Research Paper Sample on Minimum Wage

Scott Horsley, Chief Economics Correspondent for NPR, covers the economy's peaks and troughs, as well as the political divisions that exist between flourishing and bursting areas. He highlights in one of his findings that consumer prices were 5.4 percent higher in July than a year earlier, according to the Labor Department. Most of the recent increase in inflation has been generated by technical impediments, like a chip scarcity that slowed new automobile manufacture and drove up the price of old cars. While some argue that low wages hurt all workers and by raising the minimum wage will help prosper a difference in the world and the economy. Others believe what raising the minimum wage will destroy people and the economy overall. In most circumstances, raising the minimum wage seems luxurious and euphoric because of improved living conditions and the assistance it provides to minority employees, but it is all a set-up for further damage and difficulties inside each community, business, and individual.

The federal minimum wage was established at $0.25 per hour in 1938, which was $4.6 in 2020. By 1950, the minimum wage had climbed to $0.75 per hour. The purchasing power of the federal minimum wage has shifted; the highest level in 1968 was $1.60 per hour, which is comparable to $11.91 in 2020. Deciding whether increasing minimum wages will be beneficial or unbeneficial to people, has become a major debate between policymakers, enforcing $15 the minimum. Hyperinflation is a particularly terrible form of inflation. When the price of products rises uncontrollably over a long period, this behavior occurs. In most cases, this would imply a monthly inflation rate of 50% or higher. The minimum wage is the minimum income that companies are legally permitted to pay their staff, as well as the minimum price below which employees are not allowed to sell their labor.

 Conservatives of raising the minimum wage claim that increased salaries will have various negative consequences, including inflation, decreased company competitiveness, and job losses. Minimum wage supporters claim that reforms are required to help salaries keep up with rising living expenses and that a minimum wage increase will bring in millions of people out of extreme poverty. Studies from Federal Reserve Bank in Cleveland, “found that although low-income workers see wage increases when the minimum wage is raised, ‘their hours and employment decline, and the combined effect of these changes is a decline in earned income’” (ProCon.org 2). Jobs are necessary to survive and earn money but raising minimum wages will result in the layoff of many of those individuals. Many people claim that increasing the minimum wage will help poverty people or in the worst-case families but, how are you helping when increasing the minimum wage will cause more deployment than anything. Bosses will be looking for the most skilled in this case, meaning that even if you are not the best and work hard the boss will consider firing you. So, are policymakers trying to help people or discourage them? This matters because all the consequences of increased minimum wages affect inflation. Do we want the price of a cheeseburger for example to be around $5.00 for one? Or a gallon of milk to be $6.00 for one? Whom are we helping? Only those who are getting the minimum wage, but how many and who is getting the money?

Inflation already precedes to be present in 2021, increasing minimum wages would only increase the cost of consumer products more. “It will raise prices for those who can afford it the least. Big businesses and high-end restaurants often support higher minimum wages” (Skorup 7). “NBC News found that the price of a cup of coffee went up by 10 to 20% in Oakland, California, after a 36% minimum wage hike in the city to $12.25” (ProCon.org 4). Those who preserve cash reserves and those with fixed income will be harmed by inflation. Inflation will assist people with huge debts, making it simpler to repay their loans as prices rise.

A higher minimum wage would increase the actual income of low-wage employees who already have employment, pulling some of their families out of poverty. Unfortunately, some families' incomes would suffer from the effects of other workers being laid off and company owners having to bear at least part of the higher labor expenses. The effects of those income changes would vary across families. Changes in earnings would mainly affect low-income families, but many higher-income families would be affected, too. The loss in business income would be mostly borne by families well above the poverty line. All consumers would pay higher prices, but higher-income families, who spend more, would pay more of those costs. And the cost of effects on the overall economy would generally accrue to families in proportion to their income, which means they would largely be absorbed by families with income well above the poverty threshold” (CBO 14). With this outlook on increasing minimum wages, supporters and non-supporters take away that increasing minimum wages, in this case, will be affecting non-poverty and poverty families.

If the minimum wage rises, there is a possibility, that adolescents and young adults may be fired or jobless. Associate Professor of Economics at Susquehanna University, Matthew Rousu, Ph.D., Matthew Rousu, Ph.D., Associate Professor of Economics at Susquehanna University, “wrote in a 2014 article that the federal minimum wage ‘has a devastating impact on teenagers’ because firms will not pay many young workers with no skills or experience minimum wage, let alone a higher wage” (ProCon.org 5). The overall percentage of teenage workers is 20%. In this case, what are you teaching teenagers? What if they don’t proceed to go to college and get a good degree and finish, it will be 10 times harder to get or find a job? Or let teenagers have a mindset that they might be jobless. Whom are we helping?

Minimum wage advocates say that improvements are essential to help salaries keep up with rising living expenses and that a minimum wage increase will rake in millions of people out of extreme poverty. “Raising the minimum wage and indexing it to inflation would ensure that low-wage workers could adopt a standard of living commensurate with the current economy” (ProCon.org 4). It would contribute to the abolition of low-wage jobs, implying that they are especially concerned with this scenario. It is important because, for some, it provides a solution to a variety of economic and family income issues. It matters more to proponents who think this since it will assist elite problems across the world, according to them.

Who will fix or enhance this debate? Policies, but not just any kind, specifically a monetary policy aiming at attaining full employment by matching pay growth to productivity growth. Initiatives to increase employment with a special focus, public investment, and infrastructure. Correcting our trade deficit is significantly important to facilitate a full employment one.