Should We Raise the Minimum Wage?
No matter your position on raising the minimum wage, it is wise to familiarize yourself with this topic by reading some basic articles from reliable news sources. To do this, it may help to read a few basic articles as an initial way of making up your mind about raising or not raising it.
Low-wage workers rely on public assistance programs like SNAP, TANF and EITC for support to make ends meet; this dependence costs local economies dearly.
Raising the minimum wage not only boosts employee morale but can also increase productivity. Employees tend to work harder when their efforts are recognized and when there’s more at stake if they fail to meet performance standards, leading businesses to achieve increased efficiency by decreasing hiring and training costs while simultaneously decreasing turnover costs, which ultimately lowers employers’ total expenses.
Additionally, increasing the minimum wage could help alleviate poverty by freeing families up from dependency on government assistance programs such as Medicaid, Child Health Insurance Program (CHIP), Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program. Such assistance costs state and federal taxpayers billions every year – raising the minimum wage would relieve pressure off these services while freeing funds up for other uses.
There is extensive evidence showing that increases in minimum wages reduce smoking and absences from work due to health limitations among low-wage or low-skilled continuously employed adults, but less so for other groups like teenagers or noncontinuously employed adults. Furthermore, research suggests increased wages improve job satisfaction resulting in better health outcomes.
Longer-term, increasing the minimum wage could cause job losses in the short term; but in the long term it would increase wages both directly affected by this change as well as those working just above it – due to employers replacing higher-wage workers with cheaper ones who provide services at lower wages. Researchers, including Wharton finance professor Thomas Winberry and Chicago Booth economics professor Erik Hurst studied these effects using a unique framework which captured both direct and indirect effects on employment/wages.
Researchers investigated various policy options, such as indexing minimum wage increases to measures of median hourly wages rather than inflation indexes; this approach allows policy to respond more flexibly to changes in labor markets. They discovered that an increase indexed to this measure of median hourly wages had greater effects on employment and family income.
Another possible consequence of raising the minimum wage could be higher urban living expenses. According to EPI’s Family Budget Calculator, two adults and two children residing in the New York City metropolitan area require $134,938 annually in order to enjoy an adequate standard of living.
New York currently has a minimum wage of $15 an hour for non-tipped workers and $10 for tipped workers, making the minimum wage $15 for non-tipped and $10 for tipped employees respectively. Due to New York City’s food-service economy, any increase in minimum wages would likely impact restaurant prices; however, consumer costs may only experience limited change as most of the food-away-from-home portion of CPI includes tips and service charges rather than actual menu items.
Impact on the Economy
The minimum wage is an important policy tool to reduce income inequality and food insecurity among working families while increasing family incomes. Yet despite all of its advantages, federal minimum wages have not been raised in almost two decades, leading to their value declining over time. Therefore, gradual increases are needed so as not to shock workers; one solution would be creating a five-year plan so workers have time to adapt.
As well as increasing worker income, raising the minimum wage would also decrease dependency on public benefits such as SNAP or Medicaid paid for with tax dollars. Businesses like McDonald’s and Walmart make millions in profits yet pay their employees pitifully little; many employees rely on these benefits in order to get by financially.
Many states have implemented gradual plans to raise their minimum wages, with no negative repercussions for employment or local economies; instead, gradual increases can actually lead to greater productivity and reduced unemployment rates.
Some economists fear that an increase in minimum wages will prompt employers to hire more high-skilled employees at the expense of low-skilled ones, leading to job losses. Although this is certainly a concern, it does not reflect reality since most jobs in America require low skills; thus it is unlikely that increasing minimum wages would cause major job loss.
Minimum Wages (MWs) are legally mandated levels of compensation that employers must offer their employees. Minimum wages can be set through statute, tribunal ruling or collective agreements that give legal force to specific provisions in collective agreements. Although MWs do not guarantee employment they should be seen as one element in policies to combat poverty and inequality.
Apart from minimum wages, other policies can help address income and labor market inequality such as tax credits for low-wage earners, unemployment benefits as a safety net and unconditional social transfers that give citizens periodic lump sums. In the US there are also programs such as Earned Income Tax Credit and affirmative action available that may help address disparities among races.
United States state governments have passed laws to raise the minimum wage, with some taking immediate effect and others scheduled for gradual increase over time. Congress also recently passed laws exempting certain workers from minimum wages such as executive, administrative and professional employees as well as outside salespersons; in addition to federal contracting laws such as Davis-Bacon and Walsh Healey which mandate preestablished wages paid out to contractors’ employees.