THE ECONOMIC IMPACT ON AN INCREASE IN MINIMUM WAGE

The Full Economic Impact on an Increase in the Minimum Wage

The Full Economic Impact on an Increase in the Minimum Wage

Introduction

The concept of minimum wage is a complex economic program pitting an employee's benefit of a living wage against an employer's hardship of forced policy. In this critical analysis of the minimum wage, each side presents an argument for or against the program. This examination provides an insight into whether minimum wage serves as a social and economic safety net or a welfare crutch with crippling effects for those affected. (Economic Policy Institute, 2006) The presentation of facts and figures explores wage requirements for employment of adults versus minors, as well as, displacement of workers based on rising wages. An increasing deficit between the minimum wage and the national poverty level will also be covered with a final conclusion of the team's stance on the subject of minimum wage. (Macpherson, 2006)

The United States economy and workforce faces a tough and challenging dilemma dealing with the minimum wage issue. Minimum wage has been, and will continue to be, a topic of discussion amongst America's workforce. Should Congress be held responsible to pass an act raising minimum wage throughout the United States? Should a minimum wage be a state-led initiative? Should minimum wage be abolished and never raised? This paper will answer the questions stated above and critically analyze the pros and cons of the minimum wage structure in the United States. This paper will allow the reader to establish a clear and precise picture of the “pro minimum wage stance”, by providing facts and opinions concerning the economic and social benefits of maintaining and raising minimum wage. This paper will also identify facts and opinions concerning the “con minimum wage stance”, focusing on the negative impact on employers if the minimum wage is increased. (Economic Policy Institute, 2006)

Historical Overview of Minimum Wage

The minimum wage was first enacted in 1938 as part of the Fair Labor Standards Act (FLSA). The 1938 FLSA was generally applicable to employees engaged in interstate commerce or in the production of goods for interstate commerce (U.S. Department of Labor 2006). The initial minimum wage in October 1938 was 25 cents per hour. Over the next 12 years it tripled to 75 cents per hour by January 1950. In 1961 Amendments to the FLSA extended coverage to employees in large retail and service enterprises as well as to local construction, transit services, and gasoline service station employees. The 1966 Amendments of the FLSA extended coverage to State and local government employees of hospitals, nursing homes, and schools, and to laundries, drycleaners, and large hotels, motels, restaurants, and farms. Subsequent amendments extended overage to the remaining Federal, State and local government employees who were not protected in 1966, to certain workers in retail and service trades previously exempted, and to certain domestic workers in private household employment (U.S. Department of Labor 2006). The current federal minimum wage is ...