Minimum Wage

Running head: MINIMUM WAGE 1
Minimum Wage
Name
Institution
THE US SHOULD INCREASE THE MINIMUM WAGE FROM $7.25 PER HOUR 2
The US Congress Should increase the federal minimum wage from $7.25 per hour?
For quite some time, the national debate is mostly centered on whether or not the federal
minimum wage should be raised. The current minimum wage has been put at $7.25 per hour.
However, President Obama had advocated that the amount be raised gradually to about $10 per
hour (Williams, 2009). The minimum wage should be raised to $10 per hour because it tends to
have numerous benefits.
There are several reasons as to why the minimum wage should be increased from $7.5 to
approximately $10. Firstly, it is believed that the federal minimum wage has not kept up with the
different inflation rates. Therefore, the specific pay of many of the American workers, and in
particular those that tend to have families of three or more individuals are now below the poverty
levels. Research shows that the federal minimum wage has since 2009 stagnated at $7.5. This in
turn has resulted in millions of individuals living in America struggling in poverty despite the
fact that they have full-time jobs (Doucouliagos & Staneley, 2009). Though, most of the
Americans tend to work approximately 40 hours a week or more, their wages tend to be low
enough, meaning that most of them must rely on benefits from SNAP as well as other kinds of
public assistance. The present minimum wage tends to economically marginalize millions of
Americans who in most cases have the capacity of generating growth in the economy.
There are numerous reasons as to why raising the minimum wage is important. Firstly,
raising the minimum to approximately 10$ per page will raise the living standards of
impoverished workers. Research done by the CBO found out that raising the amount to $10 per
hour could eventually up lift the lives of 900,000 individuals from poverty. The numbers were
obtained from observing the present poverty rates of low wage employees (Sowell, 2004). This
THE US SHOULD INCREASE THE MINIMUM WAGE FROM $7.25 PER HOUR 3
means that by increasing the current minimum wage per every hour could enable the employees
to better support themselves and also their families.
Secondly, raising the minimum wage will not only raise many of the low wage
individuals out of poverty, but will eventually help the general economy. Logically, the more
money that individuals make through their wages, they more they will spend on consumption of
goods. This means that the higher wages will eventually be passed on, as a result of greater
spending power levels. However, this would only ripple through the economy is at all the general
budgets for salary grew gradually under an increase in the minimum wage (Dube et al, 2010).
The workers would have increased amounts of money to spend on their basic needs. This would
give businesses more customers hence stimulating the economy. As a result, this would increase
the demand for extra workers. Most of the businesses tend to understand this fact. This is the
reason as to why majority of the small businesses both in the restaurant and retail industries
support that the minimum wage should be increased.
Another important benefit of increasing the minimum wage is that it would eventually
reduce race and gender-based income inequality. It would be an important step in addressing this
gap as well as help in lifting these groups out of poverty. Research shows that approximately 6
million Americans would have their standards of living elevated, and 60% of them would be
people of color (Krugman, 2013). This means that Asians, Hispanics and Blacks would benefit
significantly. This is because they tend to constitute a huge share of minimum-wage earners than
the overall workforce.
In addition, government expenses for different social programs that are aimed at poor
individuals would possibly be reduced. As a result, this would culminate in slightly lower tax
THE US SHOULD INCREASE THE MINIMUM WAGE FROM $7.25 PER HOUR 4
rates for other Americans (Neumark & William, 2008). This is because; when individuals earn
higher levels of income, they tend to eventually rely less on the various governmental safety net
programs such as SNAP. This would eventually produce a total of $46 billion in terms of savings
over the next ten years.
Another benefit of increasing the minimum wage is that somewhat more revenue for the
American government would be generated mainly from payroll taxes for purposes of social
security. For instance, research shows that that by increasing the minimum wage to $15 per hour
by 2024, would have both a direct and indirect impact on 41 million workers (Mankiw, 2011).
This would translate into $144 billion in terms of additional wages that would end up being
generated, and streaming out into the American economy.
In addition, putting higher amounts of money in the hands of American citizens who are
willing to readily spend it would improve the economy. In addition, increased spending and
wages would end up raising the demand, hence creating more jobs. When the minimum wage is
increased, the workers stays with their employers longer, instead of seeking out better-paying
jobs with other organizations (Chamley, 2013). As a result, this tends to reduce the business turn
over levels, training and associated hiring costs.
In conclusion, it is evident that the US congress should increase the minimum wage. This
is because; many of the Americans will rise above the poverty level, hence raising their standards
of living. In addition, increasing the minimum wage to $10, it would improve the economy as
majority of Americans would have additional amount of money to spend on other commodities.
THE US SHOULD INCREASE THE MINIMUM WAGE FROM $7.25 PER HOUR 5
References
Neumark D & William, L.W (2008). Minimum Wages. Cambridge, Massachusetts: The MIT
Press
Williams W.E (2009). The Best Anti-Poverty Program We Have? Regulation 32(2): 62
Sowell T (2004). Minimum Wage Laws. Basic Economics: A Citizens Guide to the Economy.
New York: Basic Books
Chumley C.K (2013). Take it to the bank: Sen. Elizabeth Warren Wants to Raise Minimum
Wage to $22 per hour. Washington Times. Retrieved on 13/11/2017 from
http://www.washingtontimes.com/news/2013/mar/18/sen-elizabeth-warren-raise-
minimum-wage-22-hour
Mankiw, N.G (2011). Principles of Macroeconomics. (6
th
ed). South-Western Pub. P.311
Krugman P (2013). Economics. Worth Publishers p.385
Dube A; Lester T & Reich M (2010). Minimum Wage Effects Across State Boarders: Estimates
Using Contiguous Counties. The Review of Economics and Statistics 92(4): 945-64
Doucouliagos H; Stanley T.D (2009). Publication Selection Bias in Minimum-Wage Research?
A Meta-Regression Analysis. British Journal of Industrial Relations 47(2): 406-28

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