Minimum Wage Research: Should it be Increased or Not? (Essay Sample)

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Minimum wage. Should it be increased or not?
A minimum wage is the lowest pay or remuneration that employers may legally pay to the employees. Also, it may be referred to the price floor below which workers may not sell their labor. The debate on minimum wage and its laws are in effect in many jurisdictions. Therefore, there are differences of opinion exist about the benefits and drawbacks of a minimum wage. Minimum wage laws affect employees in the low-paid fields of employment and often related to the criterion of reducing poverty. These laws receive less support from the economists as compared to the public.
Some policymakers are proposing to raise the minimum wage, but that policy would be harmful. Research shows the following to be the arguments against the minimum wage law.
It would result in losses of jobs. Evidence of loss of jobs has been traced to the earliest enforcement of the minimum wage. For example, the first 25% minimum wage about 1938 in America resulted in huge job losses. Minimum wage increases lately imposed in American Samoa caused economic effects that President Obama signed into law a bill postponing them. Also, a 2006 review of more than hundred minimum wage studies by William Wascher and David Neumark and found that about two-thirds found negative employment effects.
It would hurt the low-skilled workers. Evidence have showed that an increase in wage may and can hurt the people they are supposed to help. A 2012 research of the New York State minimum wage increase from $5.15 to $6.75 per hour found that 20.2 to 21.8 percent reduction in the employment of younger less educated individuals. In 2010, Michael J. Hicks’ analysis found that "the latest round of minimum wage increases" account "for roughly 550,000 less part-time jobs," including "approximately 310,000 fewer teenagers working part-time.”
It would have little effect on reducing poverty. According to 2012 review by Mark Wilson, a minimum wage increase to $7.25from $5.15, only 15% of the employees who were expected to gain from it lived in poor households. It also noted that since 1995, 8 studies have done on the income and poverty consequences of minimum wage rise, and all but one has found that past minimum wage hikes had no impact on reducing poverty. CITATION Kos06 \l 1033 (Kosteas, 2006)
It may result in higher prices of commodities for consumers as someone must pay the minimum wage raise. A 2007 study done by the Federal Reserve Bank of Chicago found that restaurant and hotel prices increased by minimum wage increases.
Minimum wage rise may result in the exclusion of particular groups from the labor force. Such groups are regarding ethnic or gender based. CITATION Wal89 \l 1033 (Williams, 1989).
This minimum wage increase can result in discrimination. It discriminates against, less qualified workers (including new employees to the labor market) by keeping them from amassing work experience and qualifications, hence likely graduating to higher wages later.
Some jobs can be moved to other countries that allow low-cost labor.
Small and medium-sized firms cannot offer fair, and attractive wages to their employees above unskilled workers paid the artificially high minimum and saw a rising hurdle-cost of adding workers. CITATION Lle05 \l 1033 (Llewllyn, 2005).
Despite the arguments against the minimum wage debate, some economist supports the minimum wage bill claim with the following facts:
Suitable for families. Research by the economist James Galbraith, increasing the minimum wage would increase the incomes of more than 28 million Americans. Women would significantly be the beneficiaries because they usually work for lower wages compared to men. As Galbraith sees it, an increase in the minimum wage is family friendly policy as with a rise in household income, some people would choose to go back to school, decide to retire, or have children, making it simpler for others who require jobs to find them.
It helps in economic recovery: To get the economy back to be vibrant, purchasing power and ability has to be in the hands of those who spend in the economy. That means regular people, not the super-wealthy who tend to hoard wealth or invest in financial products. The fault with most economies today is that the widening gap between the actual wages and productivity has gone against the general relationship between real wages and consumption.
Helps people get out of debt:...