During the Great Depression in 1938, President Franklin D. Roosevelt passed the Fair Labor Standards Act(FLSA) which established the U.S. federal minimum wage to be 25 cents. After 49 years, President Bill Clinton proposed a legislation that would allow individual states to set their own minimum wage as they see reasonable. As a result, several states set their minimum wage above what was originally established by the federal government. During that time since the FLSA was passed, the minimum wage was revised every few years to account for inflation and the cost of living which includes several reductions made by Congress. As of 2009, the federal minimum wage became $7.25, although labor activists continue to debate and ask Congress to raise …show more content…
By 2016, California passed the, “Raise California’s Wage and Sick Day Act” which caused the minimum wage to slowly increase every year until the minimum wage reaches $15 in 2021. However, economists are now discussing such actions as they believe it is a gamble to raise the minimum wage since there are a series of negative factors. Although there are beliefs that increasing the minimum wage to $15 would benefit various Americans in different ways, the current economic state of our country would grow weaker, the younger generation would face multiple problems involving the workforce, and the condition of our society as we know would cease to improve, which explains why the minimum wage should not be raised to 15 dollars.
Economists and Americans have discovered that taxes could hike up with a $15 minimum wage which is an unignorable economic circumstance. Research in America has discovered that “every one percent increase in the minimum wage boosts prices by 0.04 percent to 0.40 percent”(Schager). From these statistics, businesses would have to raise their prices to compensate for the new minimum wage and the federal taxes for all employees would increase. According to an economist named Allison Schager, “the accompanying price increases and additional burden on low earners would be large too.” For example, a Senior Policy Analyst at the Heritage Foundation named James Sherk conducted a study on a …show more content…
However, countless people begin to ask the question, “does it really help the poor?” According to a researcher in labor economics named James Sherk, if the minimum wage is increased it forces consumers to raise their prices which ultimately damages people of the low and middle class. Since companies and businesses have to raise their prices, everyone in society is affected. James Sherk had additionally found other studies from labor economists and found, “no correlation between higher minimum wages and lower poverty.” Even when President Obama raised the federal minimum wage to $9, studies suggest that it would, “simply not reduce poverty.” Furthermore, economists additionally concluded that “only 12 percent of California’s $15 an hour minimum wage rise will actually go in higher incomes to people living in poor households.”(Worstall) As explained by Professor George Reisman of economics at Pepperdine University, “The higher prices are, the smaller the quantities of goods and services demanded and the number of workers employed in producing them.” Even with a minimum wage increase, numerous low-wage earners will discover that they will have to pay more for the same amount of goods. Moreover, an even greater amount of low-wage earners could lose their jobs due to such actions. Another study from the Federal Reserve Bank of Cleveland discovered that for low-income