The issue of minimum wage increase has been one of the most debated in the last few years. Low-paid workers have protested against minimum wages which have not been adjusted for inflation for several years. While low-paid workers argued that meager pay practices put them on the verge of poverty, economists argued that such an increase will result in mass layoffs. Although minimum wage increase to $15 per hour may result in a lower number of vacant positions, it should be raised as it will positively affect the United States economy.
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Low minimum wages cost the United States government billions of dollars. A lot of discussions are centered on the economic impact of the minimum wage increase. While minimum wage increase will, obviously, require businesses to pay their workers more and will require businesses to find new ways to compensate for increased expenditures, the economy, in general, will benefit from such an increase. While increasing the minimum wage is costly for businesses, not increasing the minimum wage is costly for the United States government.
Individuals who earn less than $18,000 a year cannot meet their basic needs and get compensated by the government (Owens par. 1). In spite of the fact that they are employed, current hourly rates are not enough to allow them to buy food, clothing, medications, and other necessary things. It is the government’s responsibility to provide competition for the poorest populations. Such compensation may come in the form of food-purchasing assistance or medical care coverage (Owens par. 4).
The United States government initiated such programs, as the Supplemental Nutrition Assistance Program (SNAP) to provide benefits for families with low income. A family living on the current minimum wage will be eligible for such program (Owens par. 4). Another issue to consider is health care. Low-income individuals cannot afford health coverage, and many of them do not pay for medical services in full. As a result, the United States government is responsible for covering these expenses. Uninsured individuals cost the United States $49 billion each year (Kennedy par. 2). Companies which pay workers less than $15 an hour simply offload their payroll expenses onto the United States government.
Raising minimum wage will reduce poverty with no significant effect on employment. Those against minimum wage increase argue that if such increase takes place, it will result in higher unemployment due to mass layoffs initiated by businesses to compensate for increased costs. The opponents of the increase argue that businesses will have no choice but to employ fewer workers. However, studies suggest that measured employment effects of minimum wage increase are very small due to a variety of factors in play (Schmitt 1). Businesses can cope with increased minimum wage through “improvements in organizational efficiency; reductions in wages of higher earners (“wage compression”); and small price increases” (Schmitt 1).
This fact means that if the minimum wage is increased, businesses will have to choice but to improve its operational performance and reduce wages of their top managers, who, sometimes, earn millions of dollars annually. While minimum wage increase has no employment response, it does help eliminate poverty. Currently, many employers pay low minimum wages simply because they can. If businesses were allowed to pay even less, some might even pay lower wages. As a result of such practice, many families are struggling financially and cannot afford many things due to the high cost of living in the United States. In order to reduce poverty, it is necessary to increase minimum wages to $15 an hour.
Since companies will be required to pay low-wage workers at least $15 an hour, more of these people will be able to afford better food and clothing, and be able to buy pharmaceuticals and offer some kind of medical coverage. By and large, businesses have no interest in keeping low-paid workers above the poverty line. Low-paid workers are typically people who lack the skills required for better jobs or a struggling financially. As such, they have no choice but to work for the minimum wage. It is the government’s responsibility to oversee the relations between the employer and employees, as it is in the government’s best interests to reduce poverty and improve the well-being of its citizens.
The issue of raising minimum wage level is a complex one and requires careful examination. While the necessity of minimum wage increase is not universally accepted, much of the opposition seems to come from business owners who are interested in keeping their profits high. The United States government has to recognize the needs of its citizens and work towards eliminating poverty and improving the quality of life. Minimum wage increase is a step forward in this direction.
Kennedy, Kelly. Up to $49 billion unpaid by uninsured for hospitalizations. 2011.
Owens, Christine. Wal-Mart CAN afford $15 minimum wage. 2016.
Schmitt, John. Why Does the Minimum Wage Have No Discernible Effect on Employment? 2013.