Introduction
Over the years, the minimum wage issue has been a heavily debated and controversial topic. With the recent decline in global economic performance, many workers earning minimum wage are placed in a position where they struggle to make ends meet (Manning, 2021). This is reflected in the extensive exodus of employees from minimum-wage jobs during the Covid-19 pandemic. A large number of minimum wage workers left employment following the pandemic because their wages were insufficient to survive in the harsh economic conditions. The rise in living cost strengthened the push for an increase in minimum wage across the country. Advocates for the push for minimum wage argue that the current Federal minimum wage of $7.25 per hour is no longer livable and that there is a need to increase the wage to at least $15.35 per hour (Manning, 2021). Proponents of an increase in minimum wage present that the increase would boost the economy, reduce poverty levels across the country and improve the living standards for millions of Americans. This paper presents that increasing the minimum wage is morally justifiable and economically necessary and would have far-reaching positive effects on society.
Lift People out of Poverty
Several studies have indicated that the current minimum wage in the United States is insufficient to lift workers out of poverty. A 2017 report by the Government Accountability Office revealed that 20% of working families that earn the minimum wage of $7.25 are living in poverty, 13% of working families earning an hourly wage of $12 live in poverty, and 5% of working families earning up to $16 per hour live in poverty (U.S. Government Accountability Office, 2020). Based on the findings of the different studies, it is logical that the Federal minimum wage of $7.25 is insufficient to help families escape the York of poverty. Raising the minimum wage would give low-wage workers a much-needed increase in income, allowing them to catter for the basic necessities like food, food, and healthcare. Raising the minimum wage would also provide the workers with the resources they need to invest in themselves and encourage greater social mobility. The workers will be able to invest better in their education and training, which is important as it helps them move up the economic ladder (U.S. Government Accountability Office, 2020). Through the extra income low, wage workers would also be able to effectively finance their children’s college education, providing them with the knowledge and skills required to obtain high-paying jobs. The fact that raising the minimum wage would help to lift workers out of poverty is reflected in a 2020 Congressional Budget Report. The report presents that raising the minimum wage to $15 per hour by 2025 would lift 1.3 million workers out of poverty and increase the income of 17 million workers (U.S. Government Accountability Office, 2020). The report also found that the benefits of raising the minimum wage would outweigh the potential costs, such as higher prices for goods and services. A reduction in poverty levels would serve to boost spending among consumers, which leads to economic growth.
Increase Consumer Spending
Increasing the minimum wage would increase consumer spending, which would help create more jobs and improve economic growth. Several studies support the claim that increasing the minimum wage would boost consumer spending. One such study can be found in a 2020 report by the Economic Policy Institute. The report determined that increasing the federal minimum wage to $15 per hour by 2025 would cause an increase in consumer spending of $120 billion by 2025 (Cooper, 2021). The study also found that the increased spending would positively impact the overall economy, with the creation of 1.3 million jobs and a GDP increase of $92 billion (Cooper, 2021). From the two reports, it is evident that consumer spending is directly proportional to income level. Individuals who earn more have a higher disposable income and, as a result, can spend more (Cooper, 2021). An increasing number of people actively spending within the economy spurs economic growth as more goods and services are created to meet the rising demands. Increasing employee spending power also encourages them to work harder, making them more productive.
Encourage Employees to Work Harder
There is a common misconception that raising the minimum wage will discourage work and increase unemployment. However, research suggests that this is not necessarily the case and that raising the minimum wage can actually encourage work. One study conducted by the University of California, Berkeley found that increasing the minimum wage can lead to increased worker productivity and reduced absenteeism. The study looked at the impact of minimum wage increases on low-wage workers in six states and found that productivity increased by an average of 0.4 percent. At the same time, absenteeism decreased by an average of 0.3 percent. The study’s findings are also supported by a National Bureau of Economic Research study, which found that raising the minimum wage can increase labor force participation rates among low-skilled workers. The study looked at the impact of minimum wage increases on low-skilled workers in states that have raised the minimum wage above the federal level and found that the increases led to a 5 percent increase in labor force participation rates among this group (U.S. Government Accountability Office, 2020). Raising the minimum wage can give low-wage workers a greater incentive to work. Workers may be discouraged from working when wages are low because they do not see a significant benefit (Cengiz et al., 2019). Increasing the minimum wage gives workers a greater incentive to work because they can earn more money.
