The U.S. federal minimum wage, which currently stands at $7.25 per hour, is intended to be a bulwark against poverty and exploitation of low-skilled or scantly educated workers by the industrial elite.
The U.S. federal minimum wage was drafted into law in the late 1930s and has been amended several times since then. President Franklin D. Roosevelt promulgated the law to protect low-end workers from being exploited by big companies taking advantage of the Great Depression to employ workers in sweatshops, where they had to toil long hours for little pay. There has been and continues to be substantial debate regarding the efficacy of the minimum wage and it's impact on unemployment and inflation.
The case for a minimum wageProponents of the minimum wage argue that by setting a base level of pay intended to meet basic human needs, poverty is reduced. This is beneficial to society at large because poverty is a key contributor to many social ills such as crime, child abuse and violence. By giving people a fair start in the work world, it increases their chances of being able to succeed and eventually move on to better-paying work.
Minimum wage increases often have a spillover effect on wages of other workers. This occurs when those who earn a little more than minimum wage receive pay increases from their employers in order to keep good-performing employees. According to some economic experts, often, when the minimum wage increases, employers will boost the wages of workers making wages moderately above the minimum wage to retain them. This "rising tide that lifts most ships" is often an overlooked positive consequence of increasing the federal minimum wage.
From a government perspective, the minimum wage is a positive thing as a means to assist the poor, because it requires no government revenues in the form of increased taxes or deficit spending to fund and maintain. Other poverty-fighting programs, such as the Earned Income Credit, which is a payment to low-income families, cost the government money and do not have the effect of encouraging work.
According to some analysts, the minimum wage has an impact on individuals' feeling of self-worth and accomplishment, because as low-skilled workers are able to find work to maintain themselves they can move off of welfare rolls, giving them a sense of self-sufficiency. This sense of self-sufficiency and accomplishment can translate to these workers going on to secure better paying jobs or better education. The minimum wage is a real-life expression of the age old adage "Give a man a fish, he eats for one day, teach a man to fish, he eats for life."
According to economists, a large segment of minimum wage workers are high school and college students working part-time jobs. This statistic is often used to argue against the necessity of a minimum wage, but guaranteeing a base level of pay for these workers achieves some laudable societal aims. Because many of these students are using the money they earn from part-time jobs to pay for living or educational expenses, the minimum wage is a good way of helping them earn their keep without having them need more government aid or go into deeper student loan debt to finance their education.
With regard to the economy, many economic experts argue that the impact of minimum wage hikes is negligible on unemployment levels, as other factors such as economic downturns have a greater impact on companies' hiring and retention practices. The same is true for inflation. During the years of 1997 and 2007, when the minimum wage was frozen, inflation edged upward at a rate comparable to time periods when the minimum wage increased. It appears that factors other than the minimum wage, such as labor costs across the market, fuel and transportation costs and other factors appear to have a much more significant impact on inflation than increases in the minimum wage.
Historically, since the introduction of the minimum wage, the number of minimum wage workers as a percentage of the workforce has decreased. Today, about 7 million Americans work in minimum wage jobs, about three million less than worked in minimum wage jobs in 1996. Recession-related layoffs aside, the reduction in the number of people working minimum wage jobs is clear evidence of its ability to propel workers upward.
In sum, the argument for the minimum wage boils down to its efficacy in reducing poverty, its inducement to citizens to join the work force rather than just sit back and accept welfare benefits and its minimal impact on government spending, unemployment and inflation. The minimum wage is by no means a cure-all for poverty, and workers should not be content to settle for minimum wage work for the entirety of their careers, but it does create a baseline income and promotes a more fair and equitable society. |
