Minimum Wage And Its Effects On The Labor Demand Market Essay

1378 Words Dec 1st, 2016 6 Pages
Minimum Wage and its effects on the Labor Demand Market
Beginning in 1938, the Fair Labor Standards Act introduced the federal minimum wage starting at 25 cents an hour. However, in order to reflect changes in the spending power of money caused by inflation, and increasing GDP (Gross Domestic Product) from increases in productivity, the minimum wage has been increased 22 times through the years to the current level of $7.25 per hour. The minimum wage was raised to its current level on July 24, 2009. “The minimum wage in 2014 was 24 percent below its 1968 level despite the fact that U.S. productivity more than doubled over that period and low-wage workers now have much more experience and education than they did back then. Now is the time to address this historic weakness in the minimum wage by raising it and lifting the earnings of low-wage workers” (It’s Time to Raise the Minimum Wage). There has been discussion during the past year among politicians about raising the minimum wage soon to around $15 per hour which would more accurately reflect the amount of money a worker needs to earn in order to live a lifestyle free of government entitlements.
With a raise in the minimum wage, benefits and consequences are incurred by both the employee and the employer. From the employee 's’ perspective, they are always happy to get a raise in pay. In order to decide whether an increase in the minimum wage would be justified or not, we need to look at it from several different business…

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