Additionally, raising the minimum wage can help to reduce the number of workers who rely on public assistance programs, such as food stamps and Medicaid. When workers earn a higher wage, they are less likely to need these programs, which can help to reduce the burden on taxpayers and encourage individuals to work (Cengiz et al., 2019). An increase in work levels leads to increased productivity which enhances economic growth and helps to combat income inequality.
Close the Gap Between Rich and Poor
The economic gap that exists between the wealthy and the poor has been widening in the United States, and increasing the minimum wage is one way to help address this issue. By providing a more livable wage for low-wage workers, an increase in minimum wage would help to reduce income inequality. Income inequality has been a major challenge for the country. The country’s high level of income inequality is reflected by a 2020 report by the Economic Policy Institute which reveals that the top 1% of earners in the United States earned 15 times more than the bottom 90% (Gould & Kandra, 2020). The high level of economic inequality has led to increased poverty as people at the bottom of the income distribution struggle to meet their basic needs, such as food, shelter, and healthcare (Gould & Kandra, 2020). The huge level of economic disparity has also resulted in limited access to basic resources for individuals occupying the lower end of the f spectrum (Cengiz et al., 2019). Raising the minimum wage can reduce income inequality by increasing the earnings of low-wage workers. When the minimum wage is increased, workers who earn the minimum wage or slightly above it will receive a higher hourly rate, which can increase their income. This can help reduce income inequality by closing the gap between low-wage and higher-wage workers. Closing the income gap helps to alleviate the challenge of historical injustices.
Address Historical Injustices
Increasing the minimum wage can be seen as a way to address historical injustices by promoting greater economic equality and improving the financial well-being of low-wage workers. Historical injustices such as discrimination, segregation, and the exploitation of workers have contributed to income inequality and wealth disparities that persist today (Smith, 2015). A study by the Economic Policy Institute found that raising the minimum wage can help to reduce racial and gender disparities in wages, as low-wage workers are more likely to be women and people of color (Smith, 2015). The study also found that raising the minimum wage can reduce income inequality and improve economic mobility for low-wage workers. Raising the minimum wage can help address these injustices by ensuring that all workers are paid a fair wage.
Conclusion
The discussion shows that the current federal minimum wage of $7.25 is not enough to combat poverty in society. The recent economic slowdown is pushing many people into poverty, and the government has to implement solutions to help the citizens escape poverty. One effective solution will be raising the minimum wage. The government will increase consumer spending by raising the minimum wage as workers will have more disposable income. Raising the minimum wage will also help to combat poverty among the poor. Raising the minimum wage will also motivate workers to be more productive and help close the growing gap between the rich and the poor. Lastly, raising the minimum wage will also address s historical injustices that have plagued the country over the years. In summary, it is logical to argue that raising the minimum wage will significantly improve the quality of life in society.
References
Manning, A. (2021). The elusive employment effect of the minimum wage. Journal of Economic Perspectives, 35(1), 3-26.
Cengiz, D., Dube, A., Lindner, A., & Zipperer, B. (2019). The effect of minimum wages on low-wage jobs. The Quarterly Journal of Economics, 134(3), 1405-1454.
Smith, L. (2015). Reforming the minimum wage: Toward a psychological perspective. American Psychologist, 70(6), 557.
U.S. Government Accountability Office. (2020). Low-wage workers: Poverty and use of selected federal social safety net programs persist among working families. Low-Wage Workers: Poverty and Use of Selected Federal Social Safety Net Programs Persist among Working Families | U.S. GAO. Retrieved March 13, 2023, from https://www.gao.gov/products/gao-17-677
Cooper, D. (2021). Raising the federal minimum wage to $15 by 2025 would lift the pay of 32 million workers: A demographic breakdown of affected workers and the impact on poverty, wages, and inequality. Economic Policy Institute. Retrieved March 13, 2023, from https://www.epi.org/publication/raising-the-federal-minimum-wage-to-15-by-2025-would-lift-the-pay-of-32-million-workers/
Gould , E., & Kandra, J. (2020). Inequality in annual earnings worsens in 2021: Top 1% of earners get a larger share of the earnings pie while the bottom 90% lose ground. Economic Policy Institute. Retrieved March 13, 2023, from https://www.epi.org/publication/inequality-2021-ssa-data/
write