Minimum Wage Effects On Unemployment

Ever since President Roosevelt first instituted the idea of a minimum wage in 1938 as part of the Fair Labor Standards Act, there has been debate about it. It started at merely twenty five cents, and was established to ensure that Americans were being paid fairly for their hard work. The minimum wage has since risen to seven dollars and twenty five cents per hour. But, some say that still isn’t enough. Inflation has changed the true amount that workers are being paid. The buying power of the minimum wage reached its peak in 1968 when it was a dollar and sixty cents. It may seem that workers were being paid much less than they are now, however a dollar and sixty cents in 1968 is about the equivalent of ten dollars and forty seven cents in …show more content…
Most assume that with salaries being higher, companies will try and cut losses by laying off workers in order to save money. But there is little to no research to support this. In reality increases in the minimum wage have at the very least not affected the unemployment rate and at the very best have improved upon it. During the Great Depression when the federal minimum wage was first enacted unemployment rates had skyrocketed, reaching the very high number of up to nineteen percent. After the implementation of the federal minimum wage the unemployment started to lower. In 1968, when the minimum wage reached it’s peak buying power, the unemployment rate was just above three percent. That percentage is a huge improvement from the numbers seen just thirty years earlier when the minimum wage was first implemented. These numbers even continued to decrease slightly for the next few years. The next time the unemployment rate came close to those levels was after the minimum wage raises of 1996 and 1997. Even when looking the least skilled and least educated people of the job market, there has been no negative effect on employment. Studies have also found very little change in the amount of hours worked by each employee. The most conclusive evidence found was from the decade between 1997 and 2007. These ten years are the longest period in history with absolutely no raise in the federal minimum wage. It was during this time that many states took it upon themselves to raise their own minimum wages above the federal level. Research shows that states that raised their minimum wages experienced better employment than states that did not. The main point that people forget about when assuming that raising the minimum wage would increase unemployment is that there is a social aspect to working. It’s not all about money, or the economy. The workforce is made up of real human beings who by nature are social