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The Minimum Wage Debate: Evaluating Economic, Social, and Political Implications
Living Wage vs. Minimum Wage Dynamics
The difference between a living wage and a minimum wage is that a living wage is the amount of the minimum possible wage required to support a family. Indeed, the living wage is the remuneration of employees corrected for inflation. There is no difference based on the employee’s marital status. children, debt position, location, etc. It can also include public benefits, such as overtime pay, health care, and similar benefits. While there is no federal decent wage law, many American cities have adopted decent wage laws. Policymakers and economists usually compare the living wage to the cost of living to ascertain the relative financial health of employees.
The minimum wage is the lowest wage an employer is required by law to pay to its employees. The federal government allows it under the Fair Labor Standards Act, state or local governments. As of July 24, 2009, at $7.25 an hour. They set the federal minimum wage. Nothing has changed since then. Therefore, a full-time employee is entitled to a minimum wage of $15,080. However, the concept of the minimum wage has become useless during this period, as it has not been able to keep up with the rising cost of living, which has kept many workers living below the poverty line. State officials reserve the right to raise the minimum wage higher than the federal minimum wage. All employers must pay the higher of the two – the federal minimum wage or the state/local minimum wage.
Local Insights and National Impacts
Salary rates are generally set by the federal government. However, states can also set wage rates. But you should be aware that states are adding minimum monthly wage laws. Therefore, you must comply with these changes. The state should decide the wage for American citizens. State officials know the needs of their local workers and employers much better than a federal government that is a thousand miles away. Raising the federal minimum wage will not wage war on the economy. On the contrary, it will end up benefiting everyone in different ways. It will help Americans make ends meet; prices of essentials like housing and food are on the rise in America; this increase is not at all met by the minimum wage.
As a result, the minimum wage for workers America depends on to keep other commodities affordable has been literally missed. The United States needs a minimum wage. There is no doubt about it. A minimum wage is a useful financial tool for setting cost ceilings in many industries. However, there is no rule that the minimum wage cannot be a subsistence minimum. The current minimum wage is not enough to cover the basic living costs of most Americans. Of course, the cost of living varies by geographic area. Living in rural Iowa is much cheaper than living in San Francisco.
Addressing Income Disparities and Empowering the Workforce
However, it is not how many families are struggling but how much they are struggling that should lead to a national minimum wage. The federal government must establish minimum wages for workers across the country. This will help ensure that both the people of Iowa and the people of California have the money they need to live and raise their children. This can be used by states as a baseline for adjusting the local cost of living. However, it is up to the national government to set a standard for fair wages so that it can be an example.
An increase in the minimum wage of $ 10.10 would help 27 million workers bring home an additional $ 35 billion annually. It will help alleviate income inequality. Income inequality is no longer the only concern in America. It is an epidemic, and the country is the closest to a financial epidemic. The highest-paid workers in the country do not earn 10, 20, or even 30 times the lowest-paid workers. American corporate executives earn 933 times more per year than someone who works full-time and earns minimum wage. This is a dangerous precedent for Americans.
He suggests that some Americans are worth nearly 1,000 times more than others. It’s not true. Most CEOs wouldn’t be able to run companies without people willing to work for the minimum wage. These workers are the foundation of American society, not the people of the ivory towers. Raising the minimum wage will help alleviate this income gap by making it easier for people to live on an adequate minimum wage. America’s minimum wage workers are important. The federal government can show them by putting their needs ahead of CEOs and raising the minimum wage.
Minimum Wage’s Impact on Job Creation, Welfare, and Dignity
It won’t stop job creation, when asked about raising the minimum wage, politicians yell that it will slow job creation. For Washington, job creation is the trump card in the fight for equal pay. There is no historical evidence that raising the minimum wage will destroy jobs. In fact, this idea is absurd. The minimum wage has increased significantly over the last 50 years, and the number of jobs has not decreased. Minimum wage Americans earn twice as much as before, but that doesn’t end jobs.
The idea that the minimum wage is killing jobs is what big business owners and their private politicians want to believe. They don’t want to pay higher salaries because that means they have less money for themselves. Important findings of Harkin-Myler’s proposal indicate that if the federal minimum wage is raised to 10 10.10, the impact on GDP will be positive. This increase would affect 27.8 million workers, who would bring home much higher wages and then spend them on the economy.
The result will be 22 22 billion in GDP growth. This increase will create 85,000 new jobs. The rich do not even understand a world where the rest of the population has some form of disposable income. However, it is important that they begin to take this into account. Even though they would be displaced as the elite of society, they would actually benefit from it in the long run. When more people have more money to spend, it will give the economy a moderate boost, and a better economy will benefit everyone.
It would relieve people from relying on food stamps, and there is a great disconnect between those who need to use food stamps and those who actually depend on them. By definition, it can be assumed that meal coupons will only be used by the very poor and unemployed. Unfortunately, the underemployed also rely on food stamps to meet their needs. Raising the minimum wage can help minimum wage workers buy basic food so they don’t have to rely on government-subsidized food programs.
A recent report suggests that if the minimum wage were increased by only 10 percent, it would reduce enrollment in the food voucher program between 2.4 and 3.2 percent. You can also reduce program costs by 1.9%. If the government chose to raise the federal minimum wage to $ 10.10 an hour, the increase would result in a 7.5 percent reduction to 8.7 percent in today’s food stamps. This means that between 3.1 and 3.6 million people can buy their own food. Preventing more people from relying on food stamps will do more than save the government money.
