Should The Minimum Wage Reduce Poverty?

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The debate about raising the minimum wages are does it really reduce poverty and hardship amongst the poor? Most of the minimum wage workers are under the age of 24, still living at home and still attending high school or college. By raising the minimum wage, there would be more job loss and higher prices for goods and services.
Our country’s poverty rate has been at an all times high in almost 20 years at a rate of over 15 percent, proving that an increase in minimum wages is not helping to reduce poverty. Those living in poverty were not even working, or a number of them not even living in poor families and it was reducing the employment opportunities for the less-educated and less-experienced. Most families have an income of more than the poverty level rate and the people receiving minimum wage either still live at home with family or have a spouse that also works. Single parents with children made up only ten percent or less and most receiving minimum wage were under the age of 24. In 2007 through 2009 when the three 70 cent increases began, it was not focused on the poor and low income poverty people, so 85 percent saw no direct financial benefit from the increase. The Fair Minimum Wage Act (FMWA) was not as cost-effective as the policy mandated and was a poor way of trying to reduce poverty. In What’s Best at Reducing Poverty, the authors stated that “an expansion of the Earned Income Tax Credit (EITC) and an increased rebate of the Federal Insurance Contributions Act (FICA) tax would each be a more effective and less costly means to assist needy families.” 1 Since both policies are directed at specific income brackets, it would give extra money to the poor families who really need it. Since the EITC is credit claimed on earned income that is a refundable tax credit for low to moderate income individuals and reduces the amount of tax you owe, it would encourage more people to find employment. Increasing minimum wage would also force businesses to lay off employees. Employers would decrease hiring by 54% if minimum wage increased which would raise the unemployment levels even higher. Higher wages would increase production costs, forcing an increase of consumer goods which would slow the economy and reduce employment.Evidence used from the earnings and Census Bureau data found that minimum wage workers are from ages 16 – 24 year olds making up half the wage earners, but only 13.7% of the total workforce. It is shown that 2.5 times more Americans would possibly escape living below the 150 percent poverty level would better benefit from the EITC expansion than from the FMWA. In Employment Policies Institute findings, “beneficiaries of a $9.80 minimum wage tend to be young – 41.5 percent of those directly affected are age 25 or under” 2 and only 10 percent of them being a single parent with children. There would also be more lost jobs if this kind of wage hike occurred, forcing businesses to lay off some of their employees. The employee’s hours or even employment would decline causing their earned income
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Many companies will not pay young workers with no skills or experience the minimum wage, let alone a higher wage, so those experiencing unemployment at an early age will have years of lower earnings.I agree with the authors stating that minimum wage is not helping reduce poverty or inequality. Most of the statistics show that minimum wage workers are under age 24, working part-time while still living at home, or are less educated than others. This would increase the cost of production, causing higher prices and then there would be less consumer spending causing less workers employed. I agree with not increasing the minimum wage because the statistics have not proven that it has helped with the poverty level or those with financial or health insecurities. Raising the minimum wage could have an effect on the worker’s hours declining, which would reduce their earned income. It would also force businesses to lay off employees. Many teenagers and young adults could be excluded from the workforce since several businesses will not pay them with no skills or

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