Minimum Wages Policy in the United States

Introduction

This essay will examine the issue of minimum wage laws and how the regulations affect the employment and earnings of the low-skilled natives and immigrants in the United States. Increases in the minimum wage over the years may have larger effects among the immigrants than the low-skilled natives because their lower levels of education, less social capital, and limited ability to speak English cause them to earn less. The essay will cover how the issue of minimum wage increases related to the class, and identify the interest groups related to the issue. The paper will investigate what various research and studies state about the effect of minimum wage increases. Finally, the paper will present my opinion and whether or not it has changed in light of new information from the different studies used.

The Issue

The issue of minimum wage and its effect on employment of immigrants and low skilled natives attracted the attention of social scientists from various fields close to the end of the last decade. In July 2007, the federal government increased the minimum wage from $5.15 to $5.85. this was the first time the federal government had increased the minimum wage in over a decade. In the next two years, the wage floor had seen a 70 percent increment to reach $7.25 per hour in July 2009. While the government is yet to make any changes since 2007, various states raised their wage-floors some going as far as $12 an hour. The changes brought an urgency to the debate over how increases in the minimum wage would affect the labor market, specific outcomes of low-skilled workers particularly immigrants and natives. Economists have used standard competitive economic models to predict that higher minimum wages will result to increase in unemployment among the interest groups. Despite this prediction, research conducted over the years has continually reached inconsistent conclusions.

In his article, “Minimum Wage Debate Rages On”, George Karp seems to support the prediction made by the economists as he discusses the negative impacts of a job due to the rise in the minimum wage. The author uses quotes from Robert Bruno and other studies which are focused on showing how a reduction in the job entry levels might have been a result of an increase in minimum wages. Karp also uses numerous reliable sources to analyses the effect of an increase in high wage on business owners especially in reducing payrolls. Through the use of extensive research approach, the Gregory claims that the method applied by business owners is the source of deterioration in the living wages as most workers are not adequately compensated as well as fails to get adequate employment insurance cost. The article further quotes that the rise in the minimum wage can lead to the creation of more dollars because a lot of money will be available for workers to spend. Overall, I believe that the author’s credibility is enough to give readers insight and adequate information for further studies.

This section illustrates that the debate over the impacts of rising minimum wages is far from over. For instance, as mentioned earlier, economists have predicted an increasing rate of unemployment among the low-skilled workers. George Karp’s article seems to support this idea but the author somehow contradicts his position. At the end of his article, Karp quotes that increasing the minimum wage would result in the creation of more money available for spending by the low-skilled workers. While this statement is true, an increase in spending by the said group of workers would result in increasing employment and not unemployment. This contradiction demonstrates the lack of conclusive research regarding the debate over the effect of minimum wage increases in the country.

Relation to Class

Minimum wage relates to the class on several fronts. First, the issue is among the most debated topic in the political discourse of the country. The politics of minimum wage usually focus on the sizeable and rich variation across the states. despite the extensive support by the public to increase the minimum wage, the federal government has put the diminutive effort in the recent past. Instead, state governments have taken a more proactive measure to increase the minimum wage. In most states with higher minimum wage, direct democracy has been the main approach to improve the situation. Unfortunately, the 2016 elections further enhanced Republican control of state governments. As such, the issue of the minimum wage is now more than ever, affected by federalism and politics. Finally, as mentioned earlier, low wage workers including immigrants and natives are the interest groups affected by the issue. additionally, minimum wage disproportionately affects women and people of color.

The research found that 75 percent of American support increasing the federal minimum wage from the current $7.25 to $10.10 an hour. The Democrats are the majority supporters with over 90 percent proponents while the Independents supporters are 71 percent. While the Republicans seem to be divided about the issue, more than 52 percent are also in support (Flavin and Shufeldt 210). Despite the support, congressional Republicans have successfully blocked recent efforts by the Democrats to raise the minimum wage. Because of this political impasse, many states have chosen to act on their own. This is the main advantage of federalism when it comes to the issue as states can enact their own bills when the federal government is inactive regarding the matter. currently, 29 states have a minimum wage higher than the federal level. while the majority have taken such measures, 13 states are still using the federal level, two states have lower minimum wages, and six states do not have minimum wage policy at all.

The Interest Groups

The low wage workers are the group of people who are directly affected by the issue of minimum wage increases. This group of people is divided between immigrants and American natives. Interestingly, immigrant adults (age 25 and older) make the fastest growing low wage workers. Unlike in the case of immigrants, native low wage workers are mostly teenagers. Therefore, the issue of increasing minimum wages affects immigrants the most. The main reason why there is a disproportional labor force participation between immigrants and the natives is the level of education. As of 2009, around 39 percent of foreign-born adults in the country did not have a high school diploma. Even in the lower levels of education, the immigrants perform the worst. For instance, in 2006, the Census Bureau found that foreign-born adults make up almost two-thirds of adults with less than a fifth-grade education in the country.

