Raising The Minimum Wage Essay

Minimum wage is the lowest amount of money earned per hour by a worker authorized by law. The federal government allows each individual state to set its own minimum wage amount. The current federal minimum wage stands at $7.25 per hour. Increasing the federal minimum wage can help many people, but it also has many drawbacks. Consumer prices will skyrocket and cause inflation, when money becomes less valuable, if the federal minimum wage increases. Also, increasing the minimum wage causes employers to hire fewer people, causing unemployment. Finally, the government should consider smarter ways to help the lower class earn more money such as implementing a direct wage subsidy or increasing the earned income tax credit. Raising minimum wage has the negative effects of causing unemployment and does not raise many people out of poverty. Raising the federal minimum wage above $7.25 per hour has too many drawbacks, so the government should consider implementing a direct wage subsidy. A direct wage subsidy pays a low-wage worker additional dollars per hour.
When employers pay workers more money per hour, less workers will get hired. Employers want to acquire the maximum amount of profit possible, and they will not achieve this profit by paying more workers. According to a study done by Jeffrey Clemens and Michael Withers, when the federal minimum wage rises, so does the unemployment rate.“...although minimum-wage legislation does achieve its stated aim of raising wages of those at the bottom of the earnings distribution, it also reduces the employment of low-skilled workers by measurable amounts” (Baker). This quote states that even though low-wage workers will earn more money by raising minimum wage, many other low-wage workers will not have a job. With many workers out of a job, the unemployment rate will rise. This proves that raising the federal minimum wage will cause