Essay On Pros And Cons Of Minimum Wage
Minimum wage in the United States varies state to state, as well as changes year to year. The current Untied States minimum wage is 7.25 United States Dollars (USD) per hour. This is for non-tipped employees such as retail workers. For tipped employees such as servers, minimum wage is 2.13 USD per hour. This varies state to state, as I mentioned above. In Ohio the state minimum wage is 8.10 USD for non-tipped employees, and for tipped employees it is 4.05 USD per hour. These wages can vary so much from state to state legally because the cost of living in each state can vary tremendously. For example, New York will have the highest minimum wage as of 2018, which will be 15.00 USD per hour. This is more than double the United States minimum wage standard.
This topic is of interest to me because of the increasing discussion in the media about minimum wage and if it is enough to survive of off. This has been a growing argument among youth, adults, and families in all states and of all occupations. In the paper I will go into detail of the pros and cons of a minimum wage on our economy.
A positive of minimum wage is that …show more content…
it is set to make sure the employee is making enough money to live off of. This lowers our poverty rates because if people are paid a set number that has been analyzed and declared “livable” income, people are not classified as in poverty if they are working the appropriate hours. “The federal poverty level for a working adult is $11,880 in 2016 according to the United States Department of Health and Human Services. At $7.25 per hour a minimum wage workers earns $15,080 per year, which is already greater than the federally determined poverty level. “ This is based on a 40 hour work week. This statistic shows that minimum wage is indeed enough to keep one individual out of poverty.
Another advantage of minimum wage is the support it provides to families. According to The Economic Policy Institute, 33 percent of minimum wage workers are married couples, if we did not have a minimum wage these families could not provided for each other enough to stay out of poverty. If these families did not have the adequate funds to stay out of poverty, tax rates would rise, demands on goods would decline, and more families would be accepting welfare and government assistance.
One positive to a set minimum wage for a county I found was for the greater good of a local community. If a person is working and making minimum wage they are therefore not receiving government assistance, such as welfare, food stamps, or housing. This allows the people in the community to not endure such a heavy tax burden on their income.
Several argue that increasing the minimum wage will stimulate our economy. These people argue that if the wage was raised people would have more “spending money” and the demand on goods would increase, moreover stimulating our economy. According to The Economist “the minimum wage should be about $12 an hour in the U.S based on our GDP.” It is said that raising our minimum wage would not hurt small businesses or even corporations causing unemployment truly because the increase in wages would come out of the company’s profit, in turn just taking away a small percent of profit that is in most cause, very substantial.
Another argument to minimum wage, and raising the national minimum wage stems to, if an employee is paid well, they will work hard and do great things for the company. A personal example of this is when I go to a restaurant. If my waitress who could be making as little as 3 USD an hour, is not friendly helpful, or fast, I will have a bad impression off the bat. Then in the kitchen if the cook is making 7.25 USD an hour he may not be inclined to work hard and fast. As a consumer, if my food takes a long time to be made, isn’t right, and is cold. I will be even more upset, and overall will hurt the company in the long run by losing business. If this happens the company could go bankrupt and lose it all because of underpaid employees.
It does not take a company to much lose of revenue to pay their employees a higher wage. A great example of this is from PBS, “You’re running a McDonald’s selling 1,000 hamburgers a day. You make, say, 75 cents on each Big Mac costing $3.99. Will you raise its price by a nickel to $4.04 in order to make up for an increase in the minimum wage? That would be silly, because $4.04 is not an attractive number, and you’d lose too many sales as a consequence. Rather, you’d be satisfied with a lower profit margin on a Big Mac of 70 cents. But you notice that the Big Mac Meal is selling for $5.69; that gives you the opportunity to raise its price to the next attractive number of $5.75 in order to make up for the increased cost of labor. Will the demand for Big Mac Meals decline? It is doubtful that customers will even notice that tiny increase in price…………..’Decently paid workers tend to do a better job.’” This makes sense in an economic stand point because as a society, we will pay the extra quarter, nickel, dime, to buy the product we want if it is something we truly want, this extra profit can be placed towards paying our employees a higher wage, while not hurting the demand for the good.
