The United States has varied opinions on the question of the minimum wage at both federal and state levels. Legislatures and workers are all keen on the decade-long quest to have wages raised. Significant amounts of workers prefer wages as high as $15 per hour (twice the wage floor of $7.5 per hour). Such a wage floor help regulate the labor market, giving workers and employers a fairground for operation. Without a minimum wage, employers may take advantage of employees, leading to high rates of unemployment and a high labor surplus. A deviation in the minimum wage affects American households and firms at such microeconomic levels as disposable income and employment decisions.
Minimum wages affect the business's ability to negotiate wages for its employees. When the government through the influence of labor unions solicits for minimum wage increases, businesses are at a loss over the wages to pay their employees. They are forced to increase the minimum wage to a new price floor, thus increasing the expenses of the business. Employers or business owners, therefore, have to choose between letting go of some workers or paying all the workers at the new rate and facing the risk of a loss. Employers, therefore, have a say in the setting of the minimum wage by ensuring that the new wages set do not lower their economic profits. Since most of the businesses in the United States operate in free markets, they are price takers, and therefore labor wages are a great way of manipulating their profits. It is through such variable costs as labor that they can increase the profit of the business. Businesses that employ unskilled labor, given a minimum wage law, experience diminishing profits and increasing expenses that challenge their economic growth. A sensible move for such an employer is to employ skilled labor that maximizes the quality of output and increases the sales revenue of the business.
The minimum wage has been a contested topic across the United States, given the one-size-fits-all mandate of the $7.5 per hour minimum wage. The different states within the United States have varying costs of living that need to be considered when setting the minimum wage. Urban and coast-bound states tend to have high costs of living as opposed to the Midwestern states. Increasing the minimum wage within such states, therefore, gives the locals more disposable income to sustain the high costs of living within these regions. For example, the cost of living in Iowa and New York. New Yorkers are bound to spend more on food, rent, and healthcare as opposed to Iowans. The United States, therefore, needs an increase in the minimum wage with consideration of the cost of living within each state. A common minimum wage floor for all states may put more money into the pockets of one household while burdening another household under a similar firm. The wages should, therefore, vary depending on the state across the industries.
The minimum wage should be high enough to allow workers to support their families. Some individuals earning minimum wages sometimes have to resort to food stamps as they lack the extra cash for eating out or for huge emergencies. A stretched wage is essential to allow workers to afford a quality lifestyle, save, and even invest. An increased investment plan increases the discretionary income of the firms and households.
Summing up, increasing the minimum wage benefits the majority of low-income workers in both the short and long term. In the short term, they have an increased disposable income, while in the long run, they have more than enough to pay taxes, meet their needs, and have enough to save.