Benjamin H. Harris and colleague use this article to explain the impact of minimum wage on low waged workers. In this article, the authors, Harris and Kearney, use economist Arin Dube argument on the effects of minimum wages on immigrant adults and native teenagers. In Dube argument, he states that those who earn less than $7.25 of the federal minimum wage in 2011 as compared to previous years were the two mentioned groups. the authors noted that more American natives earned above the minimum wage of $7.25 but less than $10 an hour compared to immigrants. However, within this bracket, the number of native youths was 12 percent more than immigrant youths. Harris and Kearney also support that immigrants are more affected by increasing minimum wages than natives. Overall, the article makes adequate use of data making it a reliable source of information.

Research

The available research on the effect of minimum wage on the low wage workers, businesses, and the economy at large is extensive. While there are dissimilar conclusions among the available literature, more and more social scientists are agreeing that increasing minimum wage is a necessary move as the costs of living increases. This is especially so after the Raise the Wage Act of 2019 was introduced. The bill is the most ambitious effort yet to overhaul the federal minimum wage. According to the Economic Policy Institute (EPI), the country well overdue in raising the minimum wage. If the current rate of $7.25 an hour was adjusted for inflation, workers today would be earning 29 percent less than they did over 50 years ago. The economy’s capacity to deliver higher wages has more than doubled over the last 50 years when measured by the amount of output produced by workers as well as labor productivity (Goelzhauser and Shanna 285).

To support my thesis, I present the argument in “Minimum Wage: Would Raising the Rate Be Good for the Economy?” by Barbara Mantel. Mantel echoes the words of Jared Bernstein, the Chief Economist and Economic Adviser to Vice President Joseph Biden in the Obama Administration who argued that the rise in the minimum wage is beneficial in attaining certain living standards among the low wage workers. The author reasons that the extra income earned by the poor is likely to be spent while the rich are likely to save their extra dollars. As such, with the increase in the amount of spending by the poor would result in increased business. This claim contradicts the earlier argument that an increase in the minimum wage would result in rising unemployment among the unskilled labor force. Therefore, according to Mantel, and many more economists, increasing the minimum wages is good not only for the workers themselves but also the economy at large.

Another article that agrees with my position on the issue of increasing minimum wage is “What the Minimum Wage Fight Says about the Economy” by Wee Heesun. The author believes that the American unskilled worker is the most mistreated worker in the world stating that despite the effort he makes in the workplace, he is struggling to make ends meet. Most low wage workers in the country can barely afford decent housing or health insurance. It is for this reason that most low wage workers are usually working several jobs a day. Heesun maintains that if the situation in the entire nation was not so tragic it would be laughable. The wealth gap between the rich is gradually widening. By citing other studies, Heesun upholds that increasing minimum wages would be a right move in rectifying the situation where those who work the most earn the least.

My Opinion

I believe that the country is well behind in raising the wage bill. At $7.25 an hour, low wage workers cannot provide for their families because of the increasing cost of living across the country. Various states in the country have already raised their minimum wage. Some, for instance, California, Seattle, San Francisco, and New York are currently at $15 an hour, the amount proposed to be achieved by the federal government by 2024 through its Raise the Wage Act. the new information only serves to support my opinion. Service industry contributes over 70 percent of the GDP and is the largest source of private employment in the American economy. Again, as revealed earlier, the economy’s capacity to pay higher wages has more than doubled over the last 50 years while workers continue to earn less for the similar period if inflation is taken into account.

In conclusion, this essay disputes the claim that increasing minimum wages will result in reduced employment among low skilled workers. On the contrary, such a move will result in increased employment among the interest groups. with higher wages, the low wage workers will have extra income to spend in the economy resulting in more businesses which will need employees to run. Despite the dissimilar views held by various researchers, it is more than clear that the higher wage bill is better for all including the workers, the businesses, and the government.

Works Cited

Barbara, Mantel. “Minimum Wage: Would Raising the Rate Be Good for the Economy?” 24.4 (24 January.2014.) CQ Researcher. Web. 30 Sep.2014.

Flavin, Patrick, and Gregory Shufeldt. “The State of the Minimum Wage: Federalism, Economic Policy, and Workers’ Well-Being.” The Forum. Vol. 15. No. 1. De Gruyter, 2017: 210-215.

Goelzhauser, Greg, and Shanna Rose. “The State of American Federalism 2016–2017: Policy reversals and partisan perspectives on intergovernmental relations.” Publius: The Journal of Federalism 47.3 (2019): 285-313. Retrieved from 1093/publius/pjx038/18157437/pjx038.pdf”>https://academic.oup.com/publius/article-pdf/doi/10.1093/publius/pjx038/18157437/pjx038.pdf

Gorry. Aspen. Nataraj Slavav. Sita. “Minimum Wage, Maximum Harm” US News & World Report. 01 May. 2014 Web. 21 Oct. 2014.

Harris. Benjamin H. and Kearney. Melissa S “The Ripple Effect of a Minimum Wage Increase on American Workers.” www.brooking.com. 10 Jan. 2014 Web. 21 Oct. 2014.

Wee. Heesun “What the Minimum Wage Fight Says about the Economy.” www.cnbc.com 28. Feb. 2014 Web. 21. Oct. 2014.

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