...The Devastating Effect of Raising the Minimum Wage Raising the Federal minimum wage does not reduce poverty. If legislators raise the price of low and unskilled labor, businesses would reduce the workforce. The very laborers that are pushing for raising the minimum wage are the ones that will suffer the most. An increase in the minimum wage would lead to job loss and may result in higher prices for consumers. Minimum wage increases may result in severe economic devastation. Recently in New York between ten and fifteen thousand laborers marched in an effort to persuade lawmakers to increase the minimum wage to fifteen dollars per hour. The majority of those marching were activist students and employees of fast food industries. If protesters are successful in securing a fifteen dollar per hour minimum wage up to seventy percent of them will lose their jobs. For the first time in history, if the fifteen dollar per hour wage is approved, a fully automated solution would be an economically viable solution for struggling companies like McDonalds. Several companies are nearing commercial launch of the automated burger process. “Roboburger,” an automated burger machine can produce 8,500 burgers a day while 25 employees can produce 320 per day in comparison. If the companies are only required to pay a minimum wage of eight dollars per hour and contract labor, which means no benefits, it would still be viable to hire those 25 employees. The automation over the next few years...
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...The Effects of Increasing the Minimum Wage Jacqueline S. Nock May 19, 2014 Abstract The issue of minimum wage increases has been controversial since the inception of the minimum- wage law in 1938. The minimum-wage law, which includes child labor laws, was put into place to protect American workers from exploitation and poverty during tough economic times (Schuldt, Robert; Woodall, Davis; Block, Walter E., (2012), par.4). Although the law accomplished what it was intended to at the time, increases in the minimum wage over the years have produced higher unemployment rates and higher poverty levels. As the minimum wage increases, employers are forced to eliminate employees who are not working up to the current minimum wage level and hire better-skilled people who are worth the wages they are paid. Increasing the minimum wage causes an increase in unemployment among certain populations for this very reason. Completely eliminating the minimum-wage law is not the solution to the problem, but if the minimum wage remains at its current level for a few more years, it might motivate minimum wage earners to do more to protect their own financial future. The History of Minimum-Wage Law President Franklin D. Roosevelt signed the federal minimum-wage law into effect in 1938. It was part of a larger bill called the Fair Labor Standards Act. The minimum-wage law was created to protect workers from not being paid a fair wage for the work they perform. It guaranteed workers a fair wage, ensured...
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...Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania The article aims to evaluate the impact of increased minimum wage from $4.25 to $5.05 per hour in 1992 on the employees working in fast-food restaurants in New Jersey and Pennsylvania. The author has shown two comparisons in this study. One is the comparison of employment growth rates at Stores in New Jersey and Pennsylvania before and after the rise of minimum wage. And second is change in the employment rate from stores which paid higher wages initially to the changes in lower wage stores. His study concluded that there is no indication that the increase in minimum wage reduces employment. Analogous to this case study, based on the basic economic concepts, rise in the wage rate per hour have two effects – substitution effect and the income effect. If substitution effect dominates the income effect, then rise in minimum wage increases the labor supply and thus the employment rate. But if income effect dominates, then rise in minimum wage reduces unemployment. We shall understand the reason behind why rising minimum wage did not show any impact. The study analysed the 410 fast –food restaurants in New Jersey and Pennsylvania post the increase of minimum wage and compared the changes in wages, employment and prices at stores before and after such increase. Some of the other significant features of this empirical study include: first, the idea to increase the minimum wage happened...
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...Cannot ignore the issue of humane working conditions • Wage gap, class issues, race issues, gender issues will inevitably be brought up • Government vs private institutions Pros Raising the minimum wage would increase economic activity and spur job growth Increasing minimum wage would reduce poverty Cons Increasing minimum wage would force businesses to lay off employees and raise unemployment levels Would increase poverty Higher minimum wage would reduce government welfare spending Would hurt businesses and force companies to close The minimum wage has not kept up with inflation Would increase price of consumer goods Improvements in productivity and economic growth have outpaced increases in minimum wage Teenagers and young adults may be shut out of the workforce if minimum wage is increased Increasing minimum wage would reduce income inequality Would disadvantage low-skilled workers Minimum wage increase would help to reduce race and gender inequality...
