Changing the National Minimum Wage has been a hot-button issue recently. On top of being a major social issue, it is now a main point in many Democratic Presidential candidate platforms. The real question should be: What are the impacts of raising the minimum wage? I am going to explore this question with a focus on the business impacts of a major increase of hourly wages such as planned legislation proposes.
What is the point of Minimum Wage?
Passed in 1938, the Fair Labor Standards Act established the national minimum wage. As stated in The Fair Labor Standards Act of 1938 the purpose is to require employers to provide adequate wages so that an employee may “Maintain the minimum standard of living necessary for health, efficiency, and general …show more content…
One of these solutions was originally proposed by Nobel Prize winner George Stigler, it includes the expansion of the Earned Income Tax Credit (EITC). “The Earned Income Tax Credit is a benefit for working people with low to moderate income…To qualify for EITC you must have earned income from working for someone or from running or owning a business or farm and meet basic rules. (United States Internal Revenue Service).” According to Burkhauser and Stigler, this tax benefit directly targets the low-wealth population by offering more of a tax credit for working families under the national poverty line. Also, this credit is funded by the Federal Income Tax instead of directly by the employer. By using the EITC the public could, in theory, avoid the increase in cost of goods/living and the people in the worst situations actually get relief instead of a possible “trickle down” effect or that money [should] flow from the top of the company [the bottom line before wages, but after taxes] to the bottom …show more content…
In reality, a $15 minimum wage is an insane jump, more than doubling the current minimum wage. History shows that every time the minimum wage was increased in America, the cost of goods and cost of living followed suit. With this in mind, obviously changing the dollar amount will do nothing, even if it weren’t a $7.75 increase. I do favor the idea of an expansion to the EITC. This credit actually targets severely low income families, and the actual poor in need of
What is the point of Minimum Wage?
Passed in 1938, the Fair Labor Standards Act established the national minimum wage. As stated in The Fair Labor Standards Act of 1938 the purpose is to require employers to provide adequate wages so that an employee may “Maintain the minimum standard of living necessary for health, efficiency, and general …show more content…
One of these solutions was originally proposed by Nobel Prize winner George Stigler, it includes the expansion of the Earned Income Tax Credit (EITC). “The Earned Income Tax Credit is a benefit for working people with low to moderate income…To qualify for EITC you must have earned income from working for someone or from running or owning a business or farm and meet basic rules. (United States Internal Revenue Service).” According to Burkhauser and Stigler, this tax benefit directly targets the low-wealth population by offering more of a tax credit for working families under the national poverty line. Also, this credit is funded by the Federal Income Tax instead of directly by the employer. By using the EITC the public could, in theory, avoid the increase in cost of goods/living and the people in the worst situations actually get relief instead of a possible “trickle down” effect or that money [should] flow from the top of the company [the bottom line before wages, but after taxes] to the bottom …show more content…
In reality, a $15 minimum wage is an insane jump, more than doubling the current minimum wage. History shows that every time the minimum wage was increased in America, the cost of goods and cost of living followed suit. With this in mind, obviously changing the dollar amount will do nothing, even if it weren’t a $7.75 increase. I do favor the idea of an expansion to the EITC. This credit actually targets severely low income families, and the actual poor in need of