Minimum Wage Debate

History and Debate of Minimum Wage

Minimum wage is defined as the lowest amount that employers can legally pay their workers per hour of labor. Most jurisdictions do have laws in place to enforce a minimum wage. However, there are both benefits and drawbacks of this type of policy. Many supporters of minimum wage say that it increases the standard of living and keeps people out of poverty. Those who are opposed to it tend to believe that it increases unemployment and harms the less skilled workers.

The first minimum wage law was passed in New Zealand in 1894. Since then, many other nations have adopted similar policies. In the United States, the current minimum wage is $7.25. The state of Washington has chosen to establish a higher minimum wage of $8.67. These rates are not established randomly. In fact, they are the result of much research in the areas of economics, standard of living and inflation. Labor supply and the effects of rising unemployment are also considered when establishing minimum wage.

Minimum wage laws were established and are upheld with certain goals in mind. Those who support minimum wage laws usually believe that these goals are being adequately achieved and that this alone is enough justification to keep the laws in place. Minimum wage was initially established to reduce poverty. Establishing a minimum wage in the United States helped do away with sweat shops and insures that people are paid properly for their work. Minimum wage also protects younger workers and minorities from being paid less than others to some extent.

Proponents of Minimum Wage

Many do believe that minimum wage laws achieve these goals. They do ensure that workers on the low end of the pay scale are not underpaid because of their gender or race. They also do ensure that workers are given a fair wage. However, their effect on society as a whole and on those who are not currently employed is questionable. Supporters of minimum wage also believe that a minimum wage stimulates consumption and thus puts more money into the economy by allowing low paid workers to spend more. They also believe that it may increase the work ethic of those who are paid little and thus benefit employers. It also encourages people to join the work force, rather than seek other illegal means of earning money such as selling drugs or prostitution.

Opponents of Minimum Wage

Some people who are opposed to the idea of minimum wage believe that it is not accomplishing the goals it was designed to meet. In several instances, employment has decreased more than the increase in wages and thereby overall earnings are still reduced. Businesses are sometimes forced to hire fewer employees because they must pay minimum wage. Thus, fewer people have a job. Studies also show that very few low-wage workers actually come from families in poverty. Thus, minimum wage is more often imposed on the sixteen-year-old worker with his first job than on people who would otherwise be unemployed.

Other opponents of minimum wage believe that it can cause price inflation as businesses must raise their prices to accommodate the higher wages. They also believe it discourages further education of the poor. The United States currently has laws in place to ensure a minimum wage. Whether or not these laws should remain in place is a matter of debate. There are benefits and downfalls to minimum wage laws and nothing is cut and dry.

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