A minimum wage: Its Origin and Effects
A minimum wage refers to the lowest amount of money that a worker can legally be paid, hourly. It is a legally authorized wage in terms of hours, below which workers are not to accept a particular job, let alone to be offered the job. The issue on minimum wage has recently been a ground for a battle for economists. The minimum wage has generated a lot of anxiety since it goes deep to the heart of how individuals have viewed the free markets. If the minimum wage is decent policy, it upsets the conventional theory of economy. The origin of the minimum wage is traced back to the 19th century, where workers formed movements in industrializing nations to fight low wages, long hours, as well as the shortage of unions that supported the safety of workers. Laws on minimum wage at the time represented minimums for particular industries in which concerns of workers being taken advantage of were high. This is unlike the current laws on minimum wage, which encompass all forms and types of employment. Walking through the assessments of the effects of the minimum wage is an experience that can be described as dizzying. However, even though some studies have shown the harmful impacts of raising the minimum wage, most others have described the positive effects of the same. This essay will lay a focus on how the raising of the minimum wage could impact the society in a positive light.
Why Raising Minimum Wage Would Be a Positive Change
Over the past few years, several states have increasingly experimented on higher minimum wages, with the aim of remedying inequity of incomes and the still economic mobility. It has been observed that raising the minimum wage grows remunerations at the foot of the distribution. Convincing evidence exists, that suggests that if the minimum wage is increased in moderation, it will provide much-needed benefits to some of the most hard-pressed families, and this would not cause any apparent negative effects on employment. Raising the minimum wage means increasing the salaries of millions of workers who toil for low wages. This translates to an effect on the household incomes of several individuals who have low-wage workers in their families. The minimum wage is progressively pertinent to the wellbeing of the families of low-wage workers since the ones who would most likely be affected by the low wages are the considerably older and the infants. These higher incomes from the increase in minimum wage would highly benefit low, moderate, and middle-income families.
Ensuring Shared Growth and Reducing Dependency on Social Programs
Through the increase in the minimum wage, the government can ensure that all people continue to share in the profits of growth. This increase in wage would instantly translate to more money for low-wage workers, who would hence be able to spend this money on the essentials of living, for instance, food, gas; which creates faster growth. For the businesses, if the employees have higher wages, they would not want to leave their jobs in pursuit of better-paying jobs. Moreover, employees who survive at minimum wage most often than not, depend on supplementary backing from social programs that are run by the government, for instance, subsidies on housing, food assistance, health support for themselves and their families, as well as education. Better education means better-paying jobs in the future and reduced stress (Sutch 10). If the minimum wage is raised, then some of these individuals will have the ability to support themselves more without having to rely so heavily on social programs. It upturns the incentive to take jobs, rather than other means of transferring revenue to the less fortunate that are not related to employment. This would translate to the reallocation of these funds, for the support of other societal needs.
Reducing Poverty, Income Inequality, and Achieving Gender Pay Equality
Raising the minimum wage, and the subsequent raising of the wages of workers who work for lower incomes also facilitate the reduction of poverty and income inequity, while fostering gender pay equality. When the central significance of counteracting income inequality is put into consideration, it is notable that minimum wage growths have been seen to create a reduction in the inequity of incomes. Also greater minimum wage has been seen to reduce the gender wage gap, more so for women of color. Research indicates that African-American ladies only get 64 cents for every dollar paid to a white man, while Hispanic women get just 54 cents for every dollar that their male counterparts are paid. An increase in the minimum wage would mean 55 percent of workers (all ladies), would be on the beneficial side (Steele 23). Also, a higher minimum wage would similarly decrease the wage penalty for bisexual and gay men, who happen to experience a wage penalty, earning between ten and thirty-two percent lower than men who are heterosexual. Lesbian ladies are not left out by this gender gap, and would greatly benefit from increased minimum wage as well.
Positive Impacts on the Economy
An increase in the minimum wage would also have positive impacts on the economy. With higher wages, individuals will acquire a higher purchasing power, which will lead to the expansion of aggregate demand as well as the strengthening of the economy. Families which experience increased income would usually advance their consumption, while families that experience decreased incomes would usually lower their consumption rates. This increase in demand elevates the income and the output of the nation. According to the Keynesian theory of economics, through the improvement of salaries for low-wage jobs and increased in the minimum wage, the consumer spending of these workers will be restored. This spending powers our economy and is essential for the growth of local businesses (Holly, 2015). More disposable incomes translate to increase in sales volumes, which mean more profit. This would encourage expansion and hence more employment. Also, contrary to the arguments that increased the minimum wage would lead to reduced employment and affect business, affect capital, and reduce demand on prices; the minimum wage in the US has been altered more than 22 times, and the GDP per capita only increased steadily (Steele 13).
Works Cited
Bernstein, Jared, Lawrence R. Mishel, and Ellen Houston. Crime and work: What we can learn from the low-wage labor market. Economic Policy Inst, 2000.
Holly Sklar, Small Businesses Want Minimum Wage Increase – Business for a Fair Minimum Wage". St. Louis Post Dispatch. Archived from the original on 17 January 2015.
Steele, Kerri Jo. The Evolution of Employment and Training Programs for the Homeless: An Evaluation of a Community Outreach Response to the One-stop Career Model. Diss. University of Georgia, 2013.
Sutch, Richard. The unexpected long-run impact of the minimum wage: an educational cascade. No. w16355. National Bureau of Economic Research, 2010.
