The issue on raising the minimum wage has become a steady topic for debate for a while. The former president Obama made the issue of unequal payment and low a wage the chief concerns for his campaign called – “income inequality”. The first proposal for raising the minimum wage to $7.25 per hour took place in the year 2009 though none of the attempts taken by the congress stood fruitful (David et al., 2016). The thesis statement of the following paper is that minimum wage should be raised to minimize the poverty rate. The aim of the following discourse is therefore to identify whether raising minimum wage in the United States of America could successfully decrease the unemployment and other poverty related rate or not.
Instead of the fact that the proposal for increasing the minimum wage is a politically correct as well as a popular fact, there are varied critics who believe that the issue regarding the consistent unemployment rate will not be eliminated by simply raising the minimum wage. According to most of the opponent critics, the issue of poverty has been stagnant since the year 1960 (nytimes.com, 2017). The poverty rate is further escalated by the falling rate of the average income, which increased the rate of income inequality. However, according to the opponent economists, hike in minimum wage will create issues for the medium and small sized business owners.
Specifically, the believers of LMW or the “Lower Minimum Wage” say that there is a chance to encounter a widespread job loss if the minimum wage would be raised. According to their account, if minimum wage would be raised, small and medium sized firms would react disappointingly to the issue of rising production and operation costs (forbes.com, 2017). According to the 2013 Gallop poll, more than 50% of the small business owners have opposed to the proposal of raising minimum wage.
However, as per the LMWers, in order to reduce unemployment and poverty in specific, business firms should be allowed to pay their employees whatever the current market can bear for them. According to Michele Bachman’s argument, with the elimination of the “federal minimum wage”, an increase in the number of job offers possibly can take place and this particular step will be successful in wiping out the unemployment. It is to consider in this respect that the point highlighted by the LMWers cannot be ignored as per the reason that there are already several minimum wage jobs in some of the most competitive sectors of the USA economy (economist.com, 2017). It means the business sector of USA is already struggling hard to keep its viability.
With increased minimum wage, most of the small and medium sized organization could not possibly match the operation cost with the revenue and consequently the rate of unemployment will rise. Most significantly, according to several economists, the hike in the minimum wage will possibly reduce the opportunities for employment for those who are not skilled enough (Meer & West, 2015). The aforementioned opinions are indicative of the fact that raising minimum wage itself is a negative step for mitigating the unemployment constraint. It is also understandable from the opposition made by the LMWers that, they are strongly concerned about the poverty and the unemployment rate though their point of view, which does not support the proposal of raising minimum wage, shows concern for the current condition of the business sector of USA.
After having a concise view regarding oppositions made mainly by the LMWers, it is to consider that charges from a large number of workers who have consistently said that their employers are paying them far below than what they are supposed to get, should not be ignored. It is because the impact of low income on the workers’ daily life is causing deficit of nutritious food among the children (Neumark et al., 2014). At the same time, low income is imposing negative impact on the educational life of the workers. It cannot be ignored that most of minimum-wage workers are students belonging to middle class families.
Moreover, according to the former chairperson of Obama’s council of economics – Christina Romer, more than half of the families of the middle class student workers of minimum wage have made less than $40,000 a year (forbes.com, 2017). The aforementioned condition is indicative of the fact that low minimum wage is a strong constraint that prevent equal distribution of wealth and increases poverty. It should be considered in the context that unemployment is not only the chief cause of poverty as those families are suffering from poverty too who have one or two earning individuals (Linde Leonard et al., 2014).
However, it should be also kept in mind that the unemployment rate in the country is increasing due to lack of skills among the individuals and the crucial condition of the business sector. On the other hand, it should also be considered that with higher wages, business organization would be profited with increased productivity and low turnover (Linde Leonard et al., 2014). It is because, with increased minimum wage, it can be expected that the employees will be motivated enough, which will help them to give their best in their professional fields.
It should be considered that more than half of the minimum wage workers and their families chiefly rely on the earnings; therefore, understandably one of the chief sources of poverty is low wages without a doubt. Thus, it can be said that if the level of wages will increase then at least those families will be benefitted who have minimum wage workers. In this context, a striking conclusion can be included. As per Christina Romer, if the earned-income tax credit will be raised then it is possible to help the workers who get low wage. In such way the workers will at least have a government payout (forbes.com, 2017).
From the above discourse, it is understandable that hike in the salary will be a trouble for the small and medium sized business owners and consequently it will increase the unemployment rate too. On the other hand, it has been also pointed out that increased wage will help to increase the production, which will directly make positive contribution to the economy. Hence, it can be concluded that the internationally reputed and large-scale organizations of USA should definitely consider hike in the salary of their employees. With increase minimum wage, at least the wellbeing and necessary nutrition to the children can be given.
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Linde Leonard, M., Stanley, T. D., & Doucouliagos, H. (2014). Does the UK Minimum Wage Reduce Employment? A Meta?Regression Analysis. British Journal of Industrial Relations, 52(3), 499-520.
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