Minimum Wage Unanswered Questions PDF

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Pompa 1 Professor Kachadorian English 10 TTH 9:30 am 17 November 2016 Minimum Wage Unanswered Question Many Americans working level entry positions are facing financial challenges due to the meager earnings of the federal minimum wage, and one way to solve this issue presented by the government is the raise of the federal minimum wage. The minimum wage can benefit people if increased, but with the risk of inflation, makes it harder for Americans to pay for everyday needs. A political issue which is being addressed currently and in the process of being passed soon. The raise on minimum wage has benefits to those working entry-level positions however there is still in consideration those who do not function at a minimum wage rate. With the evidence researched more negative outcomes than positive can happen however if the minimum wage increase to fifteen dollars and inflation did not occur it can benefit businesses and the economy so that the minimum wage will increase for the benefit of the people of the United States. So the question stands does raising the minimum wage help or hurt the individuals in the United States? One issue Americans face is the minimum wage increase becoming a familiar cycle. In 2009 the United States minimum wage was $7.25 per hour and was raised in 2014 to $10 an hour. Every few years the minimum wage is being raised, and the prices of goods start becoming too expensive to purchase. Usually, since the value of an American dollar begins to decrease, and there is not enough money to match the economy. So the need for a high paying job is a higher demand. According to the U.S. Department of Labor in 1968, a full-time employee minimum wage worker could support a family of three. Today that family would be way below the poverty level at $14,500 a year. There are many controversies on the minimum wage increase

Pompa 2 whether it is a helpful or hurtful to the economy and the people. Minimum wage is the lowest pay permitted by law. Wage means the price of labor and if the minimum wage increases so does the price of labor. People are arguing that minimum wage currently is not enough to afford to live. People are expected to live off of minimum wage and in many cases support their families. States to name a few Arizona, Maine, and Colorado has passed the raise of their minimum wage. There are many states still in the process of trying to pass the law by 2020. Everything is being voted by the people and is still currently talked about between political candidates. Also, President Obama called for a minimum wage increase in 2013. There was a bill introduced by Representative George Miller to raise the minimum wage to $10.10 an hour. There have been debates between the Presidential Candidate Donald Trump and Hillary Clinton. Both candidates have different views on the minimum wage increase. Candidate Trump states, “ Taxes too high wages too high we are not going to compete against the world I hate to say it, but we have to leave it at the way it is people have to go out and work hard.” Trump isn’t supporting the minimum wage however Clinton on the other hand is. She argues, “The minimum wage at the national level is seven dollars and twenty-five cents, we want to raise it higher than it ever has been, but we also have to recognize some cities and states will go high, and I support that. We will set a national level at twelve dollars. 35 million people will get a raise, and one in four mothers will get a raise.” Currently, many favor the rise and many states have signed to increase in a few years. For the minimum wage to increase businesses will also need to raise prices to keep up with providing pay for labor is something people are currently worried. Reduces profits for business leading to lay off more workers to keep up with workers’ pay. People are afraid jobs will be lost if the wage is increased. In the Huffington Post, an online article, “Raising the

Pompa 3 Minimum Wage Boosts Growth and Does Not Cause Unemployment” written by Aaron Pacitti, a professor at Siena College he argues for the increase and talks about the benefits that can come from it. He states, “Raising the minimum wage, critics argue, will create more unemployment and more reliance on public assistance. But there is no evidence to support this claim: states with a minimum wage higher than the Federal minimum have experienced faster rates of job growth than other states” (Pacitti). This is a proven since states like California and New York City have higher wages the real federal minimum wage. The raise of minimum wage can have many effects on the economy one being inflation. Inflation is the increase in prices of the general goods sold. Inflation is usually seen as a bad thing since prices start going up and items start becoming too expensive to purchase. There is an argument against the negative inflation since consumers are receiving more pay with their extra earnings they will be able to spend on other purchases. There are two types of inflation which are known as cost-pull. This type of inflation is seen as a good thing since it is a demand for goods and services than there is to provide. So, consumers are willing to pay and can afford to purchase items. In result of growing the economy. Economists are concerned about the business industries the most since that is what provides jobs for the people in the United States. In an online article, “Business economists not worried about minimum wage hikes, with one huge exception” published on the Washington Examiner called, summarizes what economist believe raising the minimum wage will do for the United States. The most affected would be the service industries. In the article Joseph Lawler states, “Nearly one in three in the service sector, however, responded that a higher minimum wage would hurt their business, either by forcing them to reduce hiring or by reducing profits” (Lawler). A tough decision a business industry had to make and the more common choice would