This will increase the self-esteem of all people who work hard but need extra help. This will help them meet their needs and avoid the stigma that most of society attaches to government assistance programs. This increase in self-esteem by three and a half million people is worthless; however, it comes at a price. Workers should not have to bear this price. Instead, they should benefit from a government that helps them make a living for the benefit of an economy that pays workers a penny to make a profit.
Minimum Wage’s Fiscal Impact, Advantages, and Disadvantages
It will save the federal and state governments money, both the federal and state governments spend a lot of money helping the poor. They help the unemployed, the sick, and even those who work full-time but cannot provide for their families. Raising the minimum wage would save the government money since raising it to $10.10 would take 1.7 million people off various types of public assistance. For example, a higher minimum wage would mean a cheaper food stamp program.
An increase in the minimum wage will reduce the amount of money needed to run the program by 6 percent. This 6% reduction would result in savings of $4.6 billion per year. This is just one of the state aid programs that would benefit from an increase in the minimum wage. There are many other programs that would require less money if Americans were less dependent on the program. In all, the federal government alone can save $ 7.6 billion from all of these programs because 27 million U.S. workers will receive wages from which to live. This money can then be reallocated to help those who are poor and vulnerable and help fewer people trust government programs in the future.
The advantages of minimum wage are it can be helpful depending on the type of market, and it can help with reducing the tax burden, the disadvantage is it can disrupt the economic system, it can hurt the poor, and it can create unemployment. The cons of raising the minimum wage are that it would increase the income of the low-paid, provide an incentive to increase labor productivity, reduce income inequality, evidence effect on employment is limited, increases demand in the economy as low-paid earn more, deal with monopsony power of firms, and it reduces labor turnover.
The cons of raising the minimum wage are that firms respond by increasing prices, if it increases too much, it will cause unemployment, could cause restaurants to close, lack of au in recession, lack of geographical flexibility, poor areas hit hard by the cost of minimum wage, could lead to underground labor markets to avoid regulations, and it could encourage automated society with less human interaction.
Envisioning the Positive Impacts of Minimum Wage Increase
The current minimum wage is certainly not enough to allow people to afford everyday essentials, raising the wage would allow people to lead a healthier population and avoid premature death. Raising the minimum wage will boost economic activity and boost jobs. Raising the minimum wage would reduce poverty. An increase in the minimum wage would reduce public welfare spending. The minimum wage has not kept pace with inflation.
Improvements in productivity and economic growth have outpaced the increase in the minimum wage. Raising the minimum wage would reduce income inequality. An increase in the minimum wage would help reduce racial and gender inequalities. An increase in the minimum wage will have a ripple effect, increasing the income of those earning above the minimum wage. Raising the minimum wage will increase workers’ productivity and reduce employee turnover.
The current minimum wage is not high enough to pay people for housing. Today’s minimum wage is not high enough for people to meet their daily needs. Raising the minimum wage will lead to a healthier population and prevent premature death. An increase in the minimum wage will increase schooling and reduce the number of dropouts in upper secondary schools. Raising the minimum wage would reduce the federal deficit. Raising the minimum wage would reduce crime.
References:
- U.S. Department of Labor. (n.d.). Minimum Wage Laws in the States – August 1, 2023. https://www.dol.gov/agencies/whd/state/minimum-wage
- Cooper, D. (2014). Raising the Federal Minimum Wage to $10.10 Would Lift Wages for Millions and Provide a Modest Economic Boost. Economic Policy Institute. https://www.epi.org/publication/raising-federal-minimum-wage-to-1010/
- Allegretto, S. A., Dube, A., & Reich, M. (2018). Credible Research Designs for Minimum Wage Studies: A Response to Neumark, Salas, and Wascher. ILR Review, 71(5), 1177–1208. https://doi.org/10.1177/0019793917720610
- Congressional Research Service. (2019). The Effects of a Minimum-Wage Increase on Employment and Family Income. https://crsreports.congress.gov/product/pdf/R/R45090
- National Employment Law Project. (2022). Raising the Minimum Wage Would Boost Incomes and Reduce Poverty. https://www.nelp.org/publication/raising-the-minimum-wage-would-boost-incomes-and-reduce-poverty/
- Reich, M., Allegretto, S., & Montialoux, C. (2019). What Does the Minimum Wage Do? ILR Review, 72(2), 305–329. https://doi.org/10.1177/0019793918820813
- Cooper, D. (2016). Raising the Federal Minimum Wage to $12 by 2020 Would Lift Wages for 35 Million American Workers. Economic Policy Institute. https://www.epi.org/publication/raising-the-federal-minimum-wage-to-12-by-2020-would-lift-wages-for-35-million-american-workers/
- Dube, A. (2019). Minimum Wages and the Distribution of Family Incomes. Journal of Labor Economics, 37(S2), S363–S412. https://doi.org/10.1086/702490
- U.S. Census Bureau. (2020). Income and Poverty in the United States: 2019. https://www.census.gov/library/publications/2020/demo/p60-270.html
- Allegretto, S. A., & Reich, M. (2019). The Choices Made by Minimum Wage Workers: Evidence from the Current Population Survey. ILR Review, 72(2), 346–378. https://doi.org/10.1177/0019793918789835
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