Minimum Wage in the US - Essay Example

Supporters of living wage laws say that the current minimum wage simply does not keep up with the cost of living. Allowing employers to pay less than a living wage is just cost-shifting to the public at large, forcing the government and private charities to fill in the gap between low pay and survival.

Many economists support that the minimum wage is a matter of social justice which helps reduce exploitation and ensures that workers can afford basic necessities of living. Supporters deny claims of causal links between the minimum wage and adverse impacts upon employment and suggest that in any event, greater social benefit derives from the minimum wage. Raising the minimum wages of employees increases the economic efficiency of the economy where labor markets exhibit a high degree of market power on the part of employers.

As Kash explains, (Montag 51)"The minimum wage goes up in one place but doesn't change right next door. Employment in restaurants goes up in both places - if anything, by more in the place where the minimum wage went up. Putting all of these different types of papers together, my conclusion is that the best evidence that labor economists can gather from data seems to indicate that we need not fear major employment losses if we were to increase the minimum wage. The effects may be slightly negative for teenagers, but overall the effect on jobs may be zero to even slightly positive.

" 1The subject of minimum wages and their effect on unemployment levels is a controversial issue. The majority favor increases in the minimum wage. They look at these increases as a way to help the poor. To understand the studies and their problems, it is important to understand the traditional argument that raising the minimum wage reduces employment among low-skilled workers. The reason is simple. The demand for labor--the number of man-hours (not workers) employers want to buy at different wage rates--is determined by the expected productivity of the given workers.

So if wages rise by decree, rather than because workers can produce more per hour, employers will hire fewer hours of labor. The magnitude of harm from the minimum wage may not seem so bad, since it does not ruin the economy. But the benefit is even smaller. As of 2005, only about 2% of workers earned the minimum wage. Most of these are young people or part-time1 Montag G. "The Minimum Wage." The Gale Group Inc. Macmillan Reference. pp - 142workers, not people trying to support a family. And even most of these people will earn more than the minimum wage after a few weeks on the job.

Very few people are hired at the minimum wage and stay there for very long. Politicians exploit these feelings by raising the minimum wage to gain popularity. Supporters of the minimum wage argue that it provides a fair wage for the least skilled employees in the country. They also argue that increased pay can often lead to increased loyalty and productivity. However, these raises in the minimum wage often hurt the very people that need the help. Economists agree that increasing the minimum wage does almost nothing to help the working poor, and have noted that about one-third of the people who benefit from a minimum wage increase are teenagers.

Economists also recommended an increase in the earned income tax credit, rather than a minimum wage increase, to actually help people. Minimum wage increases, though, are politically expedient. The goal in establishing minimum wages has been to assure wage earners a standard of living above the lowest permitted by health and decency. Raising the minimum wage s hikes as a useful tool to help reduce poverty as well as provide a "living wage" for the working poor population and sometimes act as a yardstick for policymakers to use minimum wage as a means of lessening the income inequality that has occurred over the last 30 years.

( Padhy 11 )It is essential for the policymakers to consider the benefits and problems associated with minimum wages, and determine whether they are really the best method to assist the poor. Before we evaluate the impact of the minimum wage, it is important to identify those who are affected by the minimum wage in the country.CONCLUSIONThe minimum wage has become a hot topic. The arguments for and against a higher minimum wage boil down to whether the Country's economy should follow a low-road/low-wage or high-road/high-wage growth path.

A low-road strategy involves developing an economy based on mass production, with large numbers of workers hired for low-skill jobs at low wages. A high-road strategy involves developing an information-based economy, which would require a flexible workforce with a high level of skills; such workers would, of course, command higher wages. Legislating an increase in the minimum wage would contribute to accomplishing this task.