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...Abolish or Sustain? The Minimum Wage Debate Sarah Campbell May 8, 2013 Abstract In 1938 the Fair Labor Standards Act established a federal minimum wage. Minimum wage has continuously increased throughout the years due to interest rates and the value of a dollar. Since its introduction the minimum wage has risen from 25 cents an hour to 7.25 dollars per hour in 2009. In President Obama’s recent State of the Union Address he states, “Working folks shouldn’t have to wait year after year for the minimum wage to go up while CEO pay has never been higher.” He hopes to raise the minimum wage by 2014 to 9 dollars per hour. Following the President’s support on minimum wage increase Sen. Tom Harkin (Democrat-Iowa) and Rep. George Miller (Democrat-California) formalized a proposal known as S.460, the Fair Minimum Wage Act of 2013 to increase the minimum wage by 2015 to $10.10. This proposal includes increasing the minimum wage (in three incremental increases of $.95) and then indexing it to inflation (“as prices rise, so would the minimum wage” (Cooper, Hall 2013)). Also, the tipped minimum wage (the minimum wage paid to workers who earn a portion of their wages in tips) would be increased in $0.85 increments from its current value of $2.13 per hour, where it has languished since 1991, until it reaches 70 percent of the regular minimum wage (Cooper, Hall 2013). However, in the current tough economic times many people argue that an increased minimum wage will only hurt and that...
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...Introduction Minimum wage refers to the lowest hourly, daily or monthly wage an employee is legally entitled to when working. Minimum wage is in effect in a range of different jurisdictions with differences in the views on the advantages and disadvantages being disputed by people. Supporters claim minimum wage increases the standard of living for workers whilst reducing poverty. Opposite views are that if it is high enough to be effective then it increases unemployment, particularly among workers who are inexperienced or handicap, thus harming the lesser skilled workers to benefit the better skilled workers The effect on employment rates due to minimum wage rates is a highly contested policy within economics. The introduction of minimum wage into the market can lead to competitive employers cutting employment; this depends on the rate of the wage rises require to comply with the current minimum wage according to the “standard textbook model”. Other models have also been suggested in which a decline in the employment rate may not occur and in fact employment may increase. During my research I found a wide range of literature on minimum wages, particularly on the effects of a minimum wage policy in place. Though a lot of informative research was concluding I also found the argument between weather the effects and positive of negative on employment, both sides of the disagreement present a large amount of information supporting the theories. Research before the 1990’s mostly...
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...Battle to Raise Minimum Wage Lyvonda Wadley Baker College The raising of minimum wage will have a negative impact on the economy while $15 minimum wage increase ripples across the states. In the article The Hamilton Project explains, “U.S. policymakers continue to engage in an active debate over the minimum wage. Calls for minimum wage increases—at the federal, state, and local levels—are based on the premise that rises in the minimum wage will improve the economic well-being of low-paid workers (Kearney, M. S., & Harris, B. H. (n.d.)... Minimum wage increase would actually have a deleterious effect on the economy, low-skilled workers, unemployment, and surrounding businesses. “Congress instituted the minimum wage in 1938 as part...
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...that a minimum wage causes unemployment as a myth. The Department argues that an analysis of 64 studies on minimum wage rises found no apparent effect on employment. In addition, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in help of increasing the minimum wage to $10.10 in the next two years. In 1994, Card and Krueger suggested that minimum wages may not necessarily decrease employment, but can actually increase it. It is hard to believe that a price floor may lead to an increase in quantity of labour employed in competitive labour markets. However, it is not so hard to believe, when discussion comes to oligopsony and monopolistic competition labour markets, where multiple...