When it came to how minimum wage was a disadvantage to our economy the results were overwhelming. I found a very simple and easy way to understand the way minimum wage effected our economy negatively with a quote from Rom Economics “….Let’s start with a simple Demand-Supply diagram. Assume the economy is at equilibrium point E0. Minimum wage functions similarly to a price floor so that Wm (the minimum wage) is greater than the equilibrium wage W0. At Wm, quantity demanded of labor is lower than the quantity supplied of labor, and the distance between them is known as unemployment in the labor market. Imposing a wage level higher than the equilibrium wage level will disrupt the price mechanism and means the market won’t be able to clear, i.e. there will be laborers that won’t be able to find work. As a result non-price competition, such as worker’s age, experience or even personal connection, will supersede the price competition, making it more difficult for younger and unskilled laborer’s to find work. Thus, a minimum wage will have side-effects which can cause a lot of damage to the economy’s labor market.”
A negative to a minimum wage is that it says to our teens its okay to drop out of school because you will make a living without the education. As stated above it is indeed manageable to live off of minimum wage as a single person working 40 hours per week. With this being said our teens are dropping out of high school and not attending college because of the promises of a set pay. This is true to many, unskilled undereducated teens. A teen can get hired at the age of 16 to nearly any hiring fast food, or retail working area. With a minimum wage set, the teen is making a reasonable wage to do a job that requires little to no education. In this case the teen can work their way up the company getting a raise over time, and still not finishing their education. With this being said it hurts our economy because we have undereducated teens in our society who do not know how to help grow our society. As this teen grows up and starts a family with kids maintaining that livable lifestyle with young ones gets increasingly harder and they may in the long run need government assistance such as welfare, moreover, putting a burden on tax payers who finished their education.
Another disadvantage of minimum wage laws is the effects it has on employment opportunities.
With minimum wage being set the economy is effected because of the black market. With this being said there are business that work illegally bringing in immigrants from other countries because they do not have to pay them as much as they do legal citizens. The company can now make more profit, and pay employees little to nothing for the same workload. This then leads to unemployment among US citizens. With illegal immigrants taking labor enduring job opportunities, which require little to no skill or background knowledge needed to business owners it’s a no brainer. This leaves our Americans under the poverty level receiving government assistance and hurting those who pay taxes, and those who are in desperate need of a job at a reasonable minimum wage
pay.
With this being said our economy can also be affected positively by these illegal workers. Since company’s can pay their employees less because they are not legal citizens, they can charge less for a good. When a consumer is shopping and they see the same product priced differently, for example, one is priced 2.29 USD, and the other same product is priced at 5.30 USD, the consumer is going to by the cheaper good, and demand it more than the expensive one. This stimulates the economy, and promotes grow for the company producing the cheaper good. As this is good for our economy, this also hurts the business owner that is follows minimum wage laws. This is because the owner of that corporation is paying their employees the appropriate livable wage, but is yet being punished for doing so by losing business. If this occurs the business could go bankrupt leaving millions of hard workers out of a job and into poverty.
This topic is of interest to me because of the increasing discussion in the media about minimum wage and if it is enough to survive of off. This has been a growing argument among youth, adults, and families in all states and of all occupations. In the paper I will go into detail of the pros and cons of a minimum wage on our economy.
A positive of minimum wage is that …show more content…
it is set to make sure the employee is making enough money to live off of. This lowers our poverty rates because if people are paid a set number that has been analyzed and declared “livable” income, people are not classified as in poverty if they are working the appropriate hours. “The federal poverty level for a working adult is $11,880 in 2016 according to the United States Department of Health and Human Services. At $7.25 per hour a minimum wage workers earns $15,080 per year, which is already greater than the federally determined poverty level. “ This is based on a 40 hour work week. This statistic shows that minimum wage is indeed enough to keep one individual out of poverty.
Another advantage of minimum wage is the support it provides to families. According to The Economic Policy Institute, 33 percent of minimum wage workers are married couples, if we did not have a minimum wage these families could not provided for each other enough to stay out of poverty. If these families did not have the adequate funds to stay out of poverty, tax rates would rise, demands on goods would decline, and more families would be accepting welfare and government assistance.
One positive to a set minimum wage for a county I found was for the greater good of a local community. If a person is working and making minimum wage they are therefore not receiving government assistance, such as welfare, food stamps, or housing. This allows the people in the community to not endure such a heavy tax burden on their income.
Several argue that increasing the minimum wage will stimulate our economy. These people argue that if the wage was raised people would have more “spending money” and the demand on goods would increase, moreover stimulating our economy. According to The Economist “the minimum wage should be about $12 an hour in the U.S based on our GDP.” It is said that raising our minimum wage would not hurt small businesses or even corporations causing unemployment truly because the increase in wages would come out of the company’s profit, in turn just taking away a small percent of profit that is in most cause, very substantial.
