The minimum wage in America has been an ongoing issue for many underpaid workers across the country for years. The debate of the minimum wage raise has been around since the raise in 2007 when it was raised from $5.85 to $7.25, which is where it currently stands. Recently, there have been suggestions in Congress to raise the minimum to $15 per hour, this would be a significant change compared to the current $7.25. There has been no documentation or assembly to debate the matter but this raises the question, is $7.25 a liveable wage in modern-day America?
The minimum wage was established in 1938 from the Fair Standard Labor Act, also known as the FSLA. The FSLA established minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees. They also govern child labor and overtime hours laws. They are a branch in the government to help dispute and bring changes to laws and regulations to everyone in America.
The minimum wage first started off at 40 cents per hour, then was raised to $1.00 in 1958. After this, it was raised multiple times. In 1961, it increased to $1.51, then $2.10 in 1975, $3.31 in 1980, $4.25 in 1995, $6.55 in 2007, and $7.25 which has been the wage since 2008. Since minimum wage began in 1938, there have been patterns of the minimum not being raised over a significant amount of time. Though prior reasons to increase the wage were economic growth, workers unions, or to stabilize economic downturns, it hasn't been raised over the last decade though these factors continue to impact our market. As our economy is continuously changing due to the 2020 Covid-19 outbreak, it would be fair to say if there was a time to consider raising or changing the minimum wage it would be crucial to do it now, rather than in the future when the economy has a potential downward spiral.
There has been a bill brought to Congress about possibly raising the minimum wage for individuals with disabilities, but this is the only document that suggested the federal raise for anyone. Our current president, Joe Biden, is pushing for the minimum to be raised to $15 per hour. He currently has raised the minimum for federal workers and agencies to $15 per hour. If in fact the wage is raised to his suggested wage, it would be double the current minimum wage per hour. Since Joe Biden still has a great deal of time in office, a nation-wide wage raise is completely possible.
Congress is in charge of raising the minimum wage and without their authority, no laws or amendments are passed, so getting Congress to support the law would be highly difficult unless there would be premeditated safeguards that would come with it to prevent depression and inflation. Although it would take much effort to convince members of Congress to come to an agreement, it is only right to debate the matter for the American people.
Having as many people as possible on minimum wage would lower the need for public assistance, which will reduce the tax burden on communities and the state. This would need Congress's approval to reduce any sudden changes or stressors on the economy. Although there would need to be compromises in certain areas like taxes, government budget cuts, school funding and other government priorities to effectively raise the minimum wage, there are alternative solutions to allow the raise of minimum wage.
Imposing the minimum wage on certain markets could potentially have good effects on the working class as it would improve the quality of jobs and workers. Markets like fast food and entry-level jobs would be the ideal area to raise the minimum wage because it provides equal opportunity for individuals without experience or a degree to obtain a livable income. Jobs that require higher education already have a smaller market due to the requirements and this alteration would provide the working class with more comparable wages.
In last year alone, 39 million people made less than $11 per hour—this is substantially low, especially by the direction our economy is heading right now. A staggering 21% of minimum wage workers are currently relying upon government assistance to survive in our current economy. Without government assistance, these people have to rely on $11 per hour to feed families, raise children, and pay for necessities while juggling bills, mortgages, and anything life throws their way. It is in the best interest of our nation for the government to help people in these situations, and raising wages could resolve this issue without people heavily relying on government assistance.
Raising the minimum wage could possibly help 38 million Americans that suffer from poverty. Since 2019, 3.3 million Americans have become impoverished. This raise could help struggling families and poverty-stricken areas around the United States not only survive in their current situation but thrive. The goal isn’t to give a quick-fix solution for those suffering from poverty, but rather to ensure a brighter future for those who are unfortunate enough to get into that situation.
Inequality has been a major problem in American History, specifically the pay gap between men, women, and minors. On average, women have made 93 cents for every dollar a man of the same age earned from recent studies in 2019. Inequality is most apparent in higher-paying jobs and markets, and these raises could close the gap to provide more fair wages for everyone. Minors are also, at times, looked at as unequal. In low-level, minimum wage jobs minors are often taken advantage of in poor working conditions because most adults are unable to pay their bills on a minimum wage income, leaving minors to take these positions. More often than not, employers do not give minors the benefits that they would give adult employees. Since minors don’t receive insurance benefits, the minimum wage for the types of positions they hold should be raised. It is only reasonable since employers don’t have to provide the benefits which are significantly cost-effective for them.