Pompa 4 be reducing hiring than profits. The issue was presented to companies, and economist believe this will have a toll on job loss. However, one misconception is minimum wage increases jobs. Minimum wage does not guarantee jobs. Minimum wage guarantees those who have jobs will be paid the new minimum wage increase. There is a video explanation presented by David Henderson, an editor of The Concise Encyclopedia of Economics, and he states, “When the minimum wage rises, employers will adjust. They will use less labor. They’ll fire current employees or cut back on their hours. They will also raise prices for their goods or services. Businesses will hire fewer workers, especially those with little or no work experience” (Henderson). The worry of all economist being either minimum wage is raised, and businesses will cut back on their employees. It leads to unemployment and inflation since employers will have to adjust to the cost of labor, therefore, taking action to meet the requirements of the law. There have been many speculations that if the minimum wage were to raise that increase will only apply to those working in fast food restaurants. Many strikes were consisting of workers at big fast food corporations such as McDonald's. Most strikes were in the major cities and one of the largest protest on minimum wage yet. In the New York Times, the journal page called, “A $15 Minimum Wage. But Why Just for Fast-Food Workers?” Josh Barro states some insight on wage debate. Barro says, “It’s that the raise would apply only to fast-food workers, and only if they work for a chain with at least 30 locations. A wage increase applicable to such a narrow segment of the economy is bound to have unintended consequences.” There is still yet to see what results are raising the minimum wage to just a small group of people, but it is one view given on the issue of minimum wage. However, the following question arises, “If the minimum wage increase happens what happens to those who don’t work on minimum wage?” There has been some concern about what

Pompa 5 would happen to those not working entry level jobs and getting a higher pay. Does that mean those who have a higher paying job get a raise? Or do they have to have the same pay as those who have entry level positions? Well, in an online article, “Will recent pay increases for minimum wage workers affect those in higher earning bracket” written by Mykkah Herner he addresses the complexity of the raise of minimum wage for other employees working above entry level positions. He explains that their minimum wage can stay the same if there is no demand for an increase and also depending on the business. He expresses the complexity by saying there are “Four Cs” which is Complexity, Compression, Cuts, and Communication. He states the complex nature of the issues lies with the employer since the wage is going to move at a higher amount. So employees who’ve worked in a company for years will demand a higher pay if minimum wage increased. Now one big issue is budgeting, Henry states, “It’s a matter of getting creative with pay grade structures to accommodate both the need to pay fairly and legally as well as to differentiate jobs that are now getting paid more and more similarly.” There needs to be a level in paying workers fairly and legally. So workers who are working at higher positions are likely to get a small raise if it lies within the business's budget and the demand of the position of the job. The issue at hand is minimum wage expresses the concern many American have as not having enough money to afford everyday needs. Many make the argument on the people working lower level jobs stating that those jobs were never meant to make a living and everyone is entitled to go to college. College is not affordable to people, so there is an alternative which is going straight to the workforce. For those having no choice but to go to the workforce still have to make a living wage to support themselves. There is a concern on the motives high school students might drop one main reason being a higher minimum wage may want to make students

Pompa 6 drop out. In the article, “The Effect of Minimum Wage Rates on High School Completion” written by John Robert Warren he has done research on the effects and complexities that come with the raise of the minimum wage on high school students. Warren analyzes the impact the wage has on the high school completion on state high school graduates. Warren states, “ The research reviewed above suggest perhaps only a minority of students who are at risk of dropping out are swayed by labor market conditions. For most students’ decision-making processes, labor market conditions are likely unimportant or at least only important under very specific conditions” (Warren, 1380). There are only a few high school students tempted by the idea of a higher minimum wage and due to their circumstance that may be the only option for them. So, the raise of minimum wage does not have a large number affecting high school students dropouts. There have been many issues about the speculation of job loss due to the minimum wage increase. The United States Department of Labor answered the most question in an online article, “Minimum Wage Mythbusters” and talk about the “myths” and explain some more information on common misconceptions. The Department of Labor makes minimum wage increase viewed as a good thing for the people since it is their job to persuade others to vote on the minimum increase. Some myths explained are, “Increasing the minimum wage will cause people to lose their jobs.” The Department of Labor uses a quote from an economist explaining that there is little to no effect on the employment of minimum-wage workers. The Department of Labor stated, “‘Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.” This statement gives a different view of minimum wage increase since the economy can be improved if people can start spending more.

