Minimum Wage Report

Minimum wage has helped shape our economy and nation as it is today. In the United States, we have two different types of minimum wage, federal and state. But what is minimum wage? “Minimum wage is the lowest hourly rate at which most employers may legally pay their workers” (“Federal Minimum Wage”). The federal minimum wage is the government’s minimum wage, but each state also has their own minimum wage. “The first federal minimum wage was legislated to boost wages to ease the hardship of workers and increase the consumer purchasing power needed for job creation and economic recovery” (Berlatsky 79).

One of the most controversial issues in today’s world is if the minimum wage should be raised or not. One of the lesser known issues is leaving the minimum wage up to the states. “Minimum wage is good for the economy and should be left to the states on whether to raise it or not” (“Federal Minimum Wage”). New Zealand was the first country to put a minimum wage into effect when they did in 1894 (Minimum Wage). In 1912, Massachusetts was the first state in the United States to put a minimum wage law into effect (“Minimum Wage). The first state minimum wage laws only covered minors and women.

But, in 1937 Oklahoma passed the first state minimum wage that covered men (Minimum Wage-ProCon. org). The first federal minimum wage was set in 1938 when the economy was at an all time low (Berlatsky 79). At this time, the Great Depression was happening and president Franklin Roosevelt made the federal minimum wage (Minimum Wage-ProCon. org). “The federal minimum wage was first established in the Fair Labor Standards Act of 1938” (Berlatsky 21). The first federal minimum wage was set at an hourly rate of $0. 25 and hour. Since 1938, the federal minimum wage has increased seven dollars an hour.

In 1923, it was ruled unconstitutional when the U. S. tried to pass a federal minimum wage in the District of Columbia (Berlatsky 103). In 2014 roughly 1. 3 million workers in the United States earned exactly the federal minimum wage , which is the same as it is today at $7. 25 an hour (“Federal Minimum Wage). In 2016, roughly 2,561,000 workers in the United States earned exactly the federal minimum wage or less (Minimum Wage-ProCon. org). According to Paul Krugman, a commentator for the New York Times, “Since the 1960’s work productivity has doubled” (qtd. In “Federal Minimum Wage”).

About 4. % of the workers in the United States earn exactly the minimum wage. Roughly thirty-seven percent of the workers who earn exactly the federal minimum wage are either African American of Hispanic (Berlatsky 23). Approximately sixty percent of women make up the workforce that make exactly the federal minimum wage. In 2005, the Bureau of Labor Statistics (BLS) found that fifty-three percent of the workers who earned the minimum wage were under the age of twenty-five (Berlatsky 85). Out of the people that earn the minimum wage, forty-five percent of them are between the age of sixteen and twenty-four.

On the other hand, fifty-five percent of the people that earn the minimum wage are older than twenty-five. Teenagers make up twenty-four percent of the workforce that earn the minimum wage (Minimum Wage-ProCon. org). Fourteen percent of people who didn’t make it through high school ended up earned exactly the minimum wage. Only three percent of people who got an education past high school ended up earning exactly the minimum wage (Berlatsky 163). “Almost half of minimum wage workers are in families that earn under thirty-five thousand dollars a year” (Berlatsky 23).

Even though there is a federal minimum wage, there are still ways that you can end up earning less than that. Internship is when you’re training for a job and you either work for free or earn less than the minimum wage (Berlatsky 18). The other way that you can earn less than the minimum wage is if you are a tipped worker. Now, what is a tipped worker? A tipped worker is someone who derives the majority of their income through tips. Some of these jobs include waiters, busboys, taxi drivers, pizza delivery and barbers.

The federal minimum wage for tipped workers is only a mere $2. 3 an hour! The District of Columbia and thirty-two other states have a higher state minimum wage than the federal wage (Berlatsky 40). Whether you are for or against a higher federal minimum wage, you have to realize that having a minimum wage is beneficial. Having a minimum wage helps reduce poverty by giving money to people who need it the most. This in turn, generates more cash flow which spurs economic growth. “Having a minimum wage spurs economic activity and growth (“Federal Minimum Wage”). Walmart is the largest retailer store not only in the United States, but also the whole world.

