Minimum Wage Microeconomics

1098 Words 5 Pages
What is the minimum wage? Minimum wage can be defined as the amount of compensation an employee must receive for a specific job by an employer. These are special acts enforced to prevent employers compensating employees less than the minimum wage set by the government. Before the minimal wage was introduced in the United States in the early 1900s, New Zealand was the first country to enacted minimal wage laws in 1894. This law covered businesses and industries across its entire nation. The “minimal wage experiment” in New Zealand helped set a foundation and concept for other countries to follow towards for minimal wage laws. The minimal wage was placed to help create a “steady” income and fair treatment of pay, however this is not …show more content…
The federal minimum wage has increased slowly but steadily throughout the years until 2009 where the federal wage has increased to $7.25/hr. and has not increased since. While the dollar value has increase, its real value has decreased since its highest point under Johnson’s administration. The real value of the dollar was at its highest point in 1968 where the minimal wage was $1.60/hr. which would be $10.50/hr. in today’s world. In the United State, the minimum wage is separated by two parts: federal and state minimum wage. The federal minimum wage applies all throughout the United States while the state minimum wage applied only within its border. The federal minimum wage was created to prevent any states/employers compensating employees less than the wage placed in set. The state minimum wage can be higher but can’t be lower than the federal minimum wage, however there are instincts where the state minimum wage is lower than the federal minimum wage but applies only for those who are not covered by the FLSA. Four states, Wyoming, Minnesota, Arkansas, and Georgia, have set their wages lower than the minimal wage but the FLSA automatically overturn this for those who are covered. Out of the fifty states, twenty-one states have set their own minimal wage higher than the federal wage, twenty states has their minimal wage locked with the federal wage, while five …show more content…
in three consecutive years was introduced by Obama and his administration in 2015. However, they are people who are against this. They argue that it will harm the economy instead of helping it recover. Others argue that it will greatly help our economy and the people who are struggling to make ends meet. In order to understand the concept and foundation of the proposal, we must first observe how many people are working at the minimal wage and how much of the workforce would be affected by the increase of minimum wage. According to the Bureau of Labor Statistics, there are approximately 159 million people are in the workforce that are over 16 with 8 million people being unemployed. Out of the 151 million people currently working in the workforce, 1.3 million people are working at minimum wage, with an additional 1.7 million people working below minimum wage (tipped employees). Together, they count for 3 million people who work at and below federal minimum wage which represents 4% of the nation’s 78.2 million hourly-paid workers and 2% of all wage and salary workers. If minimum wage were to be increased, managers will being to lay people off or will stop hiring new people in order to adjust with the new federal minimum wage. However, there is little evidence to support joblessness but both can lead to a potential halt in growth. In order to avoid this, business owner can raise prices to keep the production rolling

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