Research Paper on Effects of a Minimum Wage to US Government

Introduction

The minimum wage was purposely introduced and legislated by the United States of America by the end of the 20th century to stabilize the economy post-depression issues and offer protection to employees in their labor force from employers' exploitation. In addition to economic stabilization, it was designed to provide minimum living standards such as reduce poverty, inequality as well as protecting workers' health, State of well-being and boosts morale to work ("ILO 2006: Minimum wages policy (PDF)". However, the concept of minimum wage has been politicized and destroyed by politicians due to its proposed effects of increasing the minimum salary that an employee should earn in the USA workforce. Government economists argued that raising the minimum wage will boost business lines, stimulate consumer expenditure, and lead to inclusive economic growth. In spite, some opposed it, by saying that raising the minimum wage will lead to poverty and unemployment increase because some employers will require high competence workers. It will make some low wage employees unable to find a job according to "Myth and Measurement: The New Economics of the Minimum Wage" (Card and Krueger).In this policy memo, I urge the local and State governments to raise the minimum wage for both private sectors and public employees because of the essential reasons discussed in this memo. However, some economic researches showed that imposing a high minimum wage will lead to unemployment because the amount of labor required in the market decrease, and there will be more people who want jobs than can get works. Below is the detailed discussion on the effects of increasing the minimum wage.

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Educational Perspective

In the United States of America, research shows that children who cannot take care of themselves rely on their parents and guardians for necessities to invest in their future. Low-income families have unfortunate educational developments and outcomes as compared to households with high incomes. According to the Economic policy institute, 60 million people with more than 15 million children live in families with low wage employees, and only 35% of them take care of their children. Therefore, the increasing minimum wage will lead to happy, healthy, and prosperous children in education who can compete globally and fit in the world markets (Tompkins). Working parents receive benefits which they separate those to save and to cater for basic needs such as clothing, food, diaper as well as transportation to schools. High minimum wages will increase students' urge to work harder and smart in school due to their high hopes of getting those better wages in the future. However, lowering minimum payments will, in turn, increase laziness and indiscipline cases in the learning institutions due to a lack of future salary motivations and cheaply available labor demands in the markets. Besides, raising the minimum wage will boost educational development, economic innovations, and growth and eradicates poverty levels in the United States.

Poverty Eradication

The United States is a developed country; imposing an increase in minimum wage will reduce poverty level because research indicates that most of the citizens stacked on poverty due to low earning salaries. Economists argued that increasing the minimum wage will perhaps reduce the number of jobs in the States but positively lift many Americans living in poverty according to the nonpartisan congressional budget office. The research shows that a $15 minimum wage raised will increase workers' earning, which in turn will enable them to cater to basic needs for living. Like having better shelters, clothing, health, food, and manage the cost of education through some employees would be left jobless (Cunningham).

National Economic Growth

Increasing the minimum wage will boost economic growth by a significant percent because it strengths employees' purchasing power. It also helps in closing the racial wealth gap, which has been historical levels, according to Hon. Robert, raising the minimum wage act, argued that it would increase employee productivity and lower workers turnover and absenteeism that will generally boost the States' economy from its current status. Due to a national poll of small business owners, business executives and businesses voluntarily supported the raising of the minimum wages. American sustainable business council did found that about 60 percent of small business owners support wage increase to $12 by 2020. When workers earn high salaries, this means that a lot of revenues collected by both local and national governments and so many programs that are always put in place to assist indigent citizens. In meeting their daily bread will reduce by the government because many will be able to cater to their needs. It will also reduce the cost of further training and recruiting workers every time.

Reduce Inequality

Several economic studies and research show that there have exited a significant raise to income inequality since the 1980s due to low minimum wages. The only solution to this problem is to increase the minimum wage to workers. In America, since 1979, the single wealthiest individuals are 0.1%, with the majority of people striving from poverty with small payments (Determining the effect of the minimum wage on income inequality Benjamin). This indication of income inequality is a threat to the State economy growth. According to research done by Card and Krueger (1995) on increase of minimum wage shown that it does not decrease employment due to labor market in the United States does not require unskilled labor that is not competitive in the job market (Neumark)

According to the federal minimum wage, the graph above explains five facts about the minimum wage to people who earn it as stipulated below; first, there is a need to adjust for inflation. Less than half of 2.6 million workers who are below the federal minimum wage in 2015 were 16 to 24 of age. The restaurant service industry offers the largest employments and States with minimum payments than $7.25/hour national standard.

Conclusion

If both local and State governments increased and imposed minimum wages, then firms, industries, private sectors will have to permit not to pay fewer fees than the amount that the government has mandated. Economists argued that increasing the minimum wage boosts employee's morale and ethic, which gives them better mental, physical health resulting in high productivity in the workforce. According to the above discussion on the need for increasing minimum wage will be more significant for both State government and its citizens at large as per the anticipated benefits such as improved education, reduced poverty level, provide equality and inclusive economic growth of the United States.

Works Cited

Card, David, and Alan, B. Krueger. "Myth and Measurement: The New Economics of the Minimum Wage." Princeton University Press (2015): 6-7.

Cunningham, W. "Minimum Wages and Social Policy: Lessons from Developing Countries." Washington, DC: World Bank (2017).

Neumark, David, and William Wascher. "Minimum Wages, Labor Market Institutions, and Youth Employment." A Cross-National Analysis, Industrial & Labor Relations Review57(2) (2015): 241-242.

S., Benjamin. "Determining the effect of the minimum wage on income inequality." Gettysburg College (2015).

Tompkins, Olivia. "Effects of increasing minimum wage for children education." University of Georgia (2016).