Go to the internet and find a news article that discusses the effects of a minimum-wage increase on the U.S. economy, summarize key points and post in the Discussions area. Do you Agree or Not?
The article “How Does the Minimum Wage Impact the Economy?” by Lauren Dixon (2017) refers to the different effects of a minimum wage increase for the U.S. economy. Within the article, Lauren discusses the impact of rising minimum wage, flaws with the federal minimum wage and the role of business leaders.Based on the article, the minimum wage was first established in the United States through the Fair Labor Standards Act of 1938 to prevent exploitation between employers and workers. During that period (the Great Depression), workers were desperate for work which led employers the advantage and pay very little for work. Thus, a wage floor was established to help mitigate that imbalance of power between employers and low-wage workers. Hence, some states and cities took it upon themselves to raise their minimum wages to much higher rates, such as New York City, which will have a $15-per-hour wage by 2018. Lauren also mentioned that although wages rose by $7 since 1938, when calculating for inflation, today’s federal minimum wage is about the same as in the 1950s. This is because since the minimum wage erodes for so long that that gap has grown substantially such that now it’s hard to even consider bringing the federal wage floor up to a level that would allow someone to have a decent quality of life wherever they may live.
Research in the article concluded that the economic impact of rising minimum wage is that it would increase earnings per state and businesses would see a reduction in turnover and increases in productivity. When minimum wage is set at a moderate level, it does not reduce employment rate but when it is set drastically, it can cause economical upset to employment.
Some flaws with the federal minimum wage is that it will have different value based on location because of the cost of living. For instance, the cost of living in New York is drastically differ to that in McAllen, Texas, which has the lowest cost in the U.S (Lauren, 2017). Some business owner opposed the idea of increasing minimum wage because they hope to keep their operation cost as low as possible. But according to Cooper, senior economic analyst and deputy director at Economic Analysis and Research Network at the Economic Policy Institute, those verdicts are based on narrow market picture. He continued by stating that with fatter paychecks, workers have increased purchasing power, thus benefiting businesses. In addition, Federal minimum wage increase impacted small business, including all other organizations.
Lauren Dixon (June 14, 2017). “How Does the Minimum Wage Impact the Economy?”. Talent Economy. Retrieved on Nov 28, 2017 from: http://www.talenteconomy.io/2017/06/14/minimum-wage-impact-economy/