GEN499 Week 5 Final

Increase In Minimum Wages To Workers In The United States

Mary Arterberry

GEN499 General Education Capstone

Anthony Winters

February 19, 2017

Increase in minimum wages to workers in the United States

Wages are some form of remuneration that are received as a reward for labor which is one of the primary factors of production. Wages being a factor of production plays a very important part in the growth and development of any economy. Wages payment is agreed upon between the employers and the employees even though sometimes the third parties like the government or trade unions may get involved. Wages are normally paid in hourly, daily, weekly or monthly basis depending on factors such as country laws on wages or the type of services offered. Both the employer and the employee may agree this in writing in the form of a contract that binds both of them as parties to hold their end of the deals. Normally the minimum wages are the ones that are negotiated. This in other words may be called the employees nominal wages. Minimum wages to workers differ in different professions as well as in different places. In this article, we are going to focus on the minimum wages to workers and their effects in the United States. Increasing worker’s minimum wages is a smart move towards the improvement of the country’s economy. Between 1938 and 2016, the minimum wage has remained unchanged at an average of $2.98 per hour. In the United States, the federal minimum wage is the wage per hour that the employees are supposed to be paid by the employers. Several states have their own minimum wage laws. Over the years, the politicians and activists have been pushing for increased and regulation of the minimum wages all over the country. The topic is hotly contested by the critics on both positive and negative sides of increasing the minimum wage. Reduced employment rates have been on occasions linked to the increase in minimum wages, but the idea also has improved the living standards of the workers in the state.

Annotated Bibliography

Wihbey, J. (2016) Minimum Wage: Updated research roundup on the effects of increasing pay States. https://journalistsresource.org/studies/economics/inequality/the-effects-of-raising-the-minimum-wage

The increase in the consumption of less expensive food has led to the obesity of the people. There is a lot of talk about when the minimum wages are increased. Minimum wage will help workers to be able to achieve their food plan of the family. In addressing the issue of minimum wages, California adopted legislation that would progressively increase minimum wage to $15 per hour in year 2016 becoming the first state to do so. In recent years, several states like Minnesota have increased their minimum wages to around $9.50 per hour. The changes are as a result of national debates that took place several years regarding the importance of raising the pay so that all families can earn a living wage. The article points out that the federal minimum wage was brought into light during the Depression and has tremendously increased from 25 cents to about $7.25 per hour from the first time it was instituted as a part of fair labor standards act in the year 1938.

According to the study carried out by a Purdue University and released in 2015, the increase of minimum wage could have impacts beyond the addition of money to the workers’ pockets as there is a possibility of businesses increasing their prices too. Some of the studies done earlier indicated that some businesses have been forced to cut jobs to pay workers more. The studies have also shown that the increase of minimum may lead to reduction of jobs by around 500,000 positions across the labor market. According to critics, increase of minimum wages negatively affects businesses by hurting them, prices are raised and they are at end counterproductive for the poor works since they could lead to unemployment. However, to some economic experts, increase in minimum wage could ‘ripple’ the economy hence boosting the salaries of over 30 percent of workers.

Neumark, D. (2014). Employment effects of minimum wages. IZA World Of Labor. doi:10.15185/izawol.6 http://www.frbsf.org/economicresearch/publications/economic-letter/2015/december/effects-of-minimum-wage-on-employment/

The article points out that despite the effects of job loss, voting public and the policymakers have raised the minimum wages more frequently in the recent years. The minimum wage topic has gained momentum over the years among the policymakers as an approach in alleviating the income inequality and rising wage inequality. Many policymakers are arguing if the increase of wages leads to job loss and impact of job loss. The recent studies show the conflicting evidences on both sides of the argument. Generally, the suggestion brought forward by the evidence is that it is fitting to weigh the potential cost of job loss from the increased remunerations against the workers benefits if the wage increases. Numerous studies show that the increase in wage leads to job loss to teens and workers who are low-skilled. The raising of minimum wage in several states follows the steps of federal government increases which happened in the year 2009. The article provides several scenarios that are tied to the issue of minimum wage increase and their numerous impacts on job market.

Gillikin, J. (2017). Problems With Minimum Wage. Smallbusiness.chron.com. Retrieved 18 February 2017, from http://smallbusiness.chron.com/problems-minimum-wage-2692.html

The article provides evidence on the causes of low wage and the effects on labor market if the minimum wages are increased. The issue of minimum wage provides the economists and politicians wide range of pros and cons of increasing minimum wages. In some countries like United States of America, employers are forced to conform to the imposed levels of minimum wage within the jurisdiction of any federal government. According to the article, the minimum wages reduces the low-wage jobs pools by pricing cheap labor out of market. Also, individuals are affected by the minimum wages. Some of the experts also point out that the minimum wages are harmful to the minority populations that the schemes were designed to protect and support. The minimum wage laws reduce the opportunities to learn any new skill in addition to advancing in a trade or job. According to the author, if the pooling together of all low-wage workers into a single wage group happens, then the countries that are developing will not receive the needed training since the available jobs will go to the individuals who can do the available work.

The Effects of a Minimum-Wage Increase on Employment and Family Income (2014). Congressional Budget Office, Retrieved February 18, 2017, from https://www.cbo.gov/publication/44995

The article gives an insight into the effects of increasing the minimum wage to both the workers and the job market. In addition to the effects on workers and job market, the article provides a look into the minimum wage increase effects on the federal budget. Some of the low wage earners are likely to move out of federal poverty threshold if the minimum wage is increased which in turn increases their family income. However, the increase in minimum wage could also lead to elimination of jobs for the low-wage workers hence reducing the income for most of the employees who lose jobs. Also, the share of low wage earners who get employed would also fall slightly. The federal budget would be affected by the increase in minimum wage as they would also be forced to increase the earnings of the hourly employees which would indirectly boost the price of some commodities and services that are purchased by the government. The taxes would be affected indirectly by the increased wages as people would pay more taxes.

Rest, A. & Hanauer, N. (2016). A report that analyzed every minimum-wage hike since 1938 should put a bunch of nonsense ideas to rest. Business Insider. Retrieved 18 February 2017, from http://www.businessinsider.com/minimum-wage-effect-on-jobs-2016-5

The article contradicts many suggestions by various authors that the increase in minimum wages kills jobs. The author argues that the increase in minimum wages has been an ongoing process which has no evidence of ‘job-killing’. The article lays its basis on the results from the research done by the researchers on the effects of minimum wage increase by the government. The results show that despite the numerous minimum wage hikes by federal government in recent years, the rate of employments has been raising to about 68 percent throughout the period.

References

Gillikin, J. (2017). Problems With Minimum Wage. Smallbusiness.chron.com. Retrieved 18 February 2017, from http://smallbusiness.chron.com/problems-minimum-wage-2692.html

Neumark, D. (2014). Employment effects of minimum wages. IZA World Of Labor. doi:10.15185/izawol.6

The Effects of a Minimum-Wage Increase on Employment and Family Income. (2014). Congressional Budget Office. Retrieved 18 February 2017, from https://www.cbo.gov/publication/44995.