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...many of you think that the minimum wage is too low? II. Do you think that every American should be able to keep up with the costs of living? III. As a teen employee, I know the struggle is real. Trying to make ends meet without running to my parents every time I'm in a jam is hard when I'm trying to live on minimum wage. IV. The purpose of my speech is to persuade my audience that we need a higher minimum wage to be able to assure American workers that they can support their family. Transition: Let me draw your attention to some facts about the minimum wage. Body I. A higher minimum wage could help disadvantaged workers to cover the costs of finding and keeping a job, including transportation, child care, and uniforms (Schmitt, p. 17). We need the minimum wave increased to help people make ends meet. a. The minimum wage has shown to lead to a decline in the number of students in school. i. According to David Neumark, "Demand shifts toward higher productivity -employees after a minimum wage increase and that these employees take jobs in lieu of enrollment in school, in the process displacing lower-productivity employees from employment (p. 199). ii. According to Laura Giuliano, the "employment effects may depend on the group of workers affected and on the specifics of particular labor markets. b. There is a lot of sky-is-falling rhetoric suggesting that a high minimum wage will be a catastrophic job...
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...Outline I. Introduction II. Minimum Wage Defined a. Past Minimum Wage Law b. Considerations III. Increased Minimum Wage and Employment c. Job Losses d. Unskilled Workers IV. Increased Minimum Wage and Poverty V. Increased Minimum Wage and Effects for Society e. Costs of Labor f. Higher Prices g. Individual Impacts VI. Constitutionalism h. Previous Court Rulings i. Free Contract VII. Demotivation Factors j. Education k. Promotions VIII. Minimum Wage Redundancy IX. Conclusion The issue of raising the minimum wage is a highly debated topic. This topic is one that appeals to people from all walks of life. During some time in an individual’s life, he has worked for minimum wage. There will always be the worker who feels he is not paid enough and the boss who feels that the worker’s pay is adequate for the work. “If there were only two economists left in the world, they would disagree about the minimum wage” (Mejeur 14). Minimum wage is basically the minimal amount that an employer can legally pay an employee for work on an hourly basis. Past laws governed that the minimum wage would increase every few years, with the last increase being in 2009 for $7.25 per hour (Funk & Wagnalls 1). Many people feel an increase is long overdue. Those people, however, are not looking at the entire picture. Increasing the minimum wage goes beyond simply giving people more money...
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...Economics Date: 22/06/15 The Effect of a Raise in the Minimum Wage on Employment and Profitabilty in the RMG Sector of Bangladesh, Drawing Sources From Other Developing Countries The study of minimum wages has led to many debates surrounding the topic whether a raise in minimum wage can kill businesses in profitability and employment or the change in profitability and employment is insignificant. This is a hot topic for policy makers in both developed and developing countries as a raise in minimum wage affects the economy in terms of economic growth, standards of living for the poor, survival of businesses and employment. A lot of research and literature has shown that a hike in minimum wages do not particularly affect the developed nations but the same hikes in developing countries can cause damage to firms depending on the size of the firms and their profitability. This paper attempts to show that the garments sector in Bangladesh (Ready made Garments Industry) faces the same dilemma. Since the Savar tragedy in late 2013 where a garment factory, Rana Plaza, collapsed which killed more than 1,100 people and injured and more than 2,500 people injured, garment workers and civil society demanded a raise of minimum wage from 3000 tk to 5,300 tk every month. This tragedy and similar events in developing countries lead us to think how businesses especially in the developing countries where wage rates and productivity are low can operate if minimum wage is suddenly increased threefold...