Raising the minimum wage would reduce the tax burden on the state and federal government, as some people who make the minimum are forced to use food stamps, welfare, and rent assistance. It would decrease the number of people who are forced to use these services because of the low wage. Tax cuts could potentially put the economy on an incline because there would be more money circulating.
With the rise of minimum wage comes the possibility of inflation, which means our economy would be in a decline and the prices of things would fluctuate because people are making more money to buy the product and there isn’t enough to supply so they raise the price. In the U.S., inflation is already creating a problem. Gas prices have skyrocketed because the oil industry took a big hit during the beginning of Covid-19. This is an example of how inflation could affect lower-class families and workers.
Another effect of raising the minimum wage is layoffs, in certain job markets. It may be necessary to make layoffs, which could potentially increase the poverty rate, unemployment rate, and increase the number of people who are aided by government assistance. The whole point of having a higher minimum wage is to create better opportunities for lower-class workers, but if the raising of the minimum wage would cause layoffs, it would be entirely counterproductive, and would overall leave the lower-class workers at a complete disadvantage with an even harder job market to get into while having to rely on government assistance.
If employers decided to not make layoffs, there is a possibility that they would just put roadblocks in the way of obtaining employer-provided insurance and benefits. Since they are paying their employees more, it would be unethical to do as people that need the insurance and benefits and would be left to deal with it themselves. Benefits like vacation time, personal leave, and bonuses may not be paid or provided, and employers wouldn’t feel the need to incentivize these things if the employees are already making higher wages. Ultimately, this would leave workers frustrated even though they got the raise, which leaves it at an unfair compromise, as employees would feel that employers are treating them unfairly, but in reality, it would be one of the trade-offs that they would be forced to make as a business.
People who would come in for jobs without experience or degrees would be at a disadvantage because employers are going to be more prompted to hire higher educated and certified workers. This would make the job market extremely competitive and overall leave more people unemployed due to degrees and experience which would raise the unemployment rate. This would make more people forced to collect unemployment and other government benefits which would overall raise taxes. Also, it would force people to pursue said education and certifications, which would create more debt with an extremely competitive job market, overall leaving these degrees less valuable.
Small businesses would suffer because some businesses won’t have enough money to meet the new demands by the government and be forced to lay off employees, in turn, this would leave the small businesses with two choices, lay off employees and have to work the business by themselves, which would be a very challenging task, or try to pay the minimum wage and risk going broke and having their business go under or in debt due to the wage. Small businesses would be the biggest hit in the economy if the wages were raised substantially higher, they would be heavily taxed because when an employee's salary is raised, the employer's taxes raise as well, this would overall leave the businesses on the short end of the stick with few options left for themselves.
With a possible rise of the minimum wage, there is the potential for decreased government spending due to an influx of tax dollars paid into the government as well as a decreased need for public services. The public services that many citizens currently need that are provided by the government are funded by taxpayer dollars. If fewer citizens don’t need services or assistance, it may be possible to completely scrap some of these public services or fund them less because it isn’t in as high of a demand. One disadvantage to decreasing public services, however, is that people who rely on these services due to being unemployed or disabled may have to deal with program cutbacks as well. Fewer benefits could affect poverty-stricken communities and areas that have a higher unemployment rate. If the government could find a balanced solution, this could have a good outcome for people who do and don’t use public services and assistance.
There have been few alternative solutions that supporters of raising the minimum wage or Congress have proposed that do not have a potential negative impact on American business owners, but it should be considered that raising the minimum wage could leave small businesses out to dry. When a worker’s salary is increased, so are the employer’s taxes and the cost of running their business. A viable solution to counter this negative impact on small businesses would be to give tax cuts that would be beneficial to both the employer and employee. Another potential downside to raising the minimum wage would be that employers may resort to automation, which could potentially put 1.4 million Americans out of work. This trickle-down effect wouldn’t be ideal for the working class. Tax cuts may be a solution in this case as well.
To prevent these negative impacts, the minimum wage could be adjusted to the cost of living in different states and areas. For example, “The cost of living in New York is 129% higher than the national average” (Kaushal). With the average minimum in New York areas being around 10 dollars an hour, it makes it extremely hard for people working in those areas, having that high of a cost of living to reside there. Adjusting the minimum to the cost of living would be more ideal so that the economy wouldn’t inflate as much, but at the same time, there would be better wages that correspond with the area that you live in. Overall, Americans would benefit from increased wages, and we, as the people, should be able to live a better life with much fair, liveable income.