The Effects Of Minimum Wage

Minimum wage was introduced into American policy as part of the Fair Labor Standards Act in 1938 by Franklin D. Roosevelt. The first wage was set at $.25 an hour. The United States is not the only country that has enacted this policy, other counties include China, Canada, Brazil, New Zealand, Australia and United Kingdom to name a few. The federal minimum wage is $7.25 this was effective July 24, 2009. State governments are able to enact their own state minimum wage law, as matter of fact two states, Georgia and Wyoming have minimum wage less than the federal average and five states that do not have a minimum wage. In all states that do not have or are below the national mandate, the federal amount applies (DOL, 2016). States that have increased the minimum use that as the base and companies operating in those states abide by the state regulations. Minimum wage has always be a topic in the political …show more content…
The debate of the effects of minimum wage on the economy have been going on since its inception in 1938. The vast amount of time the theory was that increases in the wage would have a negative effect on unemployment and reduce the amount of employees per business. As the minimum wage has increased and even by more in some states, that theory have become less accepted. New data shows that businesses are able and willing to make other changes so that increased salaries do not have the negative effect they would expect. One of the biggest arguments for the increase is that it would reduce costs because it would reduce turnover and have more productive workers. The counter argument is that it will reduce employees or hours, increase prices and reduce profits. Changes to minimum wage does provide a few certainties, it creates a difficult market for higher paid employees and does little for long-term employees that were hired under lower minimum