Minimum Wage
What effect does minimum wage have on the economy?
In the United States, the minimum wage is one of the lowest out of developed countries. Today, the federal minimum wage is $7.25 an hour, which is 29% less than it was 50 years ago, accounting for inflation. However, there are multiple sides of the argument to whether or not the minimum wage should be raised.
According to a survey from the American Economics Association, American labor economists claim that increasing minimum wage will actually increase unemployment and is not effective in addressing the needs of underprivileged families. Furthermore, 68% of the surveyed economists believe that employers will hire people with greater skills if the wage were to go up. Further research from the University of California at Irvine indicated that for every 10% increase in the minimum wage, low skilled unemployment would decrease by 8%, leaving poorer families and teens without jobs.
On the other hand, there is an argument that boosting the minimum wage would stimulate economy, decrease income inequality, and lift wages for millions of workers. As workers today are producing more and more with each day and each hour of work, productivity has nearly doubled since the 1960s. Additionally, more women would benefit from increasing wages, who may work more than 20 hours a week to support their families and children.
There is more research to be done on the effects of minimum wage. It may stimulate the economy or perhaps increase unemployment. What do you guys think should be done about the minimum wage?
Sources:
https://www.epionline.org/release/majority-of-labor-economists-believe-minimum-wage-hikes-cause-unemployment/
https://www.washingtonpost.com/news/wonk/wp/2018/01/11/what-does-a-15-minimum-wage-do-to-the-economy-economists-are-starting-to-find-out/?utm_term=.efaf9395812a
https://www.epi.org/economists-in-support-of-15-by-2024/
In the United States, the minimum wage is one of the lowest out of developed countries. Today, the federal minimum wage is $7.25 an hour, which is 29% less than it was 50 years ago, accounting for inflation. However, there are multiple sides of the argument to whether or not the minimum wage should be raised.
According to a survey from the American Economics Association, American labor economists claim that increasing minimum wage will actually increase unemployment and is not effective in addressing the needs of underprivileged families. Furthermore, 68% of the surveyed economists believe that employers will hire people with greater skills if the wage were to go up. Further research from the University of California at Irvine indicated that for every 10% increase in the minimum wage, low skilled unemployment would decrease by 8%, leaving poorer families and teens without jobs.
On the other hand, there is an argument that boosting the minimum wage would stimulate economy, decrease income inequality, and lift wages for millions of workers. As workers today are producing more and more with each day and each hour of work, productivity has nearly doubled since the 1960s. Additionally, more women would benefit from increasing wages, who may work more than 20 hours a week to support their families and children.
There is more research to be done on the effects of minimum wage. It may stimulate the economy or perhaps increase unemployment. What do you guys think should be done about the minimum wage?
Sources:
https://www.epionline.org/release/majority-of-labor-economists-believe-minimum-wage-hikes-cause-unemployment/
https://www.washingtonpost.com/news/wonk/wp/2018/01/11/what-does-a-15-minimum-wage-do-to-the-economy-economists-are-starting-to-find-out/?utm_term=.efaf9395812a
https://www.epi.org/economists-in-support-of-15-by-2024/
This is an interesting read, Kevin! The purpose of minimum wage is to prevent people from hitting poverty. The opportunity cost of that would be the money that would have to go towards the workings and not into the pockets of owners. There is a study that shows that it could potentially slow down employment rates. From the perspective of a store owner (for example), raising wage minimum could force stores to avoid hiring additional employees due to the higher wages or even to close down their stores because they are unable to keep up with the expenses. Both could potentially be fatal to the economy if the trend grows widespread.
ReplyDeletePersonally, I believe that the minimum wage should only be raised based on the housing market. If the housing market sees major increases, the minimum wage should follow the trend in a similar fashion to match the changes.
https://www.forbes.com/sites/adammillsap/2018/09/28/how-higher-minimum-wages-impact-employment/#6e13a05a1e7d
Interesting article Kevin! I had never heard that increasing the minimum wage could increase unemployment. The current federal minimum wage hasn't been raised since 2009, despite massive changes to the economy. Another insight I was looking into was the impact raising minimum wage has on local or small businesses. One such business in Maine couldn't afford to hire more or keep the same amount of workers with the raise in state minimum wage. While minimum wage doesn't affect hiring overall in bigger cities like Seattle, New York, and San Francisco, it does impact small businesses. Especially in the Bay Area, the cost of living is so high that a higher minimum wage is necessary. I think a better solution to National minimum wages is more specialized minimum wages by county or even city. The differences of housing and living expenses vary drastically within northern California, let alone the United States. Do you think that a solution for minimum wage so to set by the federal government, or local or state?
ReplyDeletehttps://www.npr.org/2017/12/29/574693572/the-potential-impact-of-increasing-the-minimum-wage