $6.55/Hr. A hike in minimum wage is fun to talk about, but, in the end, economically speaking, it isn’t a worthy option. Higher wages mean higher costs, which mean higher prices across the board. With a $10 minimum wage, the ninety-nine-cent value menu at Wendy’s becomes the $1.99 value menu, and so on, so what’s the point? If $7 an hour isn’t supporting your current lifestyle, then you have other options: a) team up with a friend or family member to help cover living expenses, B) change your lifestyle, or C) use that job as the stepping stone it is meant to be in you quest for better opportunities. (Shepard, 2008, page 229-230) Ok so the minimum wage is increasing to $7.25 in July 2009 that will make the annual income a total of $15,080. Congratulation! Single parents working at minimum wage you are now technically above the

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