Minimum Wage (Essay Sample)

Minimum Wage Student’s Name Institution Course Name Instructor’s Name Date Minimum Wage Introduction As set by the federal government, the minimum wage implies the minimum amount of wage that every employer should pay for the labor provided by their employees. Congress is usually charged with the role of determining the levels of minimum wage. However, several considerations are always considered when determining and implementing economic reforms and policies aimed at setting the amount of minimum wage by the federal government. Among these considerations is the desire to assess how each policy that influences the minimum wage amount would impact the national economic growth and success. These considerations have always been attracting a fierce debate pitting one group that supports the need for increasing minimum age levels and another group maintaining the opposition side of the argument. With this observation, the subject requires analysis to come up with a definitive conclusion that would guide policy development and implementation. Such analyses would benefit from the utilization of logical reasoning. For several decades, economic reforms have always been among the key topics of debate in society. Political campaigns have usually been based on issues that revolve around economic policies. Among the most important topics in these policy reforms include the concept of minimum wage. As with other key economic decisions, this subject has averaging effects on almost every aspect of society. However, whether to increase or decrease the overall minimum wage level, it becomes essential to note that the resultant effects would include both negative and positive implications. This situation makes it difficult for economic policymakers to determine whether an increase or decrease in this key component of the economic landscape would be helpful or cause harm. The phenomenon has been characteristic of causing much debate for several years, eventually resulting in the realization of significant amounts of research literature aimed at understanding the effects of an increase or decrease in the overall levels of minimum wage. However, there is evidence about increasing the minimum wage causes more harmful effects on the economy. The Importance of not increasing Minimum Wage Every individual’s economic objective is to ensure the promotion of efforts aimed at fighting poverty. To keep people away from the negative effects of poverty, it would be essential to work in employment opportunities that pay the minimum wage set by the law while figuring out other possible chances for improvement. Although these minimum wage employment opportunities are not adequately effective in helping employees stay away from poverty, they are essential in ensuring that these individuals meet basic needs and essential requirements in life. These jobs also require the least amount of training and skill. It would also be essential to note that employees in this category of jobs can easily be replaced by individuals willing to offer their services for less pay. Because of the requirement of low levels of experience and training, minimum wage job opportunities mean that workers would earn the lowest pay set by the federal government. Many American employees observe that minimum wage jobs should always be considered temporary before someone moves on to more suitable and better rewarding opportunities. However, research statistics indicate that people working in these jobs most work for less than 35 hours a week, thereby earning justifiably less money (Burauel et al., 2020). In the United States, the federal government announced the nation’s minimum wage. From this announcement, the implication was that employers had an obligation to pay their workers a fixed rate set by the government. This rate was set at an hour worked by the employee. Since 1998, the debate about this subject has been continuing ever since. However, it would be essential to note that the Fair Labor Standards Act of 1938 set the stage for this debate. The federal government’s objective for setting a national minimum wage is to ensure that every employee is fairly compensated for every hour of labor offered. For such reasons, the major question asked by several economists is whether this wage should be increased or not, with the aim of evaluating the benefits of each side. Based on research findings, it would be argued that raising the overall levels of the minimum wage would pose a lot of challenges for employers to hire expensive employees, a situation which would result in a scenario of massive unemployment across the nation (Gerritsen & Jacobs, 202). It is also evident that such a move to increase the minimum wage would potentially create a situation of an unbalanced economy. This effect would be seen through the realization of increased costs and the burden of hiring by business organizations. Small businesses, which are currently struggling because of the prevailing economic conditions, would also be forced to close as a result of increased costs of labor. As the cost of hiring increases, the prices of commodities would also be most likely to increase with businesses trying to capitalize on people’s increased levels of disposable income, which results from increased pay. From the above observation, an increase in minimum wage rates would translate to a negative effect on the cost of employment. To offset the employer’s cost of employment, businesses would have the option of either laying off most of their workers or increasing product prices to recover expenditure. In the end, cutting jobs would mean an increase in the nation’s reported unemployment rates. In recent years, empirical studies have shown that any move aimed at increasing the national minimum would be catastrophic in the sense that it would reduce the employment opportunities for low-skilled individuals and teenagers who do not have the necessary experience for high-paying jobs (Liotti, 2020). For teenagers and other low-skilled workers that would include immigrants, hourly rates at the minimum wage would be essential in supporting the need for meeting lives’ daily needs. These individuals are characteristic of finding jobs in fast-food chain stores. However, raising the minimum wage would mean that their employers would have to hire more qualified people that would have the capacity to enhance productivity. This point implies that the low-skilled labor force would be at risk of losing their jobs. Notably, employers would want to ensure that productivity is worth the expenditure on employment. Furthermore, there is the issue of the negative effect that raising the minimum wage would have on the prices of commodities in the market. All efforts aimed at increasing the overall minimum wage rates are usually designed to protect vulnerable groups from exploitation by unscrupulous employers. However, these groups are likely to find themselves the most hurt by such policies. Raising this wage rate through the market’s invisible practices would be harmful through how businesses would raise product prices to recover the employment costs. As mentioned earlier, the most vulnerable employment opportunities are those of low-skilled workers. What will happen when companies hire new skilled employees to replace the low-skilled labor because of increased minimum wage? It follows that the organization’s production cost would increase with a corresponding decline in the levels of competitiveness. This situation results in business entities transferring the increased costs to the consumer through increased prices in every commodity. A majority of the individuals advocating for an increase in the national minimum wage usually believe that low-skilled workers deserve more for what they offer to their employers. They also believe that such an increase would ensure that poverty levels among these individuals are minimized. However, as shown above, this argument would only be valid theoretically. In practice, raising the national wage levels would be more catastrophic for the same low-skilled workers. In most cases, employers will not have a choice of tolerating a higher minimum wage with poor levels of productivity. Consequently, the most appropriate strategy for these organizations would be to employ skilled workers and pay the high minimum wage while maintaining sustainable levels of productivity. This point means that losing one’s employment to a skilled employee would translate to living in poverty. Therefore, the nation that the increase in the number of poor people in the nation is caused by a wage rate that is not high enough may be quite misinformed on the effects of their suggestions. It would be useful for these individuals to focus on increasing job opportunities for low-skilled workers as the best approach to improving their living standards, thereby minimizing the nation’s overall poverty rate. Other pro-minimum wage increase individuals maintain that such policies would be essential in countering the effects of inflation on people’s living standards. According to this argument, inflation hurts the worker’s living standards. As such, an increase in the minimum wage would balance the economic effects of inflation with the economic challenges faced by employees. Many would support this point by observing that increasing the minimum wage would also create a situation where the economy would benefit through the realization of reduced levels of income inequality. In this case, the premise is that the gap between high-income and low-income earners would be bridged. Although such arguments can be valid in terms of reducing income inequalities, they fail to consider the risks of low-skilled workers losing their jobs because of increased employment costs among employers (Clemens, 2021). This loss of jobs would also result in small business enterprises closing down since they wo...