Another argument to minimum wage, and raising the national minimum wage stems to, if an employee is paid well, they will work hard and do great things for the company. A personal example of this is when I go to a restaurant. If my waitress who could be making as little as 3 USD an hour, is not friendly helpful, or fast, I will have a bad impression off the bat. Then in the kitchen if the cook is making 7.25 USD an hour he may not be inclined to work hard and fast. As a consumer, if my food takes a long time to be made, isn’t right, and is cold. I will be even more upset, and overall will hurt the company in the long run by losing business. If this happens the company could go bankrupt and lose it all because of underpaid employees.
It does not take a company to much lose of revenue to pay their employees a higher wage. A great example of this is from PBS, “You’re running a McDonald’s selling 1,000 hamburgers a day. You make, say, 75 cents on each Big Mac costing $3.99. Will you raise its price by a nickel to $4.04 in order to make up for an increase in the minimum wage? That would be silly, because $4.04 is not an attractive number, and you’d lose too many sales as a consequence. Rather, you’d be satisfied with a lower profit margin on a Big Mac of 70 cents. But you notice that the Big Mac Meal is selling for $5.69; that gives you the opportunity to raise its price to the next attractive number of $5.75 in order to make up for the increased cost of labor. Will the demand for Big Mac Meals decline? It is doubtful that customers will even notice that tiny increase in price…………..’Decently paid workers tend to do a better job.’” This makes sense in an economic stand point because as a society, we will pay the extra quarter, nickel, dime, to buy the product we want if it is something we truly want, this extra profit can be placed towards paying our employees a higher wage, while not hurting the demand for the good.
When it came to how minimum wage was a disadvantage to our economy the results were overwhelming. I found a very simple and easy way to understand the way minimum wage effected our economy negatively with a quote from Rom Economics “….Let’s start with a simple Demand-Supply diagram. Assume the economy is at equilibrium point E0. Minimum wage functions similarly to a price floor so that Wm (the minimum wage) is greater than the equilibrium wage W0. At Wm, quantity demanded of labor is lower than the quantity supplied of labor, and the distance between them is known as unemployment in the labor market. Imposing a wage level higher than the equilibrium wage level will disrupt the price mechanism and means the market won’t be able to clear, i.e. there will be laborers that won’t be able to find work. As a result non-price competition, such as worker’s age, experience or even personal connection, will supersede the price competition, making it more difficult for younger and unskilled laborer’s to find work. Thus, a minimum wage will have side-effects which can cause a lot of damage to the economy’s labor market.”
A negative to a minimum wage is that it says to our teens its okay to drop out of school because you will make a living without the education. As stated above it is indeed manageable to live off of minimum wage as a single person working 40 hours per week. With this being said our teens are dropping out of high school and not attending college because of the promises of a set pay. This is true to many, unskilled undereducated teens. A teen can get hired at the age of 16 to nearly any hiring fast food, or retail working area. With a minimum wage set, the teen is making a reasonable wage to do a job that requires little to no education. In this case the teen can work their way up the company getting a raise over time, and still not finishing their education. With this being said it hurts our economy because we have undereducated teens in our society who do not know how to help grow our society. As this teen grows up and starts a family with kids maintaining that livable lifestyle with young ones gets increasingly harder and they may in the long run need government assistance such as welfare, moreover, putting a burden on tax payers who finished their education.
Another disadvantage of minimum wage laws is the effects it has on employment opportunities.
With minimum wage being set the economy is effected because of the black market. With this being said there are business that work illegally bringing in immigrants from other countries because they do not have to pay them as much as they do legal citizens. The company can now make more profit, and pay employees little to nothing for the same workload. This then leads to unemployment among US citizens. With illegal immigrants taking labor enduring job opportunities, which require little to no skill or background knowledge needed to business owners it’s a no brainer. This leaves our Americans under the poverty level receiving government assistance and hurting those who pay taxes, and those who are in desperate need of a job at a reasonable minimum wage
pay.
With this being said our economy can also be affected positively by these illegal workers. Since company’s can pay their employees less because they are not legal citizens, they can charge less for a good. When a consumer is shopping and they see the same product priced differently, for example, one is priced 2.29 USD, and the other same product is priced at 5.30 USD, the consumer is going to by the cheaper good, and demand it more than the expensive one. This stimulates the economy, and promotes grow for the company producing the cheaper good. As this is good for our economy, this also hurts the business owner that is follows minimum wage laws. This is because the owner of that corporation is paying their employees the appropriate livable wage, but is yet being punished for doing so by losing business. If this occurs the business could go bankrupt leaving millions of hard workers out of a job and into poverty.