Essay Sample on Minimum Federal Wage

My opinion about the Federal minimum wage is that it should be abolished. The reason why my position is against the minimum wage law is that it is a significant contributor to unemployment. The workers whose skills cannot match the minimum price are completely jerked out of the market. For instance, if the minimum wage is $15 per hour, and a worker only has the skills of producing $14 per hour, then the employer is most likely not to employ such a person for fear of losing the $1 every hour (Dube, Lester & Reich, 2010). Regardless of the current value of the minimum wage, and all the other factors kept constant, there would be a fall in demand for labor in case of any increase in the price of labor.

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Another reason why the minimum wage should not be there is that the employees own their labor, and no one should have the power to determine for them the price at which they should sell their labor. It is only the worker who has the right of determining the minimum amount at which he/she should offer the commodity. They have the right to ownership, and they do not need minimum wage laws to exercise such right of ownership. An individual has the right to set their minimum wage without the laws. However, to reduce the cases of unemployment resulting from the imbalance between skills and the minimum wages, the government should come up with some policies where people are paid according to their skills (Dube et al., 2010). However, this should be guided by common sense that the wages for certain professions should not go beyond some limits. This would help in eliminating the causes of unemployment as everyone will have a place to fit in regardless of their skills.

Again, the minimum wage laws limit the mutually advantageous and voluntary agreements existing between employees and employers from taking place. This is dangerous as it interferes with the working environment. Besides, it is sometimes harmful to the economy to have minimum wage laws as they lead to firms making lower profits at some points. The adverse effect of this is that it would lead to higher retail prices. It is, therefore, a form of legal plunder by the workers from the consumers and their employers, and this is dangerous for the economy.

On the issue of tipped workers, I think there should not be different and lower minimum wages on their side. The reason for this argument is because having these different minimum wages for the tipped workers propagates into gender and racial inequalities (Even & Macpherson, 2014). This would, in turn, result in worse economic outcomes for the tipped workers. When the tipped workers are forced to rely on their tips for their wages, it creates a terrific instability in the income flows. This leads to the difficulty in budgeting or absorption of financial shocks.

Moreover, several studies have indicated that there is a high level of discrimination in the tipping practice. The white service workers tend to receive larger tips than the minority groups for the same quality of service offered (Even & Macpherson, 2014). This is an indication that if these two groups of people were to have a cut on their minimum wages because of the tips, then the black would carry home a fraction of what their white counterparts do.

References

Dube, A., Lester, T. W., & Reich, M. (2010). Minimum wage effects across state borders: Estimates using contiguous counties. The review of economics and statistics, 92(4), 945-964. https://www.mitpressjournals.org/doi/abs/10.1162/REST_a_00039

Even, W. E., & Macpherson, D. A. (2014). The effect of the tipped minimum wage on employees in the US restaurant industry. Southern Economic Journal, 80(3), 633-655. https://onlinelibrary.wiley.com/doi/abs/10.4284/0038-4038-2012.283