Minimum Wage Research Paper
M. Burke
Composition II
15, April, 2013
The True Affects of Minimum Wage
With voters seeking a bulwark against the Great Depression, wage-hour legislation was an issue in the 1936 Presidential race. On the campaign trail, a young girl handed a note to one of Franklin Roosevelt's aides asking for help: "I wish you could do something to help us girls," it read. "Up to a few months ago we were getting our minimum pay of $11 a week...Today the 200 of us girls have been cut down to $4 and $5 and $6 a week.” Roosevelt rode back into office in part on a promise to seek a constitutional way of protecting workers; in 1923, the Supreme Court had struck down a Washington, D.C., minimum-wage law, finding it impeded a worker's right to set his own …show more content…
price for his labor. The first federal minimum-wage law, the Fair Labor Standards Act, passed in 1938, with a 25-cent-per-hour wage floor and a 44-hour workweek ceiling for most employees. (It also banned child labor.) Outside of Social Security, said Roosevelt, the law was "the most far-sighted program for the benefit of workers ever adopted." Wages must ensure a "minimum standard of living necessary for health, efficiency and general well-being," the act stipulated, "without substantially curtailing employment." Ever since, however, critics and supporters have slugged it out over the minimum wage: some say it destroys jobs by making it too expensive to keep workers. University of California professor David Neumark estimates that the July 24 hike will end up costing some 300,000 jobs for young adults and teens by making their employment prohibitively expensive for enterprises already facing rapidly eroding profit margins. Other economists note, however, that because a majority of minimum-wage earners work in outsourcing-resistant service jobs, businesses will have a hard time handing out pink slips en masse. Researchers at the University of California at Berkeley found that after an 80-cent New Jersey minimum wage hike in 1992, employment in the state's fast-food restaurants rose slightly faster than in Pennsylvania, where the minimum wage did not change. (The law's effects showed up, instead, in prices: the tab at New Jersey fast-food restaurants grew about 4% faster than at greasy spoons in Pennsylvania.) Instead of killing jobs, minimum wage supporters argue, the wage floor increases productivity and boosts consumer purchasing power. The Economic Policy Institute estimates that the July 24 hike to $7.25 will, over the course of the next year, pad consumer spending by more than $5.5 billion. s a result of the sparring, the value of the minimum wage in real dollar terms has risen and fallen on political tides, peaking in 1968 when an hour's pay bought nearly 5 gal. (19 L) of gas. By 2006, it paid for less than 2 gal. (8 L); meanwhile, some states raised their own standards (Washington mandates $8.55 an hour). Thirty-one states will have to increase their minimum wages as a result of the July 24 increase, while 19 states and Washington, D.C. already had a minimum wage of $7.25 or higher. Supporters of the boost say it will help the country's neediest at a time when they have been falling further and further behind. From 1973 to 2007, as the minimum wage fell 22% in real dollars, domestic corporate profits jumped more than 50%—bloating the gap between rich and poor and fueling calls for a $10-an-hour "living wage" by 2010. For now, though, an extra 70 cents is as good as it gets.
An employer has to believe that the value created by an employee is more valuable than the cost of the employee.
