Federal Minimum Wage: A Case Study

1260 Words 6 Pages
With a presidential election under way, the topic of Federal Minimum Wage(FMW) is recieving an increase in attention and controversy. Many Americans find themselves wondering if the FMW should remain at seven dollars and twenty-five cents per hour. Although raising the FMW seems like the moral thing to do, it has numerous devastating effects on the economy and low-skilled workers. By raising FMW, employers may have no other choice than to pay their workers much more than what their labor is worth, thus financially devastating small businesses. This will also injure employees, as employers may need to cut or reduce the number of hours, bonuses, or benefits, and the lowest skilled workers will struggle to find employment.
Increasing the FMW would
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While an increase in salary seems exclusively beneficial for current employees, an increase in minimum wage would also bring a decrease in the amount of bonuses, hours, and/or benefits an employee is receiving. There are many benefits to being employed other than the paycheck. Employees are often times rewarded with bonuses and benefits. Some of these may include “training opportunities, insurance, child care, flexible working hours and paid vacations”(Lee 2014 para.17). These will be the first to go when employers choose to manufacture adjustments to their spending in order to save their business. Many supporters of the minimum wage believe that the extra costs will come from the employer's pocket. However, this is hardly the case. In “The Negative Effects of Minimum Wage Laws”, Mark Wilson proposes that, “While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy”(Wilson, 2012). Wilson begins his article by stating that there is “no free lunch”. He justifies this statement by explaining how an increase in minimum wage will reduce the number of hours, benefits, and training an employee will receive. Most small businesses cannot simply absorb the cost of higher wages. All business owners go through struggles of their own, many of them give up a …show more content…
This makes sense because one would think a higher salary equals a higher standard of living, but sadly this is not the case. As stated in the article “Federal Minimum Wage” there is “no evidence that it reduces poverty”. Over and over again economists agree that a minimum wage hurts those whom it is trying to help. Raising the minimum wage will by no means help a jobless individual with no work experience, but rather make it even harder for them to find employment. The 1923 supreme court decision, Adkins v. Children's Hospital challenged the good and purpose of public policy, which was in fact preventing inferior workers from having a job, even though it's intent was to help them. This is because “minimum wage is a bad interference with what workers are worth”(McCloskey, 2016 para.6)as stated E.L. Godkin an early 1900s writer for The Nation. Shortly thereafter, in 1938 the federal government imposed the nation's first minimum wage of twenty-five cents per hour. Although created to reduce poverty and unemployment it did the exact opposite. Within the first year of it being implemented 120,000 workers in the US territory of Puerto Rico lost their jobs, thus launching the poverty rate of this low-income territory to over fifty percent (Wilson, 2012, para. 27). Nearly 40 years later in 1977 congress established established The Minimum Wage Study Commission that studied the effects of

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