Should the Government Raise the Federal Minimum Wage?
The federal minimum wage was first introduced in 1938 during the Great Depression under President Franklin Roosevelt, and since first being introduced, it has changed several times by Congress. The minimum wage is referred to as the lowest wage an employer can legally pay their employees. It was created to help Americans in poverty and consumer power purchasing. Lately, it has been a huge political debate about whether or not to raise the minimum wage and me personally, I believe that the minimum wage should be increased. Not only does it make it easier to live but it also helps our economy grow as a whole and I’m going to explain how.
Minimum wage enforces a basic standard of living for the poor class of workers. Raising the average earnings will help the economy grow due to more spending. Ethical concerns include the perspective that those who work on the lowest paying jobs should be able to afford a basic way of living. In a study I found by several economists called procon.org, it states that, Economists from the Federal Reserve Bank of Chicago predicted that a $1.75 rise in the federal minimum wage would increase aggregate household spending by $48 billion. By doing this, not only does it boost the GDP but the job growth as well. An economist off procon.org, stated that, a minimum wage increase from the current rate of $7.25 an hour to $10.10 would inject $22.1 billion net into the economy. By doing this, it helps create up to 85,000 new jobs over a time span of three years. Now although those are just very thought out predictions, I have reason to believe that they are highly accurate. The more money the average American gets to spend, the more things that are bought which eventually helps our economy grow. Not only does it help grow our economy but also gives the poorest class of workers the ability to purchase better homes to enhances their way of living.
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Another pro towards minimum wage is that increasing it would reduce poverty. In a different article I found, research conducted by the Congressional Budget Office suggested that, raising the federal minimum wage would raise more than 900,000 households out of poverty in the United States. I don’t know about you but to me, that is a lot of people. Imagine how great our economy would get in general with that many people out of poverty. Workers actually get see the wage increases after the minimum wage is increased and I can only imagine how much happiness that would bring. Not only does this help the working force but also helps the elder. In a different study by University of Massachusetts, economist Arindrajit Dube states that, reducing the minimum wage to $10.10 would reduce the number of non-elderly living in poverty by around 4.6 million, or by 6.8 million when longer-term effects are accounted for. Now, of course, this is over a time span of a few years but just the fact that we have that many people in poverty is ridiculous so imagine reducing it by a couple million. We would literally see a boost in our economy because more people would be spending which is a win-win for just about everyone. In that same study, it explains how raising the minimum wage to just $9 lifts 300,000 people out of poverty while raising it to $10.10 lifts 900,000 people out of poverty. With that being said, these are just predictions that I believe we should make into statistics in order to help enhance our economy.
Another benefit from increasing the minimum wage is that the government would reduce the spending on welfare programs. Think about it like this, when the current federal minimum wage leaves American workers under the poverty line, they have to do something to provide some kind of aid for them. The first thing that these Americans do is look towards the government for help to solve their problem and luckily, the government has programs that got just what these people need. These benefits are meant to help the low-income works because without welfare, it makes these families struggle even worse. After doing some research, I found an article by an EPI report that states, the American government could save $7.6 billion a year on from this programs if they raised the minimum hourly wage to $10.10. These predictions to me are just really crazy because I don’t understand why someone still hasn’t done anything to change it even after all these researches and studies. If the United States were to raise the minimum wage, so many Americans would be immediately pulled over the poverty level and would no longer need assistance from the government. If you think about it long term, the higher wages means that the government would need to spend less on these programs and maybe even help us end up with lower taxes for the whole country.
Lastly, increasing the federal minimum wage would increase worker productivity. The reason why is because when workers get paid livable wages, they get more involved in their work making them put more effort into their work and getting more done. Increasing the minimum wage pushes workers to show how good of workers they actually are and increase their productivity. After doing some research, I found a study by CEPR that states, if employees were paid what their productivity is worth, the minimum wage in 2012 should have reached $21.72. Can you imagine if with the minimum wage being what it is now produced that much work productivity, how much harder they would work if they were earning more money? What’s even crazier is how much higher and quicker the work productivity would get for a few dollar raise. According to multiple economists, Increases in wages are associated with increased productivity. In that same article I found a quote by a professor of Economics in London, Alan Manning, stating that, As the minimum wage rises and work becomes more attractive, labor turnover rates and absenteeism tend to decline. For example, when a worker is very experienced, they tent to get the need to get paid more. If their boss doesn’t fulfill their demand, he will feel the need to leave and find work where he can earn the wage he desires. This means that employers then have to spend money to train new workers and through time can be highly expensive. If the minimum wage is raised, there is a better chance that the highly experienced works stay, helping the company from spending on hiring new workers and minimizing the negative effects that come with turnover rates. Not only does this convince the workers to stay but their loyalty to their boss is increased as long with their productivity. What’s cool about that is that the employes increase of effort increases the revenue in general and I’m sure that is something all bosses would like to experience.
The minimum wage debate is a topic that will remain relevant in our society due to its impact it can do on individuals and the economy. Now, of course, there are cons over this topic just as in any other debate but what people need to realize and understand is that we will never find out how much of a difference this could actually do to our economy if we never enhance it. We are living in a life where money is literally being destroyed because we have too much of it. Instead of throwing it away, why can’t we just use it towards raising the minimum wage? At the moment, the minimum wage here in Arkansas is $8.50 as has been steadily growing. Arkansas just recently approved a ballot to incrementally raise the minimum wage to $11 an hour by 2021 and I personally believe that that this is exactly what the people were wanting. By passing this ballot, the lives of many Arkansans are going to change and I personally believe that this is for the best.