Revaluating Minimum Wage Working Class

Introduction

Any Antipoverty Program requires public policies to protect the aged, young, sick, and unfortunate. Low incomes, lack of healthcare, inadequate nutrition, substandard education, and inadequate housing or homelessness require effective public policy measures and adequate public expenditures. As programs for reduction of income inequality, public goods and services are general antipoverty programs most commonly found in the industrialized world (Waltman, 88). On the other hand, poor countries need first to adopt growth policies that are effective in reducing poverty. In the latter case, both macro and micro measures are necessary for an effective fight against poverty.

Worldwide, antipoverty programs focus on both micro- (sectoral) and macropolicies in the fight against poverty (Ryan, 55). Monetary policy should aim at ensuring growth and protect the real value of wages by focusing on inflation, interest rates, and exchange rates. Fiscal policy should focus on allocating adequate funds for the development of human capital and infrastructure, and protection of property rights to encourage private investment. It should also focus on the level of national debt and overall policies that promote both growth and more equal distribution of income for the bottom one-fifth of the income quintile (Kosters, 63).

Discussion

Economists are divided on the impact of a minimum wage on labor markets and the economy. Neoclassical economists oppose establishing minimum wage rates and, by extension, any increases to them. They report that artificially raising wages above the law of supply and demand hurts those it is intended to benefit by increasing unemployment, contributing to inflation, and discouraging business investment and growth (Grossman, 22). The extra labor costs force employers to hire fewer low-skilled employees and/or increase their prices. Some employers offset minimum wage increases by reducing other employee benefits. Minimum wage increases attract middle-class teenagers into the labor market, which creates more competition for low-skilled adults seeking employment (Card, 35).

In response, economists supportive of minimum wage increases report that higher hourly wages have little or no effect on unemployment rates and actually stimulate economic growth by increasing the purchasing power of low-income employees. At the same time, recipients of higher minimum wages reduce their dependence on financial assistance from the government (Waltman, 89).

In the United States, although the poor are persons of all ages, races, religions, and ethnic backgrounds, poverty is more commonly found along the lines of race, gender, and ethnicity. Since the 1930s, many federal and state programs and policies have been adopted to protect these groups. Fifty-three percent of all the federal expenditures go to income security programs. The programs include Social Security, Medicare, veteran and other retirement programs, and unemployment insurance. Temporary Aid to Needy Families, Supplemental Social Insurance, Food Stamp, Medicaid, Head Start, childcare and development funds, housing assistance and special programs for employment incentives are among the antipoverty programs the federal government provides to assist the poor (Ryan, 56).

In the United States, both states and the federal government have the constitutional right to create a minimum wage. An employee is entitled to whichever is higher. In 2005, ...