The Effects of Minimum Wage

The federal minimum wage is seven twenty five an hour and is most certainly fair at that price. It is the basis and starting point for many Americans climbing the job ladder. Factual evidence and statistics can show raising it will hurt many more than it would help. A wage increase is well intended but is counterproductive because it hurts our unskilled and young workers, the low income areas some who are in poverty, and also encourages more high school drop outs while providing us with fewer jobs, proving that minimum wage should not be raised; it would simply hurt the people that it is trying to help.

Do not hurt the future of America’s young workers, the ones who are shaping the U.S. everyday by raising the minimum wage. It is a domino affect, the least skilled and younger workers who it should help will not get jobs and experience affecting them for years and maybe getting a job finally but it cannot support them or a family which could increase poverty (Sherk). Fifty percent of minimum wage workers are sixteen to twenty-four, wage increases would cut these younger ages out (Should). The last minimum wage increase lost around five-hundred fifty thousand jobs, most were part time teenagers (Four). According to Don Boudreaux, PhD the minimum wage cuts off the first rung of the employment ladder, and it is the first lowest paying rung that provides the skills and experience workers need to reach the next rung and to continue climbing their way to a better life (Should). The purpose is to also bring out workers whose skills do not surpass seven twenty-five an hour (Should). America needs low skilled industries, they provide work for inexperienced workers while including wholesale trade, durable manufacturing, warehousing and storage, rental and leasing, and waste services that are needed (New). No matter the business if it is poor, fair, or even rich, employers will start to hire fewer low skilled workers and it is directly related to minimum wage increases (Rugy). A study shows increases equal to a decline in average monthly incomes for the lower skilled employees (Should). A remark said by Neumark, Wascher the principal sources of an individuals higher earnings are more schooling and the accumulation of experience and skills in the labor market, both of which are discouraged by increases in minimum wage (Rugy). The jobs are for starters, people who are terrible at first but it is a rookie job at entry level positions (Sherk). James Sherk wrote that minimum wage jobs are the first rung on a career ladder that soon leads to higher paying jobs (Sherk). He then continues to say very few workers who earned minimum wage a decade ago still earn it today (Sherk). A claim shows that wage hikes hurt GDP’s generated from low skilled workers or industries (New). It makes it easy for evidence to show minimum wage increases disproportionately hurt the people their suppose to help (Four). This is why Congress should look out for the future of young, unskilled, and disadvantaged workers by saying no to wage increases (Sherk).

To continue it will hurt the low income and poverty areas in America. The road to higher wages is paved with good intentions, however it is also covered with recurring problems and false claims (Should). Statistics show that owners would have to spend more to pay employees in poor area than in high income areas (Should). Work by Newmark Wascher and Mark Schweitzer from the federal reserve bank of Cleveland have found that wage increase will most certainly raise poverty levels (Rugy). A raise to $9.50 would only help 11% of employees in poor households (Four). From higher wages the price of consumer goods would go up in high and low income areas, hurting mostly the low income areas (Four). Then low income employers would have to cover the cost of higher wages by raising product cost, but customers would not be able to afford the higher priced products (Should). Also the way government aid programs and benefits are set it would do little for the neediest minimum wage workers (Sherk). The research suggest that in both good and bad economic times, raising the minimum wage is a bad idea (New). More than 100 studies of minimum wage show 2/3 of it to have negative employment effects (Four). In one study, state and federal wages that were increased in the year 2003 to 2007 turned out to have no positive change on poverty rates (Four). In low income areas raising the minimum wage would just hurt them leading to a poverty increase (Should). Actually many families do not rely on minimum-wage jobs, it is 16 to 24-year-olds, that is why many are not in poverty but a raise could negatively effect it (Sherk). A small minority, one in five, live below the poverty line so an increase would hurt them (Sherk). In the end, many resources suggest that if minimum-wage was to increase, it would not help poverty what so ever (Four). Now it is on Congress to look at the pros and cons; a minimum wage increase could be beneficial, but the fall is bigger than the jump and could be more harmful than helpful (Smith).

Continuing forward, it would take jobs away from everyone. The economics of minimum wage is widely misunderstood (Rugy). The first minimum wage was set in 1938 at $.25 and had a massive affect on job losses (Four). Facts and statistics even show job losses ever since the first minimum wage was set (Four). Most businesses would not want to pay higher wages, so they would just use less employees and more robots and automated processors (Should). Some businesses employment levels will not change but the hours worked will be reduced (Smith). Other businesses would outsource jobs to other countries because the cost would be lower, equaling a decline in U.S. jobs (Should). Nearly half of the small business owners will close or released workers due to a minimum wage increase (Should). An increase in minimum wage from $7.25 to $10 accounts for a loss of 500,000 jobs (Should). $15 an hour for minimum wage calculates to 9 million jobs that will be eliminated (Rugy). Minimum wage workers only make up 13.7% of the workforce, if it raises then they will make up even less of the workforce (Should). In fast food chains, $15 an hour would cause 36% of hours worked to be cut, that’s why many are going to computers to be electronically ordered (Rugy). The minimum wage exacts a steep price for the ineffectiveness, it destroys jobs and discourages employers from hiring the least skilled and least experienced workers who most need to work (Sherk). Highly educated and skilled workers should earn $15 plus an hour, this should not be open to all workers and could hurt the first and second rung of employment, causing unemployment rates to rise (Should). This makes sense because according to George Keisman, PhD, The higher wages are, the higher cost of production is, then the higher prices of goods are, the higher prices of goods are, the smaller the quantities of goods and services demanded, and the number of workers employed in producing them (Should). To add on, a $10 or $15 an hour minimum wage would decrease high school enrollment since it attracts limited skilled students (Should). As high school dropout rates would rise from the higher wages it also hurts their career opportunities in the long run (New).

However there is always a different side to this topic. John Kolmos says, if the price of something increases you’ll buy less of it, won’t you (Rugy)? Since no matter the price of the product, people are still going to buy it if they need it (Rugy). Others say if minimum wage was raised, workers would work harder and boost productivity (Should). Lastly they think it should be raised due to inflation (Should). The point is made but does not equal up to the damage it causes, and is not plausible to increase it.

Therefore, legislators should carefully scrutinize proposals like minimum wage increases, which fail to improve the economy and everyday lives (New). Since it can cause increases in high school drop outs, it also tears apart job opportunities for everyone especially the young and inexperienced workers, lastly it hurts the low income areas, some that are in poverty and need help. The answer seems clear on if minimum wage should be raised or not and is heavily supported in the favor of not being raised

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