Minimum Wage: Why Minimum Wage Should be Increased: Difference between revisions
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== Small Business == | == Small Business == | ||
[[Affect of Minimum Wage on Small Business]] | [[Affect of Minimum Wage on Small Business]] | ||
Conservatives traditionally argue that raising the minimum wage hurts small businesses that cannot afford to pay hiring wages, and therefore are forced to layoff workers, further augmenting poverty. In a study done by the Levy Institute, the vast majority of small business owners interviewed said a raise in minimum wage would not cause them to layoff workers, or decrease the number of new workers they could hire. The Levy Institute interviewed 560 businesses with under 500 workers each, asking them questions about their hiring practices, particularly with regard to a possible increase in the minimum wage. Of those businesses, only 6.2% said a raise in the minimum wage would negatively affect their hiring practices. When the minimum wage was increased in 1997, economists and lawmakers feared there would be significant job losses, but instead it was the best job market in 30. This shows the demand for labor is wage inelastic; meaning changes in wages does not affect the amount of labor demanded. | Conservatives traditionally argue that raising the minimum wage hurts small businesses that cannot afford to pay hiring wages, and therefore are forced to layoff workers, further augmenting poverty. In a study done by the Levy Institute, the vast majority of small business owners interviewed said a raise in minimum wage would not cause them to layoff workers, or decrease the number of new workers they could hire. The Levy Institute interviewed 560 businesses with under 500 workers each, asking them questions about their hiring practices, particularly with regard to a possible increase in the minimum wage. Of those businesses, only 6.2% said a raise in the minimum wage would negatively affect their hiring practices. When the minimum wage was increased in 1997, economists and lawmakers feared there would be significant job losses, but instead it was the best job market in 30. This shows the demand for labor is wage inelastic; meaning changes in wages does not affect the amount of labor demanded. | ||
== Benefits of Increase == | == Benefits of Increase == | ||
Revision as of 19:58, 29 November 2007
Introduction
President Roosevelt established the federal minimum wage in 1938 as part of the Fair Standards Labor Act. The minimum wage was designed to protect workers from exploitation by their employers. Originally set at $0.25, minimum wage has been periodically increased as it is devalued by inflation. From 1997 to July 2007 the federal minimum wage was $5.15, and then increased to $5.85, where it stands today. Workers and economists argue minimum wage does not pay a sufficient amount to stay out of poverty. To counteract this, 31 states have enacted higher minimum wages, but the remaining 19 states still abide by the nation minimum wage. The federal minimum wage can and should be increased and used as a tool to reduce poverty and stimulate the economy.
Theoretical Model
Card and Krueger
Small Business
Affect of Minimum Wage on Small Business
Conservatives traditionally argue that raising the minimum wage hurts small businesses that cannot afford to pay hiring wages, and therefore are forced to layoff workers, further augmenting poverty. In a study done by the Levy Institute, the vast majority of small business owners interviewed said a raise in minimum wage would not cause them to layoff workers, or decrease the number of new workers they could hire. The Levy Institute interviewed 560 businesses with under 500 workers each, asking them questions about their hiring practices, particularly with regard to a possible increase in the minimum wage. Of those businesses, only 6.2% said a raise in the minimum wage would negatively affect their hiring practices. When the minimum wage was increased in 1997, economists and lawmakers feared there would be significant job losses, but instead it was the best job market in 30. This shows the demand for labor is wage inelastic; meaning changes in wages does not affect the amount of labor demanded.
