Should Government Raise the Minimum Wage Essay



The minimum wage is the lowest remuneration that employers can legally pay their workers. It’s a price floor which establishes the lowest legal wage that workers can accept to sell their labor. The minimum wage was first implemented in 1938; it was signed by President Roosevelt, and then became America's first federal minimum wage, which was 25 cents per hour. The reason for the minimum wage was to stabilize the post-depression economy and protect the workers in the labor force. It was designed to create a minimum standard of living to protect the health and well-being of employees. Over years, the minimum wage has been taken advantage of by companies who are trying to maximize profit as much as they can. The current minimum wage in the United States is $7.25 per hour, this price opens many debates on why the government should or should not raise the minimum wage. It’s very clear that the minimum wage should be increased, countries like Australia, France, and Canada have an average of $11.5 set as their national minimum wage. 

Generally speaking, if the minimum wage is raised it will cause more people to be spending more money which will increase the cash flow and that leads to a greater economic effect. Starting with the opinion of why the minimum wage should be increased, Increasing the minimum wage is important not only for economic stability for families but also for the overall economy. The minimum wage at the moment is very low that a full-time worker earning minimum wage won’t be able to support the family and will rely on programs, such as the Supplemental Nutrition Assistance Program (SNAP), to make ends meet. If we take this into consideration, when the worker can’t support the family and must rely on government-assisted programs that will cause those programs to distribute more money, but if the minimum wage happens to raised and helps the workers support their needs, that will cause fewer people to rely on those government-assisted programs in order to support their families. 

Moving on to why the minimum wage should not be raised, Research shows that businesses would respond to the increased costs by reducing employment, particularly for low-skilled workers. Other businesses may also pass the higher costs on to consumers, increasing the prices of goods and services. Based on studies that were done, In the previous federal minimum wage increase from $5.15 to $7.25, only 15 percent of the workers who

were expected to gain from it living in poor households, according to a 2012 review by Mark Wilson. If the minimum were today raised to $9.50, only 11 percent of workers who would gain live in poor households. The 2012 Wilson review noted: “Since 1995, eight studies have examined the income and poverty effects of minimum wage increases, and all but one have found that past minimum wage hikes had no effect on poverty.” The 2012 Wilson review noted: “One recent academic study found that both state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates.”

A study from the Federal Reserve Bank of Cleveland found that although low-income workers see wage increases when the minimum wage is raised, “their hours and employment decline, and the combined effect of these changes is a decline in earned income… minimum wages increase the proportion of families that are poor or near-poor.” This suggests that increasing the minimum wage could in fact increase poverty. A minimum wage increase would hurt businesses and force companies to close. 60% of small-business owners say that raising the minimum wage will “hurt most small-business owners,” according to a 2013 Gallup poll. The business owner that will close will definitely hurt the economy in some way shape or form since they were benefiting it by the sales and cash flow that was going through the economy. 

Furthermore, If the minimum wage is increased, companies may use more robots and automated processes to replace service employees. If companies cannot afford to pay a higher minimum wage for low-skilled service employees, they will use automation to avoid hiring people in those positions altogether. Using those robots and automated processes will also hurt the economy since there would be less cash flow since fewer people will be working. All of those cases will definitely cause an economic recession and could possibly cause another economic depression if they aren’t studied correctly and precisely.

Finally, Raising or keeping the minimum wage both have pros and cons and both options are highly debatable in terms of if the minimum wage is increased, to what price would it be increased?. If we keep the minimum wage the same, for how long are we going to keep this minimum wage the same?. Many of these questions make the debates more diverse which leads to more understanding on both sides of the argument.

Furthermore, the pros and cons of both are serious and could possibly contribute to the economy suffering. But, I personally do believe that if the government goes on with gradually raising the minimum wage to $15 would be good for workers, good for businesses, and good for the economy. The public will definitely benefit much more than they are at the moment and also, the economy will be striving since more cash flow and more consumers will be buying business goods and services. In terms of the cons of increasing the minimum wage, for example, companies will let people go since they can’t afford all of these wages. I believe this issue will not last long since there are endless opportunities for work in companies, factories, restaurants, banks, stores, etc… Adding to the list on why this problem won’t be as big as we think is that since the economy will be booming, more businesses are more likely to open and start a business seeing an increase in public needs since they are earning more money from the increase in the wages. 

In conclusion, I believe that this issue is not simple to fix and will take time in order for the government to decide what will be the right decision to make in order to strive our economy more and striving an economy will always benefit its people. This debate of why the government should or should not increase the minimum wages, and if they do by how much they should increase the minimum wages, etc… This debate will continue on and will never end.