7 page Poverty assignment

Rough Draft

Robert Ponton

UAGC

GEN 499

5/30/2022

Introduction:

The debate over whether or not to raise the national minimum wage is more than just a matter of dollars and cents. Individuals are classed according to their wealth, which is a worldwide social problem.

There is a wide range of experiences in these classes that have an impact on the world as a whole. There is an ever-widening gap between the rich and the poor, and as a result, society is becoming more and more polarized. Individuals in classrooms put a strain on a diverse society. It is hard to overstate how much attention Occupy Wall Street and its slogan "We are the 99 percent" have garnered in the last two decades. We've created an environment where money is used to determine one's social class. As a result, people have been categorized as middle-class, low-class, or upper-class, which has influenced how they view their own success in life. There is no doubt that money is a powerful force in our modern world. Millennials and Generation Xers seek out more content, goods, and experiences than their predecessors. As a result of the increased supply, there has been an increase in price.

Increasing the world's minimum wage is more than just a financial issue. In the long run, does an increase in the minimum wage cause a decrease in jobs and an increase in prices? This is a topic that is important to both sides of the argument. Minimum wage discussions by politicians personalize the issue by making it personal, eliciting emotional reactions, and making the problem a highly visible worldwide social issue.

Background

Minimum wage was set at $0.25 per hour by the Fair Labor Standards Act, which was signed into law in 1938. In order to protect workers from unfair working conditions, this legislation was passed. When the Supreme Court of the United States ruled in favor of the law in 1946, it became law in the United States.

Every year, the minimum wage has risen steadily until it currently stands at around $11. The nominal rate of exchange is what we have right now. The local minimum wage has also been raised by state officials over the last two decades, with New York and California implementing legislation that will elevate them to the position of pay leader.

Waiver of Penalties

The federal minimum wage must be raised urgently. The current exchange rate is known as the "nominal" rate. Minimum wage in the United States has always been higher than its actual value in terms of the dollar. There has been a call to raise interest rates because of the decline in purchasing power. Over the past 70 years, there has been no rational opposition to raising the rate of interest. However, it's a better idea to ask, "How much more should it increase?" The general consensus is that the best way to judge whether or not rate hikes would lead to job losses is to look at the likelihood of those losses. Another concern is how a rise in the minimum wage affects low-paid workers' pay in comparison to what they would have earned if the minimum wage had not been raised (Hall and Cooper, 2012).

There can be a nonlinear relationship between the impact of a minimum wage hike and a worker's initial take-home pay when using this strategy. It appears that those who receive a small increase in the minimum wage have lower salary growth than those who do not. Employees making less than the new minimum wage as well as those making more will see an increase in their income as a result of a significant increase in the minimum wage (Lopresti, Mumford, 2015). Top earners, whose pay rises regardless of the minimum wage, are the exception.

Arguments against fast food are frequently based on the industry's reputation. Even if they were right, the industry could not support a major increase in minimum wage, but there is no evidence that a $15 pay rate, phased in over four to six years, would reduce employment opportunities for low-paid workers (Howard, 2016). The federal minimum wage is currently $7.25 per hour, but some proposals call for it to be increased to $15. There is no need to reduce the number of employees on the payroll for this to be done. By reducing turnover, increasing sales, and raising prices annually, the fast food industry can withstand pay rises (Pollin, Wicks-Lim, 2016).

There hasn't been a salary increase of this magnitude since 1950, when wages rose by 88 percent, according to the proposed increase in the federal minimum wage. On a national scale, the increase had no appreciable effect on job creation. In order to make the rise even more believable, the boost occurred during the economic cycle's trough in 1950. As a result of lower employee churn, throughput for clients would increase, boosting productivity.

