Raising the Minimum Wage Essay Example

The minimum wage is the lowest legal remuneration that businesses can offer to their employees. The goal of minimum wage regulations is to protect workers from being exploited by their employers. The minimum wage should be sufficient to cover the costs of a living wage, which is the amount required to cover the costs of food, clothes, and housing. Over time, minimum wages became popular as a way to help low-income families. The first national legislation imposing compulsory union membership and setting minimum salary for its members was passed in the 1890s by New Zealand and Australia. Despite the fact that minimum wage laws are in place in many jurisdictions, there are still disagreements about the benefits and drawbacks of such legislation. The minimum wage has not kept pace with inflation, despite the fact that it is designed to protect employees from exploitation. Although the cost of living has risen, the minimum wage has remained unchanged for years.

The current federal minimum wage is $7.25 per hour, which is insufficient to support anyone. Increases in the minimum wage will raise living standards. The concept that those who work in the lowest-paying jobs should be able to live comfortably is an ethical issue. When the minimum wage is raised, more people will spend more money, which will help the economy grow. According to a 2019 CBO analysis, assuming a minimum hourly wage of $15 by 2025, at least 17 million people would see a significant boost in their standard of living, with an estimated 1.3 million people rising out of poverty. (Maverick, 2020) The more money a person has, the more items he or she can purchase, which helps the economy grow. It not only helps our economy thrive, but it also allows the poorest workers the purchasing ability to buy nicer homes, so raising their level of living. Furthermore, because inflation has outpaced minimum wage hikes, the federal minimum wage's actual worth has declined by 31% since 1968. A higher minimum wage would assist low-income employees in keeping up with rising expenses across the country, paying off debt, and affording better food, housing, medical care, and other necessities.

Another benefit of increasing the minimum wage is that government spending on social and assistance programs would be reduced. Increasing minimum wages has the added benefit of yielding some fiscal dividends for the government in the form of lower spending on government benefits, as low-wage workers are better able to support their families without relying as heavily on government subsidies like health insurance or child care. Workers would be more productive, happier at work, and less inclined to leave or no-show if they could sustain a pleasant living on a minimum wage income. Several studies have found that raising the minimum wage results in fewer employee turnover and absenteeism. This is a win-win situation for both the employee and the company, as excessive staff turnover rates may disrupt operations, hurt corporate morale, and drastically increase hiring costs. To narrow the racial wealth disparity, the minimum wage must be increased. Household income is one of the most important factors in the racial wealth divide. Low-wage workers are overrepresented by people of color. Despite making up only 32% of the workforce, they accounted for 42% of low-wage workers in 2013. Raising the minimum wage would benefit workers of color in particular by increasing their household income and allowing them to catch up to their white colleagues.

Another potential advantage of hiking the minimum wage is an increase in economic growth, as consumer spending often grows in lockstep with incomes. A higher minimum wage would provide millions of employees more discretionary cash, which would flow to merchants and other businesses. Employees would have more money in their pockets if the minimum wage was raised. This increased revenue would increase household spending, causing an economic boom. As a result, consumers will be able to buy more goods and services, businesses will profit from increased spending, and new employment will be generated. According to the most current data from the Economic Policy Institute, increasing the minimum wage to $15 by 2025 will result in a $107 billion increase in income. Raising the minimum wage from $7.25 to $9.80 per hour between 2012 and 2014 would have resulted in the creation of "approximately 100,000 more jobs," according to their earlier estimate.

While some individuals feel that increasing the minimum wage will help the economy and lessen economic disparity, others remain doubtful. They argue that, while raising the minimum wage appears to be a good idea on paper, it would generate a slew of issues in practice and have far-reaching consequences throughout the economy. it is argued that many businesses cannot afford to pay their workers more and will be forced to close, lay off workers, or reduce hiring; those increases have been shown to make it more difficult for low-skilled workers with little or no work experience to find jobs or advance; and that raising the minimum wage at the federal level does not take into account regional cost-of-living variations, which could harm low-income communities. An increase in the minimum wage could result in a large number of overqualified people filling minimum wage employment that would otherwise go to young or inexperienced workers. This could make it difficult for newcomers to the job market who are younger and less experienced to find work and gather experience to advance their careers.

A big rise in the minimum wage might result in widespread layoffs at large and small businesses alike. Employers will reduce the number of people they employ if they are required to pay workers more in order to retain profitability. And, more than likely, the persons laid off would be low-level workers, meaning that although some workers would profit from a higher salary, others would lose their only source of income. (EBR, 2021) According to the Congressional Budget Office, raising the minimum wage from $7.25 to $10.10 would result in 500,000 job losses. (Pros & Cons - ProCon.org 2020) According to a study of 1,213 businesses and human resources professionals, 38% of employers who presently pay minimum wage claimed they would lay off some workers if the minimum wage was raised to $10.10. 54 percent indicated they would cut back on hiring.

 If the federal minimum wage were to rise, many businesses would pass on the extra payroll expenses to their customers. They would hike prices on products and services to preserve profit margins, thereby canceling out the extra buying power that a higher minimum wage would purportedly provide. Not only would this raise inflation, but it would also render basic essentials like food, shelter, and healthcare even more out of reach for the poor. According to a Gallup study from 2013, 60% of small-business owners believe that raising the minimum wage will "harm most small-business owners."  If the federal minimum wage is raised to $15, Jamie Richardson, MBA, Vice President of fast-food chain White Castle, claims that the firm will be forced to close nearly half of its locations and lay off thousands of people.  According to Forbes, a raise in the minimum wage has resulted in the closure of some Wal-Mart stores as well as the cancellation of planned outlets. (Pros & Cons - ProCon.org 2020) Small business owners, who often operate on razor-thin profit margins, would almost certainly bear the brunt of a minimum wage hike. While huge organizations with plenty of cash on hand could handle the additional payroll costs, many small businesses would be unable to do so, forcing them to lay off workers or close down totally. 

While it would enhance many workers' incomes and maybe improve their quality of life, there are numerous crucial economic aspects to consider. Economic conservatives are concerned about the possibility of higher inflation and unemployment, as well as other negative economic consequences; they believe that the solution would simply exacerbate the situation and that wages should be determined by the free market. The last federal minimum wage rise was almost a decade ago, and in recent years, the push for a higher minimum wage has gained traction and strength. In the struggle against poverty, the minimum wage is not a panacea. (“Congress should prioritize raising the minimum wage | PolicyLink,” 2018) However, every effort to alleviate poverty and enhance economic mobility from the bottom to the middle class must include an increase in the minimum wage. Raising the minimum wage would reduce poverty and work in tandem with other poverty-reduction policies to promote income mobility from the bottom up, according to economic research. We must work more to reduce poverty in the world's largest economy. Part of that endeavor should include raising the minimum wage.