The minimum wage is the lowest wage permitted by law or a special agreement, such as one with a labor union. It functions as the initial salary for entry-level positions, providing employees with an opportunity to progress within the company and ultimately earn higher wages. According to ncsl.org, the average payment for the minimum wage varies from $7.25 to $9.00. Despite this level of compensation barely sustaining a family of three in America, increasing it would elicit contrasting reactions from employees and business owners. While employees would be contented, business owners may express discontentment. Let us explore the advantages and disadvantages of raising the federal minimum wage by analyzing the Congressional Budget Office report.
According to the Chicago Tribune, President Barack Obama has emphasized the importance of increasing the minimum wage to address income inequality in the United States. This action could potentially increase weekly earnings for approximately 16.5 million low-wage workers and help lift around 900,000 individuals out of poverty. Furthermore, wheniwork.com argues that raising the minimum wage would result in higher spending among those earning at or near this rate, ultimately benefiting the overall economy. It would also create more job opportunities, reduce social program costs, lower turnover rates, and potentially impact inflation. However, a study conducted by the Federal Reserve Bank of Chicago presents a contrasting viewpoint on raising the minimum wage.
According to a study, increasing the minimum wage by 10 percent will result in a decrease in low skill employment of approximately 2 to 4 percent and a decrease in total restaurant employment of about 1 to 3 percent. This could lead companies to hire fewer employees or outsource jobs to countries with lower wages, ultimately having a negative impact on job opportunities for Americans (wheniwork.com).
Moreover, minority groups may experience an even greater decline in employment. Specifically, young black and Hispanic teens aged 16 to19 might face a potential decline of 6.6 percent for every 10 percent increase in the minimum wage (epionline.org).
Furthermore, raising the minimum wage can also trigger layoffs, price increases, increased competition, and inconsistent application of minimum wage salaries.
In summary, while raising the minimum wage may benefit those who earn it, it may not be the most effective solution for reducing national poverty. Some argue that creating more job opportunities is a better approach. It’s important to note that only a small percentage of minimum wage workers are in poverty and about 7 percent of families in poverty have a full-time worker, suggesting that inadequate pay is not the sole cause of poverty but rather a lack of employment or insufficient work hours.
Furthermore, increasing the federal minimum wage would impact employment, family income, and the federal budget. This includes higher wages for some hourly government employees and indirect effects on prices of goods and services purchased by the government. Most of these costs would need to be covered by discretionary appropriations, which are currently capped until 2021.
When considering the change in minimum wage, I remain neutral as both sides of the debate have been presented with research and arguments showcasing different perspectives.
One of my sources presented both the advantages and disadvantages of increasing the minimum wage. While it acknowledged that raising it would create jobs, it also recognized the potential for layoffs. The pros and cons were balanced, leaving me undecided on how to vote. However, I suggest conducting a trial to assess if raising the minimum wage would be beneficial, with the option to reverse the decision if needed. Considering America’s indecisiveness regarding financial matters, I believe most people will understand this approach. I enjoyed writing about this topic and receiving diverse feedback from my family and friends. It was intriguing to hear their conflicting perspectives, although as consumers, they tended to support raising the minimum wage. Nevertheless, having knowledge of business backgrounds, they also comprehended the opposing viewpoint. Ultimately, at present, I would advocate for increasing the minimum wage; however, I acknowledge that my stance may change in the future if I become a business owner myself.
Work Cited
- State Minimum Wage Laws,http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx
- Chicago Tribune, “Pros and cons of raising the minimum wage”, Rex Huppke, February 2014 http://articles.chicagotribune.com/2014-02-24/business/ct-biz-0224-work-advice-huppke 20140224 1 minimum-wage-job-killer-cbo
- When I Work Blog, “The Pros and Cons of Raising the Minimum Wage”, Chad Halvorson, March 2014. http://wheniwork.com/blog/he-pros-and-cons-of-raising-he-minimum-wage!
- Neumark, David. (2007) Minimum Wage Effects in the Post-Welfare Reform Era. Washington,DC: The Employment Policies Institute https://www.epionline.org/minimum-wagel Congressional Budget Office, “The Effects of a Minimum-Wage Increase on Employment and
