National minimum wage was established by Congress as part of the Fair Labor Standards Act (FLSA) of 1938 (Cornell University Law School, n.d.). The original purpose of minimum wage was to “stabilize the post-depression economy… create a minimum standard of living to protect the health and well-being of employees (Cornell University Law School, n.d.)” and was set at $0.25 an hour. Over the course of many years, more industries were added to the FLSA. Today, minimum wage policy is in place to provide a “living wage” to all workers (Huebsch, n.d.)-an amount of money that will provide the necessities and comforts of a suitable standard of living (Merriam Webster, n.d.), and is currently set at $7.25 per hour.
The original idea behind minimum …show more content…
This increase in demand for products could cause businesses to hire more employees to meet the demand. Following this logic, an increase in wage would not only cause a boost in the economy but also reduce our unemployment rate. All great possible ramifications of an increase. However, an increase would also result in more individuals entering the workforce (switch from not in the labor force status to unemployed status [Mankiew, 2015,p587]), which would shift the labor supply and demand equilibrium (Mankiew, 2015, p596-597) increasing the unemployment rate. With this higher wage, businesses will be forced to increase prices for goods and services for every consumer if they wish to maintain their profit margins. Will businesses be willing to higher more employees to meet the demand for more products, if they are forced to pay those employees more? Increased prices for goods could result in decreased demand for those goods. Decreased demand means businesses have to produce less, consequently their need to fire employees. Following this logic, increasing the minimum wage could result in increased prices, decreased demand, and increased unemployment. The situation could truly go either …show more content…
Prospective employees and employers should be able to discuss and bargain for wages. One person may value their labor at $15.00 an hour, but another person may value theirs at $10.00. A business should be able to hire at whatever wage is agreeable between the two parties. A company may value a position at $10.00 but every applicant for the position values their labor at $15.00. This lets the company know, that in the current labor force, the labor they are requesting is valued at a higher amount and they will need to increase what they are willing to pay. To me, this process just makes
The original idea behind minimum …show more content…
This increase in demand for products could cause businesses to hire more employees to meet the demand. Following this logic, an increase in wage would not only cause a boost in the economy but also reduce our unemployment rate. All great possible ramifications of an increase. However, an increase would also result in more individuals entering the workforce (switch from not in the labor force status to unemployed status [Mankiew, 2015,p587]), which would shift the labor supply and demand equilibrium (Mankiew, 2015, p596-597) increasing the unemployment rate. With this higher wage, businesses will be forced to increase prices for goods and services for every consumer if they wish to maintain their profit margins. Will businesses be willing to higher more employees to meet the demand for more products, if they are forced to pay those employees more? Increased prices for goods could result in decreased demand for those goods. Decreased demand means businesses have to produce less, consequently their need to fire employees. Following this logic, increasing the minimum wage could result in increased prices, decreased demand, and increased unemployment. The situation could truly go either …show more content…
Prospective employees and employers should be able to discuss and bargain for wages. One person may value their labor at $15.00 an hour, but another person may value theirs at $10.00. A business should be able to hire at whatever wage is agreeable between the two parties. A company may value a position at $10.00 but every applicant for the position values their labor at $15.00. This lets the company know, that in the current labor force, the labor they are requesting is valued at a higher amount and they will need to increase what they are willing to pay. To me, this process just makes