The minimum wage's impact on immigration must also be taken into account. Using an analytical framework, it has been established that immigration is a function of the predicted pay in the destination location. State-by-state variations in projected salaries as a result of the federal minimum wage increases in the United States between 1996 and 2009 are used in the analysis. Endogeneity between immigration and expected salary is addressed by using an instrumental variable method, As long as critics agree that higher rates reduce low-paying employment, a higher minimum wage would have a detrimental effect on low-skilled immigrants.

statistical data

Increasing the federal minimum wage has been shown to have a significant influence on unemployment rates for decades. A research looked at the effect on 101,299 persons of a minimum wage rise ranging from no change to an increase of more than 20%. (Lopresti, Mumford, 2015). In the statistical summary, the sample size was broken down by gender, race, education, age, and family income. A mini-mom income boosted the wages of the middle class the most, according to a new study. The working class is most negatively impacted by a 10% to 30% increase in wages over the minimum wage. Higher-paying workers benefit from increases in the minimum wage.

Between 1970 and 2004, the average salary for the 10th and 30th percentiles was the same. Debunking the idea that wage increase would occur on its own, It may be seen in the fact that low-wage employment has risen from 36.1 percent in 1979 to 61.4 percent now, an increase of 61.4%. A common counterargument is to place the blame on globalization and technology. Education and training in the areas of greatest need is the solution. The increase of low-wage jobs and the growing cost of higher education has made this notion more difficult to execute than one would imagine. Given that student loan defaults are on the rise and earnings for available jobs are stagnating, this is a serious social issue. The method has made it more difficult for people to get to the top of the financial ladder.

Due to the large number of individuals employed by fast-food restaurants, salary raises or job losses might have a considerable impact on national employment levels, resulting in social issues. There would be no reduction in fast-food employment as a consequence of the 107% rise in the minimum wage. Research shows that raising the minimum wage has little effect on employment. In the year 2016 (Pollin, Wicks-Lim). Any increase in costs is matched by an equal increase in the price of a product or service sold. As the price of a product rises, so does the opportunity cost, which lowers demand. If an increase in wages is not sustained by an increase in price elasticity, this will have an effect on demand. The raise in the minimum wage has the largest impact on the middle class, who is the demographic most in need of fast food's offerings.

Immigration rates are influenced by factors such as minimum wage and social programs. Research on Puerto Rico's minimum wage in 1987 was the first to be conducted. Low-skilled workers fled to the US when the minimum wage was increased, according to the data cited in this article (Giulietti, 2014). Lower minimum salaries are more attractive to low-skilled employees. As Cadena (2014) found, this was indeed the case. The wage-immigration relationship can be summarized as follows:

Conclusion

The issue over raising the minimum wage has global implications. Purchase power, employment, and immigration are all affected by the minimum wage. Increasing the federal minimum wage on a broad scale will primarily benefit the middle class. When the price of a product does not exceed the price elasticity of the buyer's purchasing power, a high pay rate boosts the demand for the product. Immigrants with low-skilled jobs are less likely to come to the United States if wages are raised. They'd have to make some adjustments, but with the three changes of matching price increases, decreasing turnover, and increasing sales they'd be able to maintain their workforce.

References

Giulietti, C. (2014). Is the Minimum Wage a Pull Factor for Immigrants? ILR Review, 67(3 Suppl), 649-674. doi:10.1177/00197939140670s308

Hall, D., and D. Cooper (2012). Why increasing the minimum wage at the federal level would be beneficial to working families and beneficial to the economy? Issue Brief No. 341 from the Economic Policy Institute

Howard, D. R. (2016). Reframing the Minimum-Wage Debate. The American Prospect, 27(3), 48-52. Retrieved April 16, 2016, from http://search.proquest.com.proxy- library.ashford.edu/docview/1804562414/fulltextPDF/D31A0D7C3CAB4A12PQ/1? accountid=32521

Lopresti, J. W., & Mumford, K. J. (2015). Who benefits from a minimum wage increase? Kala- mazoo: W.E. Upjohn Institute for Employment Research.

Pollin, R., & Wicks-Lim, J. (2016). A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs. Journal of Economic Issues, 50(3), 716-744. doi:10.1080/00213624.2016.1210382