research paper

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Aliya Wadiwala

Professor Angela Taylor

ENGL 1301-51205

03 December 2020

SHOULD MINIMUM WAGE BE RAISED? remove bold and full caps

In 1938, the American Congress passed the Fair Labor Standards Act that revolutionized

the United States of America's labor policies. The Fair Labor Act ensured that the American

workers covered by the law were entitled to a minimum wage, which was to be calculated per

hour. Once established, the Federal government required the American companies with at least a

minimum revenue turnover of $500,000 to meet the minimum wages per hour for its workers

(Cengiz, et al). The minimum wage also took care of workers in the public sectors such as

hospitals, schools, and government agencies. Over the years since the first minimum wage was set

for American workers, it has continued to raise controversies since the salaries are not updated

according to the rising cost of living. The minimum wage in the United States of America has

always been subjected to discussion on whether to raise it or not. The last time the minimum wage

was reviewed was in 2009, when it was reviewed upwards from $6.55 per hour to $7.25. Is this

part of Cenzig’s documentation? If so, state that. Currently, the United States of America

minimum wage legislation is at $7.25 per hour. Considering the current state of the American

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economy, there is a need to increase the minimum payable wage to save low-income families from

the harsh economy, but economists have a different opinion on raising the minimum wage.

Individuals and entities campaigning for increasing the minimum wage argue that it will

protect the low-income earning families against the harsh economy. Over the last years, the

American economy has been growing steadily, which has made some of the essential needs

expensive. There is currently a housing crisis in the United States of America since low-income

families cannot afford decent housing due to real estate costs. Affording quality education and

medical care for low-income families is always a dream that rarely becomes true because of the

high costs of education and health care. According to Grishina and Kuznetsova, increasing the

minimum will significantly impact the low-income earning families compared to the other

families. The immediate impact is to improve living standards among low-income families because

their purchasing power will increase. Once the purchasing power increases among low-income

families, they will afford better housing, better education, and better medical services. Reducing

poverty levels ensures that the poor can afford housing, healthy food, education, and health. The

American government can achieve this goal by ensuring that companies operating in the United

States of America are coerced to improve employee wages by raising the minimum wage (Grishina

and Kuznetsova).

Raising the minimum wage can enable the United States to achieve economic growth

beyond its current economic growth rate. Increasing liquidity in the economy has a direct

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relationship with increased economic activities. Once the minimum wages are raised, many

Americans will have money to spend since their spending power will increase due to the increased

liquidity. Once most Americans have additional money to spend, it means that the production of

goods and services will increase due to the increased demand. When the demand for goods and

services increases, the American economy will be able to grow upwards. Raising the minimum

wage will also favor the American government since it will collect increased taxes from the

increased incomes, and also the increased economic activities will result in increased Value Added

Tax that is paid to the American government (Cengiz, et al.).

The business environment will also be highly boosted when the government increases the

minimum wages. Once Congress passes the bill to raise the minimum wage and effectively

implemented, the small and big business entities will boom. Any information where Congress

promote the business entities by buying from the business, hence promoting the American firms.

When the minimum wage is increased, the bottom tier business will highly benefit since they are

in environments that are occupied by the low-income earning people.

[Lead with your claim and follow with Kim and Jang] Research done by Kim and Jang on

the effects that an increase in the minimum wages has on the restaurant industry indicated that

productivity increased. One of the best-known methods of motivating the employees is increasing

their pay. The level of motivation determines the productivity of employees that they are given.

Once the minimum wage is increased, employees across the United States will be motivated to

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work harder. A hard-working human resource is essential in improving the quality of goods and

services in the economy. Therefore, raising the minimum wage will motivate the employees to

work hard and improve the quality of goods and services in the market hence likely to fetch higher

prices, especially in the international market (Kim and Jang).

On the other hand, individuals against increasing the minimum wage argue that it will

increase unemployment. According to Phelan, raising the current minimum wage to the proposed

$15 per hour is a bad public policy that will work against the public. Phelan argues that when the

minimum wage is raised, businesses will have to adapt to the changes by changing the cost

management through employee retrenchment. Once Congress passes the bill to raise the minimum

wage, the cost will be shifted to businesses that might be struggling to maintain its workforce with

the current wage limits per hour. Such companies will not be able to survive with the increased

cost of wage, which will force them to retrench some of its employees for the sake of cost

management. In the current American economy, the direct impact will be increased

unemployment. For businesses to make profits, they need to minimize the cost; hence increasing

the minimum wages will force companies to reduce the number of employees. Once the enterprises

retrench employees resulting in increased unemployment, the poverty levels will rise beyond the

current level because households will lose their income (Phelan).

Another argument on why the current minimum wage should not be increased is its impact

on demand and supply forces. Raising the minimum wage improves the spending abilities of low-

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income earners. Increased spending due to high liquidity creates an increased demand for services

and goods within the economy. Once the demand increases, a shortage of supply is created, leading

to scarcity of goods in the market. The scarcity of goods and services in the market leads to

increased prices. If the prices rise, the low-income earners will not be able to afford the new prices,

necessitating another upward review of the minimum wages. Therefore, raising the current

minimum wage is not ideal because it will make situations more complicated and more

problematic than they are now (Mullen).

In conclusion, there is a need to review the minimum wage payable per hour since it has

more advantages to the American workers than disadvantages. Reviewing the minimum wage

upwards will allow the low-income earners to afford essential needs such as suitable housing,

education, food, and medical services. When people can afford needs such as housing, education,

healthy foods, and medical services without the government's intervention, it means that the

poverty levels are decreasing, which is one of the government's goals. Also, increasing the

minimum wage will allow the American economy to grow since economic activities will increase.

The government also benefits from the income taxes earned by the increased salaries and value-

added taxes paid due to the increased economic activities. The opposing side argues that raising

the minimum wages will lead to the increased cost of business operation, forcing the businesses to

retrench employees, hence increasing unemployment. They also argue that when the spending

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ability increases, it will create a scarcity of goods, which will cause an increase in prices. When it

comes to the debate of raising the minimum wage, it essential for Congress to pass a motion of

increasing the minimum wage to protect low-income Americans from the harsh economy.

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Works Cited remove bold

Cengiz, Doruk, et al. "The Effect of Minimum Wages on Low-Wage Jobs: Evidence from the

United States Using a Bunching Estimator." 2019.

Grishina, E.E., and P.O. Kuznetsova. "Minimum Wage as a Tool to Reduce Poverty: Expected

Consequences of the Reform." Journal of the New Economic Association, vol. 40, no. 4, 2018,

pp. 137-156.

Kim, Hong S., and SooCheong Jang. "Minimum wage increase and firm productivity: Evidence

from the restaurant industry." Tourism Management, vol. 71, 2019, pp. 378-388.

Mullen, Tom. "The Best Argument Against Minimum Wage Laws | Tom Mullen." Foundation for

Economic Education, 4 Dec. 2018, fee.org/articles/the-best-argument-against-minimum-wage-

laws-you-dont-own-other-people/.

Phelan, John. "5 Reasons Raising the Minimum Wage Is Bad Public Policy." 25 Mar. 2019,

fee.org/articles/5-reasons-raising-the-minimum-wage-is-bad-public-policy/.

Zipperer, Ben. "Gradually Raising the Minimum Wage to $15 Would Be Good for Workers, Good

for Businesses, and Good for the Economy: Testimony Before the U.S. House of Representatives

Committee on Education and Labor." Economic Policy Institute, 7 Feb. 2019,

www.epi.org/publication/minimum-wage-testimony-feb-2019/.

Is the Zipperer source used?

Add hanging indent to sources.

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