For example, Susan wants to clean your car for 30 dollars, and if your car needs it, you might choose to employ her for $30, maybe even $50. But what happens when she starts to charge $100, $200,or even $1000? That job will no longer be created. Why? You value your $100 more than the service being provided, in this case, your car being cleaned. It is impossible to sustain employing anyone doing work, which is valued less than the wage they are being paid. The minimum wage is supposed to help the poorer, less skilled, and younger workers in the economy, but it doesn’t. It gets them fired. How many jobs would be lost if entrepreneurs were forced to only hire people who’s labor they valued at $20 an hour. Or even $50. Or even $100. Sure, some very highly skilled workers wouldn’t be affected by a $100 dollar minimum wage increase, but the rest of the workforce would be unemployed because they’re wage would too valuable than their services. If the minimum wage is fundamentally sound, we should be able to increase it without fear of hurting the economy. When employment cost increases, entrepreneurs can pick one of two choices. They can reduce the amount of people they employ, or raise the cost of the goods they are providing, otherwise, they are losing money. This makes the minimum wage a double whammy, even if you don’t lose your job when minimum wage increases, you and everyone else are forced to pay for more expensive goods and services provided by entrepreneurs who instead of firing employees they couldn’t afford, raised prices of their goods and services. That is the epitome of counter productivity. Try to keep in mind who is most affected by these rising prices. It’s the low wage worker, and the very people minimum wage is supposed to be saving. In a free market economy, employment is a win, win, win. Employers win because the value created by their
employees, is greater than their cost. Workers benefit, not only form a wage, but they also gain work experience, which they can use to demand high wages in the future. The economy and society as a whole benefits because the total labor being added to the pool of productivity is more than it was before. However, the unemployment caused by minimum wage is a lose, lose, lose. Employees are robbed of wages and work experience because of said unemployment. Employers are robbed of the monetary benefit that would have been gained by employing workers. The whole economy is worse off because those unemployed workers are now unable to contribute their labor to help economic prosperity as a whole.
People don't like to think that anyone's labor is worth less than the minimum wage. Someone might end up busing tables for $4.00 an hour. Some say the minimum wage is a way of paying some sort of self-worth payment or a "living wage." People with such good intentions look at the direct recipients of these wages, say, bus boys now making $7.25 an hour. The bus boys celebrate the Politian’s responsible smile and wave, but they rarely count the invisible costs: willing human beings who never get hired in the first place. Most people argue that without a bottom minimum wage, employees wont make enough to love on. Who can live off of $4.00 an hour? A teenager living at home with his parents? An elderly person who wants simply to stay active? A single mom with three kids? A single woman sharing an apartment with 2 roommates? Of course, not all of these people could live off of $4.00 an hour, but some of them could given the opportunity. Concerns about those who couldn't don't justify minimum wages even if we ignored the invisible costs of the policy, which include reduced margins to businesses that might otherwise grow (and hire more people). In other words, if you pull off the bottom two rungs of the income ladder, many will never climb it. That is the essential affect of government imposed minimum wage.
Composition II
15, April, 2013
The True Affects of Minimum Wage
With voters seeking a bulwark against the Great Depression, wage-hour legislation was an issue in the 1936 Presidential race. On the campaign trail, a young girl handed a note to one of Franklin Roosevelt's aides asking for help: "I wish you could do something to help us girls," it read. "Up to a few months ago we were getting our minimum pay of $11 a week...Today the 200 of us girls have been cut down to $4 and $5 and $6 a week.” Roosevelt rode back into office in part on a promise to seek a constitutional way of protecting workers; in 1923, the Supreme Court had struck down a Washington, D.C., minimum-wage law, finding it impeded a worker's right to set his own …show more content…
price for his labor. The first federal minimum-wage law, the Fair Labor Standards Act, passed in 1938, with a 25-cent-per-hour wage floor and a 44-hour workweek ceiling for most employees. (It also banned child labor.) Outside of Social Security, said Roosevelt, the law was "the most far-sighted program for the benefit of workers ever adopted." Wages must ensure a "minimum standard of living necessary for health, efficiency and general well-being," the act stipulated, "without substantially curtailing employment." Ever since, however, critics and supporters have slugged it out over the minimum wage: some say it destroys jobs by making it too expensive to keep workers. University of California professor David Neumark estimates that the July 24 hike will end up costing some 300,000 jobs for young adults and teens by making their employment prohibitively expensive for enterprises already facing rapidly eroding profit margins. Other economists note, however, that because a majority of minimum-wage earners work in outsourcing-resistant service jobs, businesses will have a hard time handing out pink slips en masse. Researchers at the University of California at Berkeley found that after an 80-cent New Jersey minimum wage hike in 1992, employment in the state's fast-food restaurants rose slightly faster than in Pennsylvania, where the minimum wage did not change. (The law's effects showed up, instead, in prices: the tab at New Jersey fast-food restaurants grew about 4% faster than at greasy spoons in Pennsylvania.) Instead of killing jobs, minimum wage supporters argue, the wage floor increases productivity and boosts consumer purchasing power. The Economic Policy Institute estimates that the July 24 hike to $7.25 will, over the course of the next year, pad consumer spending by more than $5.5 billion. s a result of the sparring, the value of the minimum wage in real dollar terms has risen and fallen on political tides, peaking in 1968 when an hour's pay bought nearly 5 gal. (19 L) of gas. By 2006, it paid for less than 2 gal. (8 L); meanwhile, some states raised their own standards (Washington mandates $8.55 an hour). Thirty-one states will have to increase their minimum wages as a result of the July 24 increase, while 19 states and Washington, D.C. already had a minimum wage of $7.25 or higher. Supporters of the boost say it will help the country's neediest at a time when they have been falling further and further behind. From 1973 to 2007, as the minimum wage fell 22% in real dollars, domestic corporate profits jumped more than 50%—bloating the gap between rich and poor and fueling calls for a $10-an-hour "living wage" by 2010. For now, though, an extra 70 cents is as good as it gets.
