The Effect of Minimum Wage on the American Economy

The Effect of Minimum Wage on the American Economy A sensitive topic for many Americans is their income. Many people’s income relies on minimum wage. In 2012, 3.6 million people received an hourly pay at or below the national minimum wage. There is an ongoing debate in Congress as to what the national minimum wage should be. Currently at $7.25, Obama has suggested raising the national minimum wage to $9.00. Depending on a person’s economic perspective, raising minimum wage could be positive or negative. Minimum wage has the ability to change lives. Small businesses and unemployment, teenage demographics, and the cost of civilian goods would be most affected. Many areas could be affected by a change in minimum wage, but potentially the most†¦show more content†¦The money to pay for an increased minimum wage has to come from somewhere, and there are only a few places that it can come from. The extra money could come from the company’s investors in the form of lower profits; from customers in the form of higher prices; or from workers in the form of fewer jobs. Since the marketplace is very competitive, businesses will resist lowering investors’ profits and raising prices for customers because of the potential risk of losing them. This leaves only cutting workforce as a way to get the money businesses need to afford an increased minimum wage.There are always exceptions, but historically, businesses have financed increases in the minimum wage by laying off minimum wage workers. In 2009, when the most recent minimum wage increase occurred, the national unemployment rate rose 5-10 percent. (Perry) If this were to happen again, the national unemployment rate, currently stuck at 7 percent, would skyrocket. This would be detrimental to low income Americans because many could end up losing their source of income. As time goes on, the unemployment rate should lower, but the initial spike in unemployment could hurt many families and lives. Specifically, teenage employees would be critically affected by an increase in minimum wage. Most teenagers who work take on minimum wage jobs. In fact, half of minimum wage employees are under the age ofShow MoreRelatedThe Effect Of Minimum Wage Increase On Childrens Social And Economic Standings, Making It Popular With Women1569 Words   |  7 Pages Arguments for an Increase in the Minimum Wage One of the most obvious and anticipated effects of a minimum wage increase is the income increase especially for families on and below the poverty line. An approximated 16.5 million people stand to gain from added wages, and most families incomes would, in fact, rise above the federal poverty threshold (Congressional Budget Office). With so many families depending on the minimum wage to forge a livelihood, an increase would be a blessing in disguiseRead MoreEffect Of Raising Minimum Wage1215 Words   |  5 PagesEffects of Raising Minimum Wage The minimum wage in this country has been a controversial issue. Many people believe it will help reduce poverty and boost the economy. However, they are not looking at the downfalls this will bring to our country. This could make the unemployment population rise, it will raise prices of other things, and would have little effect on reducing poverty. Raising the minimum wage would have a negative influence on our country. This movement throughout our countryRead MoreMinimum Wage Is The Lowest Payment Permitted By Law Or Special Agreement882 Words   |  4 PagesMinimum Wage Minimum wage is the lowest payment permitted by law or special agreement (labor union). Minimum wage jobs are normally designated for young adults or teens. It does not really permit a suitable living wage for a person with a family. The jobs with minimum wage are learning positions. They enable the worker to gain skills for higher paying jobs. Raising the minimum wage presents a series of advantages and disadvantages to the worker and the economy. Minimum wage was introduced in 1938Read MoreMinimum Wage1535 Words   |  7 Pagesstandard minimum wage level has been a controversy over its insufficient wages set for working class Americans. The minimum wage was established to protect unskilled workers from being exploited by employers’ low pay. Introducing the minimum wage provided stabilization in the workplace, but as the cost of living increases, working Americans are demanding a livable wage. In the recent past, the American dream fadedness changed the way Americans view the economy. For many wageworkers, the American dreamRead MoreA Brief Note On Raising Minimum Wage1088 Words   |  5 PagesBrendan Mason Mrs. Scruggs 08/07/15 Raising minimum Wage There is always talk about the problems of North Carolina’s economy, and these problems then become publicized and put throughout the media, informing people on the condition of their state’s economy. A popular topic lately is the state’s minimum wage, and whether it should be raised or if we should keep the current minimum wage. Usually, opinions vary on what to do about minimum wage, however there certainly seems to be a larger group ofRead MoreRaising The Federal Minimum Wage889 Words   |  4 Pagesthe federal minimum wage would positively effect the economy. In doing so, I will be discussing how an increase in the federal minimum wage would make a vast improvement on the way many low income families live, and also how raising the federal minimum wage would boost the economy as it desperately needs. In raising the federal minimum wage, one might argue that it would cause a spike in the unemployment rate. The reasoning is that it would force employers to balance the increase in wages that theyRead MoreThe Economic Case For Raising The Minimum Wage927 Words   |  4 PagesEconomic Case for Raising the Minimum Wage The United States is recognized for its economic opportunities. Thousands come to this country for the chance to improve economic stability and climb the social ladder – opportunities usually not available in their home countries. However, there has been increasing concern regarding American wages compared to the rise in the cost of living. Many of the lowest paid workers receive wages that is far much below the federal minimum provision as stipulated in theRead MoreRaising the Minimum Wage: A Counter-Intuitive Solution Essay753 Words   |  4 Pagesbelieve that raising the minimum wage will resolve poverty issues and lack of pay with the signing of legislation, the raising of the minimum wage to $10.10 an hour (as advocated by President Obama and the Democrats) would cause the poverty issue to be worse than it already is; inflation would occur, employees would be laid off, and minimum wage employees would lose welfare benefits, thus offsetting the wage increase. The Governme nt should consider the effects on the American economy as a whole, as opposedRead MoreMinimum Wage Should Be Raised910 Words   |  4 Pagesperson can maximize the American Dream on the minimum wage† (Benjamin Todd Jealous). In 1938, minimum wage was created by the federal government in order to protect workers by ensuring a minimum of twenty-five cents per hour worked. Though President Roosevelt had the right idea in protecting the workforce, something needs to be done to ensure that Americans are getting a reasonable amount of money for the amount of hours they have worked. As Benjamin Todd Jealous stated, minimum wage is not enough forRead MoreEffect Of Raising Minimum Wage1215 Words   |  5 PagesEffects of Raising Minimum Wage The minimum wage in this country has been a controversial issue. Many people believe it will help reduce poverty and boost the economy. However, they are not looking at the downfalls this will bring to our country. This could make the unemployment population rise, it will raise prices of other things, and would have little effect on reducing poverty. Raising the minimum wage would have a negative influence on our country. This movement throughout our country is being