12 Jan 2016
Should we Raise the Minimum Wage?
One hotly debated topic in the United States is whether or not we should raise the federal minimum wage. We should raise the minimum wages as the current minimum wage is not sufficient for workers to support their families as the cost of living on the rise. The current federal minimum wage is $7.25 per hour which is $15,080 for a full-time worker. The value of the minimum wage has fallen over the past four decades. In 1968 the federal minimum wage was $1.60 per hour, which is approximately $10.90 in 2015 dollars.
Currently 89% of all people earning minimum wage are adults and usually are supporting families. Increasing the minimum wage is important as it will increase consumer purchasing power. This will help the economy as 70% of the U.S. economy is based off consumer spending. As people will be earning more money they will have an increased demand for goods and services as they now have more money to spend.
In comparison to other developed countries, the U.S. is behind when it comes to minimum wage. Many countries in Europe have set higher minimum wages and still have strong economies contrary to the argument that increasing minimum wage will do more harm than good. While increasing minimum wage will increase the cost for companies it will also increase the disposable income of the workers. The new income that workers have at their disposal will be spent back into the economy. Also two-thirds of all low-wage workers are employed by large companies rather than small businesses. These companies have large gross profits and are able to pay their employees more. Companies have also been able to pay their employees less over the years as the value of the minimum wage has not kept up with the increase in the cost of goods and services. Studies have also shown that increasing the pay that workers receive increase productivity and reduce worker turnover which will also help save companies money.
The original purpose of the federal minimum wage was to increase consumer purchasing power in order to help the economy during the Great Depression. By reducing poverty and allowing consumers to spend more money into the economy the minimum wage promoted growth and contributed to the economic recovery of the United States. This was shown again in 2009 when the minimum wage rose from $6.55 to $7.25 per hour as a method to combat the Great Recession. If raising the minimum wage really does more damage to the economy than good the government would not continue to raise it during hard economic times. Overall if a minimum wage that is gradually increased over time is implemented it will help reduce poverty, increase consumer spending, and help increase productivity of workers benefiting the economy as a whole.
Scheiber, Noam. "What a $15 Minimum Wage Would Mean for Your City." The New York Times. The New York Times, 12 Aug. 2015. Web. 12 Jan. 2016. http://www.nytimes.com/2015/08/13/upshot/what-a-15-minimum-wage-would-mean-for-your-city.html?_r=1
"Countries with Higher Wages than U.S." CNNMoney. Cable News Network. Web. 12 Jan. 2016. http://money.cnn.com/infographic/economy/countries-with-higher-wages-than-united-states/?iid=SF_River
"Employment and Business Effects of Minimum Wage Increases." Http://www.nelp.org. NELP. Web. 12 Jan. 2016. http://www.nelp.org/content/uploads/Minimum-Wage-Basics-Business-Effects.pdf
"Declining Value of the Federal Minimum Wage Is a Major Factor Driving Inequality." Economic Policy Institute. Web. 12 Jan. 2016.