An employer has to believe that the value created by an employee is more valuable than the cost of the employee.
For example, Susan wants to clean your car for 30 dollars, and if your car needs it, you might choose to employ her for $30, maybe even $50. But what happens when she starts to charge $100, $200,or even $1000? That job will no longer be created. Why? You value your $100 more than the service being provided, in this case, your car being cleaned. It is impossible to sustain employing anyone doing work, which is valued less than the wage they are being paid. The minimum wage is supposed to help the poorer, less skilled, and younger workers in the economy, but it doesn’t. It gets them fired. How many jobs would be lost if entrepreneurs were forced to only hire people who’s labor they valued at $20 an hour. Or even $50. Or even $100. Sure, some very highly skilled workers wouldn’t be affected by a $100 dollar minimum wage increase, but the rest of the workforce would be unemployed because they’re wage would too valuable than their services. If the minimum wage is fundamentally sound, we should be able to increase it without fear of hurting the economy. When employment cost increases, entrepreneurs can pick one of two choices. They can reduce the amount of people they employ, or raise the cost of the goods they are providing, otherwise, they are losing money. This makes the minimum wage a double whammy, even if you don’t lose your job when minimum wage increases, you and everyone else are forced to pay for more expensive goods and services provided by entrepreneurs who instead of firing employees they couldn’t afford, raised prices of their goods and services. That is the epitome of counter productivity. Try to keep in mind who is most affected by these rising prices. It’s the low wage worker, and the very people minimum wage is supposed to be saving. In a free market economy, employment is a win, win, win. Employers win because the value created by their
employees, is greater than their cost. Workers benefit, not only form a wage, but they also gain work experience, which they can use to demand high wages in the future. The economy and society as a whole benefits because the total labor being added to the pool of productivity is more than it was before. However, the unemployment caused by minimum wage is a lose, lose, lose. Employees are robbed of wages and work experience because of said unemployment. Employers are robbed of the monetary benefit that would have been gained by employing workers. The whole economy is worse off because those unemployed workers are now unable to contribute their labor to help economic prosperity as a whole.
People don't like to think that anyone's labor is worth less than the minimum wage. Someone might end up busing tables for $4.00 an hour. Some say the minimum wage is a way of paying some sort of self-worth payment or a "living wage." People with such good intentions look at the direct recipients of these wages, say, bus boys now making $7.25 an hour. The bus boys celebrate the Politian’s responsible smile and wave, but they rarely count the invisible costs: willing human beings who never get hired in the first place. Most people argue that without a bottom minimum wage, employees wont make enough to love on. Who can live off of $4.00 an hour? A teenager living at home with his parents? An elderly person who wants simply to stay active? A single mom with three kids? A single woman sharing an apartment with 2 roommates? Of course, not all of these people could live off of $4.00 an hour, but some of them could given the opportunity. Concerns about those who couldn't don't justify minimum wages even if we ignored the invisible costs of the policy, which include reduced margins to businesses that might otherwise grow (and hire more people). In other words, if you pull off the bottom two rungs of the income ladder, many will never climb it. That is the essential affect of government imposed minimum wage.