There are many governmental issues being discussed today, but I believe the debate on minimum wage hikes is one of the most critical ones. Minimum wage can be defined as the lowest wage at which any person can sell labor to their employer. There are other parties who prefer defining it as the lowest hourly, daily or even monthly remuneration at which an employer may legally get to pay for his/her employees’ labor (Rycroft 09). Minimum wage rates are usually set by the jurisdictions in question; hence they tend to be different depending on the laws governing a particular district, state, or country. This diversity however, does not hinder differences in opinions that emanate from the existence of minimum wage. There are people who are of the opinion that minimum wage reduces poverty, improves the standard of living, boosts morale of workers, reduces inequality as well as making businesses more efficient (Beland & Alex 31). However, there are parties who are of contrast opinion saying that minimum wage promotes unemployment, increases poverty as well as damaging business, which is an overall negative impact to our economy. As a result, this research paper seeks to investigate the effects of minimum wage to our economy, problems of the minimum wage as well as how hard it is to live off minimum wage.
Minimum wage rate can be traced back to ancient England in the infamous Ordinance of Laborers laws of 1349, during the reign of King Edward III (Snarr 19). King Edward III was a wealthy land owner who depended on laborers to tend to his vast lands. As a result, he felt the need to come up with a way of determining the way of paying his workers depending on their chores in his fields. As a result, he came up with a decree which set the maximum wage for his workers, which was the first one of its kind in medieval England. There were several developments that took place later in determining just what amount of pay was morally reasonable enough for any laborer for a day, forming the basis of the minimum wage laws that we are witnessing today. Minimum wage laws were introduced nationally in the United States in the year 1938 (Thompson 27). Today, minimum wage rates are different, although not that much different, in the United States of America across different jurisdiction. However, there is an ongoing debate in this country due to calls by the public to increase minimum wage. As a result, policy makers in this country are trying to gauge what would be the effects of increased minimum wage in this country and what that would do to this country.
There is a notion that if minimum wage rates were to be increased, low paid workers living standards as well as the economic well being of this country would improve. This is more so direct to poor families that are run by single mothers, most of who have been relying on minimum wage, as well elevating the economic status of this gender in this country. This is why there is a heated debate and calls to increase minimum wage at all levels ranging from local, state and even federal levels. Currently, there is a proposal from congress democrats headed by President Barrack Obama to see minimum wage in this country raised from $7.25 to $10.10 per hour or labor. There are other campaigners seeking to get even higher rates at a local level in more than 23 states in the United States. For instance, there is a mayoral panel seeking to have the minimum wage rates increase from $7.25 all the way to $15 an hour for implementation over a number of years.
However, even with all these campaigns for minimum wages increment, economic libertarians and many business groups are against these hikes arguing that it may have a negative effect on the American dollar, negatively affecting this nation’s economy drastically (Thompson 86). Those who are supporting minimum hikes proposals say that on the contrary, they would help stimulating consumer spending as well as easing this country’s worsening income inequality. In fact, in December of 2013, there was a report released by the Progressive Economist Policy Institute saying that the proposal by president Obama would help in creating at least 85,000 jobs in the U.S. following this report, more than 600 progressive economists went forward to writing an signing a letter supporting increase in minimum wages the following month from $7.25 to $10.10.
According to these progressive economists, they felt that hiking these wages would have a stimulating effect on the United States economy. They also feel that these hikes would help in raising the poverty level in this country mostly experienced by single women, who have been relying on these minimum wages, food stamps as well as other welfare programs in this country that have already failed in serving their purpose (Crane & Tim 98). These progressive economists feel that minimum wage hikes would also help in trying to stabilize the inequality of income levels in the United States of America. They also cite that most people who are against minimum wage hikes are the top earners in this country who have been controlling the economy and they do not want to lose that which is of benefit only to them (Beland, Daniel & Alex 67).
Many factors cause income inequalities such as general inequality, race and gender disparities, education, and taxation and transfers. Inequality is measured both before and after taxation and transfer payments. With respect to market income, or the income before transfers and taxation, work experience, expertise, race, gender, inheritance, and productiveness all influence the distribution of personal or individual income in the U.S., as well as other countries. However, reducing the progressivity of transfers and income tax system leads to more inequality. According to the U.S. Congressional Budget Office (CBO), the equalizing force of transfers plummeted during the period between 1979 and 2007 largely due to reduced progressivity in the distribution of transfers. There was also a decline in the normalizing effect of the federal taxes due to the shrinking of federal taxes in relation to the market income and due to progressivity changes in the federal tax system. The inequality in income in the U.S. corresponds to those of other developed nations before tax and transfers. However, it is rated the worst (last) among twenty-two developed nations after taxation and transfers. This indicates that the public policies in the U.S., and not market factors, contribute to the disparities in income inequality.
In conclusion, what America need is good policies that would improve our healthcare systems, education systems and assure equality in status among its citizens. This is achievable through developing strategies that would ensure elimination of poverty is a constitutional right to every American citizen. We also need policies that would elevate the living standards, and promote children independence over a long period of time other than on the welfare basis. Minimum wages hikes are one of the ways of elevating the life of single mothers, indigenous communities in this country as well as an average American. We have also established that living off minimum wages is significantly hard especially for single mother and every American living in abject poverty, for even programs that were meant to help them get through are not any effective any more. We have also established that hikes in minimum wages can elevate our economy through creating more jobs as well as elevating the livelihood of poor indigenous communities in this country, single mothers and every other American.
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