Pompa 7 There is a lack of mentioning the adverse effects minimum wage can affect the economy. But there is no mention of the actions businesses can take which is higher prices to meet the labor cost. Job loss is a possible outcome since companies are not willing to pay more employment than money that they are receiving. Many small business owners have been addressing the issue on the minimum wage increase and in an online article, “Minimum Wages and the Business Cycle; Does a Wage Hike Hurt in a weak Economy?” by Dr. Joseph Sabia and he talks about research found on small businesses affected by the economy due to minimum wage increases. He finds it difficult as he states on “forcing higher labor cost on low-margin businesses” since he believes they will never recover from the economy. Been talked about among many news outlets on how small businesses view the new minimum wage. Most businesses are not in favor in The Washington Post, the article, “Minimum wage debate pits small business owners against small business owners” J.D. Harrison talks about the debate going on between small business owners and their view on the new minimum wage. Harrison states business owners are in favor in raising the minimum wage. However, those who do not state, “Mike Becker, owner of a bookstore in New Mexico, says that he was forced to let several workers go when the federal minimum wage was raised in 2007. He says the change “was crippling” for his small company, and it increases again; he may find himself in the same position, trying to determine which workers to terminate.” The most common reasoning is small businesses can’t afford to pay employees, and the difference with large corporations can easily adjust. Is the raise of the federal minimum wage going to help or hurt people in the United States? With the research conducted minimum wage has some negative possibilities however if raised there is a high possibility of helpfulness to the economy and the people of increasing

Pompa 8 productivity in the economy. Many people can become affected in an excellent way people will come out of the poverty line, and there may be an active economy boost. Everyone in the United States has hit some way whether it is if they are in high school entry level positions, and higher paid workers. There is current action being taken, and by 2020 there will be a new federal wage and whether the awareness of the minimum wage affects helps the people of the United States it is evident. Yes, the raise increase does help those working level entry positions significantly by living above poverty helping those who need the lift such as parents supporting children and I believe that helps one group of people. Those who have a higher paying position should receive greater increase since it is only right to give those who sought an education the right amount of pay for the job. Lastly, high school graduates who might find an easier way of living than pursuing an education. The federal minimum wage increase will pay people the new living wage and more money can be spent to stimulate the economy growth in the result of helping the individuals in the United States.

Annotated Bibliography Barro, Josh. "$15 Wage. Why Fast-Food Workers?" The New York Times. The New York Times, 28 July 2015. Web. 17 Nov. 2016.

Pompa 9 Josh Barro is a journalist who contributes to the Business Insider and comments issues important events in time. Barro has a bachelor’s degree from Harvard University in psychology. He talks about the complexities in raising the minimum wage with just one group of people and there is bound to be some problems while doing that. He says it affects the business industry with paying to much for workers who are mostly part-time. Herner., By Makkah. "Will Recent Pay Increases for Minimum Wage Workers Affect Those in Higher Earning Brackets?" Compensation Today. PayScale, 08 Nov. 2016. Web. 17 Nov. 2016. Mykkah Herner is a Certified Compensation Professional, and he expressed his ideas on what can happen to those who don’t work for minimum wage. He expressed his statements with statistics and informational background and did careful research. Lawler, Joseph. "Business Economists Not Worried about Minimum Wage Hikes, with One Huge Exception." Washington Examiner. The Washington Examiner, 21 Oct. 2016. Web. 17 Nov. 2016. Joseph Lawler is an economics writer and publisher for the Washington Examiner. Lawler shares his concerns about the effects minimum wage can have on service industries. He uses his interview with business owners who share their similar interest in job loss and insufficient funds to hold workers with still being able to maintain profit. Used to make a connection on what owners have to say about the minimum wage increase. Pacitti, Aaron. "Raising the Minimum Wage Boosts Growth and Does Not Cause Unemployment." The Huffington Post. TheHuffingtonPost.com, 27 July 2015. Web. 17 Nov. 2016.

Pompa 10 Aaron Pacitti is a professor of Economics at Siena College. He wrote a piece on the raise for minimum wage, and the reason unemployment is not by the boost of the minimum wage. He shows concern for those who work at a minimum wage however not enough to live a “decent life.” He argues minimum wage has been low for a long whole and we are in a new time, and there are hard living styles now, and the wage does not cut it. He believes it is good for the economy and for businesses to pay their workers fairly. U.S Department of Labor. "Minimum Wage Mythbusters." The United States Department of Labor. United State Department of Labor, 09 Dec. 2015. Web. 17 Nov. 2016. The United States Department of Labor provides fellow citizens with any answers concerning employment. The Department of Labor answered many concerns Americans had with the new wages that might occur and called these questions “myths” they answer the most common ones with a short description of how it will affect people. Warren, John Robert. "The Effect Minimum Wage Rates on High School Completion." Why Do Young People Drop Out of High School? 88.3 (2010): 1379-392. Web. 16 Nov. 2016. John Robert publishes a peer reviewed on the Fresno State research server, and he shares his statistical data on high school dropouts due to minimum wage increase. He talks about the importance the minimum wage can affect such young people to stop pursuing an education and just enter the workforce. He makes a strong claim by supporting his evidence by stating minimum wage is not the primary concern for drop outs....