Economists have consistently argued that the very existence of a minimum wage reduces employment opportunities for low wage workers. A small business, for example, may have work that needs to be done but can't afford to hire a minimum wage worker; that is one less job that will be offered and, perhaps, willingly taken. Recent research has supported this contention (Turner, 1999).
Reduction of poverty is the crux of any argument for enacting a minimum wage, and yet in the 72 years since the first minimum wage was created in the U.S., poverty rates have not been substantially reduced (Joint Economic Committee, 1995). Instead, the existence of a minimum wage has been shown to offer opportunities for a few as they use entry-level employment as a stepping stone (Kersey, 2004), while at the same time negatively impacting some of the socio-economic groups most in need of assistance in the U.S. To wit, a synthesis of 50 years of research on the minimum wage draws the following conclusions: the minimum wage disproportionately hurts African-Americans, low-wage regions (such as the South), unskilled workers, and the young (Joint Economic Committee, 1995).
Teenagers are of particular interest, not only because so many of them enter the workforce at minimum wage, but also because their trajectories as they age may be studied. Research suggests that "higher minimum wages have significant negative effects on the employment prospects of less skilled teens, losses which are masked by their replacement in the workforce by more highly skilled teens. In addition, increases in the minimum wage are associated with an earlier age for leaving school." (Neumark, 1995) Thus, even at the earliest stages of employment, the minimum wage is seen to favor more highly skilled workers at the direct expense of the very people it is designed to protect. The minimum wage is also shown to discourage education, since the promise of a livable wage is enticing enough for teens that they may opt to drop out of school and work instead. Over time, un-educated teenagers are less likely to earn more money or achieve success in the labor market beyond entry-level, minimum...
The company can also allow a position to go unfilled for a time to increase its leverage; the unskilled worker would starve trying to stall for a higher wage. This again invalidates the argument that the free market can set wages effectively -- it cannot given the imbalance of bargaining power between workers and businesses. The minimum wage serves a specific economic role of balancing the bargaining power between
Only 2.1% of minimum-wage workers belong to a union, versus 12.0% of the overall working population. Nonetheless, labor unions fight passionately for a higher minimum wage (Sherk). When the minimum wage rises, it becomes more expensive to hire unskilled workers. This makes the decision to employ highly paid and highly skilled workers, instead of unskilled workers, more attractive to businesses, and so businesses want to hire more skilled workers (Sherk). With
Minimum Wage Even though minimum wage has been around for many years, and was established to make sure that working people could survive and pay their bills, there are still many problems with it. This paper address both the pros and cons to raising the minimum wage, discussing not only how people can be helped by the increase in pay, but also how they are ultimately hurt by it to a
This creates a knock-on effect wherein this spending fuels hiring at other companies, whose workers also spend. In contrast, the additional profits earned by corporations as a result abolishing the minimum wage could be invested anywhere in the world and capital gains from stock price improvements are taxed at a relatively low rate. Without a minimum wage, there would be more Americans working, but they would not make enough
2% of minimum wage earners are household heads and only 2.8% of low-wage earners are single parents. If we assume that companies will even out productivity in the long run via the means above, then the largest impact will be on net employment. In many parts of the U.S., companies that employ workers at minimum wage levels are perpetually hiring - they cannot fill positions at these wage levels. The impact
Minimum Wages -- Florida Labor Law This report supports the thesis below. The minimum wage payments in the state of Florida should be upped to the $10 mark because the cost of living has gone up over the years. Ironically, there has only been a 97 cents increase in the wage since 2010. Yet the cost of living has gone up by a much higher margin. The current minimum wage stands
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