The debate about the minimum wage bill in the United States has been raging for some time. It had divided the country in the middle with the rich class and employers arguing that raising the federal minimum wage would cause great costs and losses, particularly for the small companies. On the other side of the divide are the common citizens of the country and employees, who have argued that raising the federal minimum wage serves to benefit both the workers and the employers. Considering the facts available, it is only reasonable to raise the federal minimum wage to the suggested $15 because it will raise the living standards for the poor and benefit the employees.
Today in the United States of America, the ranks of the working poor are growing at a very high rate. According to the existing statistics by the National Employment Law Project, the low-paying industries like retail accounted for the 22% of the employment opportunities lost during the Great Recession. However, they have only been able to generate 44% of the employment opportunities added since the Great Recession (Card & Krueger, 2015). It has to be recalled that in 2014, the Congressional Budget Office was able to approximate that a raise of the federal minimum wage from the current $7.25 to $10.10 per hour would uplift 90,000 people from poverty. Therefore, raising the minimum to $15 per hour would have significant effect on the living standards of many poor Americans. It will also be a way of reducing the wealth gap that exists in the United States of America. The development of a country must be characterized by a minimal gap between the rich and the poor (David, Manning & Smith, 2016). If the minimum wage is not increased, this gap is bound to increase significantly.
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It is also vital to understand that the gains from a higher minimum wage go to even those who do not receive it. Businesses and companies have to consider the economic fact that raising the federal minimum wage will put more money in the pockets of households. Therefore, the purchasing power of low-income households will significantly increase (David, Manning & Smith, 2016). This rise in the purchasing power of consumers will increase the sales of businesses and companies in the United States of America. Increased revenue means high profits for the companies. It is not right to argue that raising the federal minimum wage will reduce the profits of companies. Employers also stand to benefit from this move.
The rich class and employers have always asserted that the federal minimum wage is already high in the United States. For instance, Donald Trump stated that the federal minimum wage is already too high to be raised, during the campaign period for the Republican presidential nominations. Such people fail to note that the real minimum wage, after considering inflation, has been falling steadily. If the country were to adjust its minimum wage and consider the inflation in the country, it would be about $10 per hour today (David, Manning & Smith, 2016). For those who argue that the minimum wage of the United States is too high need to consider that of other developed countries. The federal minimum wage is lower than that of other developed nations. Basing on the GDP of the United States, The Economist , suggest that the country’s minimum wage should be $12 per hour currently.
The United States of America has all reasons to raise the minimum wage to $15 per hour. The benefits of the raised minimum wage will go to everybody in the economy. Raising the minimum wage will not kill small businesses because of high recurrent costs on wages as it has been argued. In fact, a raised federal minimum wage will significantly boost the sales and profits of companies.
References
Card, D., & Krueger, A. B. (2015). Myth and measurement: the new economics of the minimum wage . Princeton University Press.
David, H., Manning, A., & Smith, C. L. (2016). The contribution of the minimum wage to US wage inequality over three decades: a reassessment. American Economic Journal: Applied Economics , 8 (1), 58-99.
