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EconomicIssuePowerPoint.pptxMinimum Wage
Brandman University
ECNU-202 Spring I 2020
Professor Justice
February 22, 2020
James Grimes
Starleen Hurt
Shelbie Inboden
Kristi Pies
Introduction
What is minimum wage?
Lowest legal wage a company can pay its workers
Current federal minimum wage is $7.25 per hour
States and cities can also have minimum wages
21 states are equal to the federal rate, 29 states are higher
Who has the highest?
Why do we have a minimum wage?
Protect workers from being exploited by employers
It should provide enough income to afford a living wage
Purchase food, clothing and shelter
(Amadeo, 2019)
This Photo by Unknown author is licensed under CC BY-SA.
When did the minimum wage start?
Fair Labor Standards Act of 1938
It was set at $.25 per hour
The most recent amendment was in 2007 with the last increase in 2009
Do other countries have a national minimum wage?
Many counties do have a national minimum wage
Many are higher than the United States even though the United States has a higher cost of living
United Kingdom = $10.30, Ireland = $11.46
Some countries do not have a national minimum wage
Canada, Mexico, China, India
(Amadeo, 2019)
Many Pros and Cons
Some economist believe it should be up to the states (Stolberg & Smialek, 2019)
Cost of living varies in different locations
A few pros of raising the national minimum wage to $15.00
Economic growth
Increased employment
Reduced government spending
A few cons of raising the national minimum wage to $15.00
Inflation
Layoffs
Increased poverty
Pros – Economy and Employment
Employees can cover the cost of living
Better morale among employees
Reduces income inequality
Incentive to work
Job growth
Spurs the economy
(ProCon.org, 2019)
Pros – Economy and Employment
Increased economic activity
More jobs
Reduce poverty
Incomes of those above the minimum will go up as well
Increased productivity
Reduces employee turnover
(ProCon.org, 2019)
Pros - Government
Reduces welfare spending
Reduce snap by 6%
1.7 million off welfare
Income support costs reduce by $7.6 billion
Bring it back up with inflation, to keep up with the cost of living
(ProCon.org, 2019)
Cons - Inflation
Inflation, is the rate a price rises, and essentially how much the dollar is worth at a given moment with regards to purchasing.
If a regular working person makes $10 an hour and the minimum wage drastically changes to $30 it would affect how much everything is priced, whether it's a car, house, food or gas. In the end, $30 can worth $10 when the prices are raised on everything.
High inflation rates tend to cause uncertainty and confusion leading to less investment. It is argued that countries with persistently higher inflation, tend to have lower rates of investment and economic growth.
If inflation gets out of hand, it can create a vicious cycle, where rising inflation, causes higher inflation expectations, which in turn pushes prices even higher. Hyper-inflation can wipe out the savings of the middle-classes and redistribute wealth and income towards those with debt and assets and property.
Cons - Layoffs
Layoffs are usually the result of economic downturns. A company may choose to reduce the size of its workforce to reduce costs until the situation improves. With a raise in our minimum wage, many companies will have to consider layoffs in order to adjust with the new hourly wage rates
This will result in many people not having a job and no financial income
These layoffs are permitted legally by a letter of termination. No matter how long you've worked for a company, they have the right to lay people off if the company doesn’t have a good flow of financial income.
Cons - Increased Poverty
Increasing our minimum wage will also increase the pricing upon everything to buy. This means that it will be harder for people who are already homeless to buy what they already can't buy or for those who are barely financially stable.
For people who are homeless, they're sadly begging all day for money to buy food. With a huge change in a higher minimum wage it will result in homeless people desperately begging more than usual. This will cause them to barely afford less food than before, from what they already don't have.
(exaggerated example)
Imagine you were used to buying your groceries and the next day the exact same items are each raised $5 more. Would you take a minute on deciding what to buy and what you should leave behind?
Our poverty is currently already bad and to make it worse by making it harder to buy items, homelessness will increase.
Conclusion
Conclusion Cont.
Recommendation
References
Amadeo, K. (2019, July 9). Minimum wage with its purpose, pros, cons, and history. the balance. Retrieved from https://www.thebalance.com/us-minimum-wage-what-it-is-history-and-who-must-comply-3306209
Fiorillo, S. (2018, August 29). What is inflation in economics? Definition, causes & examples. TheStreet. Retrieved from https://www.thestreet.com/personal-finance/education/what-is-inflation-14695699
Pettinger, T. (2018, July 17). Pros and cons of inflation. Economics Help. Retrieved from https://www.economicshelp.org/blog/673/inflation/pros-and-cons-of-inflation/
Pros & Cons – PROCON.ORG. (2019, May 9). Should the federal minimum wage be increased? ProCon.org. Retrieved from http://minimum-wage.procon.org/
Stolberg, S. G. & Smialek, J. (2019, July 18). House passes bill to raise minimum wage to $15, a victory for liberals. The New York Times. Retrieved from https://www.nytimes.com/2019/07/18/us/politics/minimum-wage.html?auth=login-email&login=email&searchResultPosition=9
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