Costco is in the top five retailers in the United States. Both of these retailers have a positive tone about raising the minimum wage. While the federal minimum wage is at $7. 25 an hour, Walmart pays entry-level workers $8 an hour. In October 2005, the CEO of Walmart, Leo Scott, made a statement to Congress saying, “to take a responsible look at the minimum wage” and “the U. S. minimum wage of $5. 15 an hour has not been raised in nearly a decade, and we believe it is out of date with the times”(qtd. In Berlatsky 84). “Between July 2015 and the last increase in the minimum wage in 2009, the federal minimum wage has 8. % of its purchasing power due to inflation. ”

The first federal minimum wage is equal to $4. 11 an hour. (Minimum Wage-ProCon. org). The federal minimum wage in 1956 is worth $7. 93 today, which is higher than the minimum wage today (Berlatsky 80)! This is why so many people want a higher minimum wage, because the value of money is decreasing and so is the value of their income. According to Paul Krugman, a commentator for the New York Times “For about four decades, increases in the minimum wage have consistently fallen behind inflation. ” (qtd. In “Federal Minimum Wage”). The minimum wage is good for the economy.

Even though some people want their to be a higher minimum wage, you have to realize what it’s there for. Typically, a minimum wage job is for low-skilled workers with little experience, and is not meant as a career (Berlatsky 29). The food industry accounts for more than half of people who earn the minimum wage (Minimum Wage-ProCon. org). In 2006, only ten percent of workers who have had their job for around a year earned the minimum wage. Also in that same year, only five percent of workers who have had their job for one to five years earned the minimum wage (Berlatsky 163).

One of the biggest issues we have with our country is income inequality. Supporters of a higher higher minimum wage argue that this will lead to a lower income inequality and a diminished poverty level. A raise to the California minimum wage to thirteen dollars an hour would increase the income of 7. 5 million families was found by a 2014 study. “According to a 2014 Congressional Budget Office report, increasing the minimum wage to $9 an hour would lift 300,000 people out of poverty” (Minimum Wage-ProCon. org). In March of 2010 the black unemployment rate was roughly sixteen percent, while the overall unemployment rate was down to 9. % (Berlatsky 49).

The United States has one of the highest income inequalities in the world. Mexico, Turkey and Chile are the only other countries to have a higher income inequality than the United States (Minimum Wage-ProCon. org). The diverse ideas on minimum wage has had a great influence on politics throughout the years. Arnold Schwarzenegger’s campaign for Governor of California was helped greatly when he wanted state employees to be paid the state minimum wage, which was higher than the federal minimum wage (Berlatsky 33).

In Barack Obama’s 2008 campaign he promised to eventually raise the federal minimum wage to $9. 50 an hour. However, this idea didn’t end up going through as the White House never pushed for it (Smith 12+). Since July 2009, the minimum wage has not been changed. Supporters of a higher minimum wage argue that this will allow more time for teenagers to study, which will most likely reduce the drop-out rate. Supporters also say that a raise could help a struggling U. S. economy (“Federal Minimum Wage”). But the supporters of keeping the minimum wage the same have a different view.

If the government were to raise the federal minimum wage again, there would be some drastic changes. In order for the federal minimum wage to be raised, the idea would need to be supported by the president as well as Congress (“Federal Minimum Wage”). One study found that by increasing the minimum wage by ten percent, 2. 7% of teenage workers would become unemployed (Berlatsky 27). If the federal government raised the minimum wage, then small businesses will raise their prices in order to stay in business.

If we leave the minimum wage as is, then business owners will continue to be able to invest in their employees (Kennedy and Stottlemyer 27). If you raise the price of workers, then the demand for workers will decline (Smith 12+). The biggest issue with raising the federal minimum wage is that the cost of living varies from state to state. Raising the federal minimum wage would harm places, like Mississippi where the cost of living is lower. In bigger cities, like Los Angeles there is a limited housing supply. A raise in the minimum wage would lead to higher rental prices (Minimum Wage-ProCon. rg).

Leaving the minimum wage up to the states would be much better than just having one minimum wage law. During the 2000’s time period the federal minimum wage remained stagnant. During this time, several states passed their own increased minimum wages (“Minimum Wage”). The longest period of time without a change in the federal minimum wage was from 1997-2007 (Berlatsky 80). In the 1990’s the federal minimum wage increased 4 times (Smith 12+). The United States is the country with the most immigrants. But why are we the most immigrated country? One of the biggest factors is our minimum wage.

Not every country has a minimum wage, so we are often sought after for this. The main reason for immigration is to get a better standard of living (Berlatsky 130). If we raise the minimum wage, we threaten to increase the amount of immigrants and illegal immigrants. The minimum wage is good for the economy and the federal minimum wage should stay as is. By keeping the minimum wage as is, business owners can continue to compete freely (Kennedy and Stottlemyer 27). The states should be able to decide the appropriate living wage based off of inflation, employment and cost of living.