Introduction
The minimum wage is the lowest remuneration that employers are required to legally pay their employees. It is the equivalence of the price floor below which employers are not required to sell their labor. The federal minimum wage was first introduced in the late 1030s during the Great Depression under the leadership of Roosevelt. The initial minimum wage was set at $o.25, where it has been growing with the increasing economic factors such as inflation, global economic situations and the standards of living. Proponents of higher minimum wage have argued against the current $7.25 per hour minimum wage as being too low for the survival of the US citizens 1 . They argue that higher minimum wage will help in addressing constraints such as the growth of the economy, while it will address the inequality between the low and middle-income earners. This paper will show that from a macroeconomic point of view, increasing the minimum wage has a positive impact on the economy as compared to the constraints it poses.
Authors’ Perspectives on Raising Minimum Wage
Proponents of raising the minimum wage are of the view that such legislation would not only increase the economic activity but also spur job growth. The Economic Policy Institute found out that if the wage is increased from the current $7.25 per hour to $10.10, then this would inject $22.1 billion net into the economy, where this will create approximately 85,000 new jobs within a three-year period 2 . Other proponents of the increase in the minimum wage are the economists from the Chicago Federal Reserve Bank, who made predictions about the possibility of increasing the minimum wage by $1.75 and its overall impact on the economy. The economists predicted that such a move would increase the aggregate household spending by $48 billion within the first financial year, which would boost the Gross Domestic Product (GDP) and stimulate job growth.
Delegate your assignment to our experts and they will do the rest.
It is also found out that increasing the minimum wage would reduce the levels of poverty. In this case, a person who works full-time at the federal minimum wage of $7.25 per hour fetches approximately $15,000 in a year 3 . This amount is considered to be higher than the 2015 federal poverty level that was set at $12,330 for a single-person household, even though it is 8%below the federal poverty level for a single-parent family, which was set at $16,337 in 2015. The 2014 Congressional Budget Office report shows that increasing the minimum wage by 24.13% to say $9 per hour would lift more than 300,000 people from poverty while increasing the current minimum wage by 6% would raise 900,000 people from poverty 4 . Raising the minimum wage would also reduce the government spending on welfare, which would improve the levels of inequality among most citizens.
Evidence that the Authors Use
The authors and proponents of increasing the minimum wage use evidence from the government reports and statistics from research findings. The authors utilize government agencies such as The Center for American Progress, with its 2014 reports that found out that raising the minimum federal wage by 6% would reduce the spending on supplemental nutrition by $4.6 billion. The authors also utilize other reports such as the Congressional Budget Office Reports which were used to prove that a 24.13% increase in the current minimum wage would be equivalent to uplifting 300,000 from poverty 5 . The authors have also used reports from reputable agencies such as The Economic Policy Institute, which found out that an increase in the minimum wage by 6% would mean that more than 1.7 million more US citizens would no longer depend on the income support programs set by the government. The other evidence comes from documented studies, where the authors use the study by the Center for Economic and Policy Research (CEPR), which found out that the current federal minimum wage would have been more than $21 per hour if it would have kept the pace with the increase in productivity since 2012. They also use the studies from the Institute for Policy Studies, which estimated that by 2012, the personal income had grown by 100% since 1968 even though the minimum wage had stagnated.
Qualification of the Authors and Evaluation of the Articles
The information presented by the authors is reliable since it is dependent on the research evidence obtained from reputable sources. For instance, most of the information is obtained from the government agency reports and studies of authorized research bodies. However, the researchers are biased in terms of showing only the pros of increasing the minimum wage, while they ignore the findings on the viable negative outcomes of the move. They show that there might be negative outcomes even though they dwell mostly on the evidence that proves that there are positive outcomes when the minimum wage is increased. In the evaluation of the articles, the GDP, Unemployment, and inflation are the microeconomic theories that can be used to show the potential effects of raising the minimum wage. In this regard, the authors have effectively shown that increasing the minimum wage would inject more money into the economy with the consequent increase in the gross domestic product 6 . They have also been successful in showing the impact of the microeconomic theory of GDP on other areas of economic performance such as employment and inflation rate.
Bibliography
Drew, Desilver. "Who makes minimum wage?" Frac tank: News in the Numbers , 2014: 1-5.
Employment Policies Institute. "What’s Best At Reducing Poverty? An Examination of the Effectiveness of the 2007 Minimum Wage Increase." Minimum Wage , 2017: 1-8.
Peters, Jeremy W. "2 Parties Place Political Focus on Inequality." New York Times , 2014: 1-8.