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...ENG 111 10 March 2014 The Reasons Why Federal Minimum Wage Is Raised U.S. President Barack Obama signed an executive order on February 12, 2014 to raise the minimum wage for federal contract workers to $10.10 an hour starting next year and encouraged employers nationwide to increase wages for their workers. The president also announced during his State of the Union address last month that he intended to take executive action to raise wages for federal contract workers (Mason). Order to understand this issue, we are going to understand what the Federal Minimum Wage is and when started it in the U.S.A. According to the United States Department of Labor (USDL), early in the administration of the Fair Labor Standard Act (FLSA), it started to be apparent that the use of the legal minimum wage was prone to producing undesirable efforts upon the financial systems of Puerto Rico and also the Virgin Island if put on all their covered industries. As a result, on June 26, 1940, an amendment was passed prescribing the establishment of special industry committees to find out, and problem through wage orders, the minimum, wage levels relevant in Puerto Rico and also the Virgin islands. The rates established by industry committees might be under the legal rates relevant elsewhere within the United States. In 1949, the minimum wage was elevated from 40 cents an hour or so to 75 cent an hour so for those employees and minimum wage coverage was extended to incorporate employees in mid-air...
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...Minimum wage has changed many times throughout the years. There are many people who are affected by the changes that are made. Many believe that raising the minimum wage is a good idea and have pushed for the increase. Minimum wage has many effects on the economy: helping families with the cost of inflation, helping businesses thrive, and can also cause job loss. When minimum wage is raised it creates more money for workers. The boost in pay for families helps them to buy necessities, such as food, clothing, housing, and transportation. When products become more expensive, it is hard for families who only make minimum wage to purchase these items. Government will then tend to step in by increasing the minimum wage to an amount that can help with these expenses. “In his State of the Union address, Obama pressed to raise the hourly rate in stages to $9 an hour in 2015, up from the current $7.25, and index it to inflation. The change, should it become law, would boost the wages of 15 million Americans, according to the White House (Luhby, 2013).” When minimum wage is raised it will help “lift 900,000 families out of poverty and increase the incomes of 16.5 million low-wage workers in an average week (Lowrey, 2014).” Increasing the price of minimum wage can help businesses to thrive. When more people are being paid an increased amount than before, it would cause them to increase spending after receiving their paycheck. With receiving more money, families will tend...
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...Minimum wage is a controversial topic that has people on different side of if it should be increased or it should remain the same. It should be increased, but only in certain states such as california due it's expensive living cost. Across all models with a dollar increase in the minimum wage above the federal level was associated with a 1% to 2% decrease in low birth weight births and a 4% decrease in postneonatal mortality. Minimum wage has a huge effect on the economy. Minimum wage be increased in certain states such as california due it's expensive living cost. Now here are some examples of why minimum wage should be increased. Because of low minimum wage in big cities their infant mortality rates are higher than they are in other states due to how parents cannot afford to take care of their child. If minimum wage was increased by a dollar it would cut down of infant mortality. In her article, Kormo provides evidence to prove her point of how income and mortality rates are connected: “Due to low income studies show that...
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...Some people think that raising the minimum wage to $15.00 per hour is a good thing. They think that it will make the economy stronger and that those that got to take advantage of the wage increase, will benefit. If they raise the minimum wage to $15.00 per hour , are they also going to raise the wage of people to fought to make that much? People should be more concerned raising the wage of the teachers that are responsible for the education and growth of our children. Or perhaps the wage of the medics and first responders should be raised, as they are supposed to arrive in an timely matter in response to o emergency. What ever the case, fast food restaurants are considered entry level employment. One is not required to have any experience or special skills, just the ability to follow directions, administer good customer service and have good time management. This paper will discuss the reasons why raising the minimum wage for a fast food worker to $15.00 per hour is a negative thing. Fast food workers should receive an increase in wage, but not $15.00 per hour. If the wage increases to $15.00 per hour this may cause a negative effect on unemployment for low-skilled and teenage workers, an increase in debit, and a change in job qualifications. According to Senate Republican Party Committee (2013) “Raising the minimum wage could hurt opportunities for teens to land their first job -- and with it the chance to learn valuable life and work skills that cannot be taught in the classroom...
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