The Minimum Wage Inequality

Recently there has been a pervasive discussion about wage inequality, particularly raising the minimum wage. Many argue that fifteen dollars per hour or even the Presidents ten dollar ten cent minimum wage is too high with reasons such as small businesses will lose profit and close, people will have no incentive for higher education, and the overall elimination of jobs. Past arguments like these against minimum wage have been recycled since the passing of the Fair Labor Standards Act of 1938. Examining historical data on minimum wage increases will illustrate if these criticisms have been accurate. As a matter of fact historical data would be the ideal information to study when trying to prove the accuracy of each criticism, because since the enaction of this law back in 1938 much data has been accumulated. Over time the minimum wage has increased from twenty five cents to today’s nine dollars in incremental parts, with each gradual rise one can see the effect on the labor market. Comparing increased wages with how …show more content…
Also due to the fact minimum wage jobs usually have higher rates of turnover and vacancy the increase in minimum wage reduced both and other inefficiencies (Laabs 1998). Lastly the fourth point of redistribution of wages “it doesn’t last long because other factors kick in, particularly the inefficiency gains, and also because minimum wage is falling on real terms from the day it’s legislated” (Laabs 1998). Stemming from that quote the EPI did see high increases across the board for higher paid employees that were making above minimum wage. In the end this study finds that yes some of the four points were found to have some truth to them the overall affect is not as extreme some may think it is and that there are process in effect that handle increases in prices in the labor