Minimum Wage in the United States

Minimum Wage in the United States

Kathrine D. Nepon

Strayer University

Teresa Hartnett

ECO405

October 22, 2011

ABSTRACT

This paper will discuss the topic of minimum wage in the United States. We will begin by giving some background information on the history and purpose of minimum wage. The first minimum wage in America was passed in 1938 and has increased 23 times, the most recent occuring in 2009. It mandates that businesses be required to pay no less than a certain amount, right now $7.25 per hour, for entry level and really all employees. They are also required to display posters in the work place that inform workers of their rights. The thoughts behind the plan were that setting a minimum wage can theoretically guarantee that workers will be paid enough to live on. There are many arguments both for and against a minimum wage and countless different views from both sides of the subject. In this paper we will discuss what this writer feels is the most relevant benefit and the only real cost of imposing minimum wage in the United States; the benefit being to help stabilize or equal out the income of less skilled workers and the cost being that it may cause price inflation as businesses try to compensate by raising the prices of the goods being sold.

BENEFITS

Those that truly benefit from minimum wage are those that are less skilled and do not possess a higher education will not be taken advantage of. It guarantees that even all workers regardless of their skill levels will receive a fair wage for the work that they do. Some argue that in a free market with no government regulation, corporations might not pay a fair wage to employees, especially in unskilled positions where there are more workers than there are jobs. There are even some that feel that the rates that have been set for minimum wage are actually too low. "The increase in the minimum wage is long overdue, yet even the increased rate of $7.25 is an insult to workers and employers. Yes, small business owners must spend wisely, but this means paying our workforce a fair wage if we expect quality work. I want the federal government to recognize hard work and raise the minimum wage so everyone who works can support themselves and their families" (Khaki, 2007). That being said, if a people are given fair wages, it will increase their overall well being and their contribution to the economy. A minimum wage increases the amount of money the lowest wage earners make, which means they have more money to spend on goods and services which increases the overall economy. "History has proven time and again that increasing