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Zachary Shann

Professor Moore

English 1301

16 October 2017

An Increase in Minimum Wage in America

During the Great Depression, the minimum wage was introduced by President Franklin

D. Roosevelt at $0.25 an hour. Since then, Congress has raised the minimum 22 times. The last

change occurred in 2009 when it was and has stayed at $7.25. However, roughly 29 of the

individual states in the U.S. have raised their own minimum wage higher than what the federal

government has set. The debate over whether to increase the federal minimum wage in America

has become louder in recent years, regarding the impact it may have on the economy and

everyday life of U.S. citizens.

Although an increase in the federal minimum wage would raise the annual salaries of

low-wage earning workers, it would also lead to a large decline in jobs throughout businesses

branches. There must be a happy medium when it comes to the ratio of salaries to number of

employees. Companies will not be able to afford to pay employees higher wages and keep as

many workers as before the increased pay. According to a report by the nonpartisan

Congressional Budget Office, The Effects of a Minimum-Wage Increase on Employment and

Family Income, which stated two options of raising the minimum wage along with the results of

both. Option one would be to raise the minimum to $10.10 throughout three years. After

reaching the designated price in the third year the new minimum wage will be adjusted for

inflation according to the consumer price index. The result of this option would be the loss of

roughly 500,000 jobs, or in the extreme case a loss of 1.0 million jobs. However, Of those
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workers who will earn up to $10.10 under current law, mostabout 16.5 million, according to

CBOs estimateswould have higher earnings during an average week (The Effects of a

Minimum-Wage Increase on Employment and Family Income). The other option would be to

raise the minimum wage to $9.00 throughout two years. After reaching the set wage, it will not

be adjusted for inflation. As a result, this option would only decrease employment by about

100,000 jobs or in the extreme case, a loss of 200,000 jobs. In this case, Roughly 7.6 million

workers who will earn up to $9.00 per hour under current law would have higher earnings during

an average week (The Effects of a Minimum-Wage Increase on Employment and Family

Income). In either case, employees will have to be laid off, and the amount of jobs lost is directly

related to how high the minimum wage is increased.

In addition to the loss of jobs, an increase in the federal minimum wage would also lead

to an increase in prices and costs. Regardless of whether the price of inflation is considered in the

newly set minimum wage, prices of products, resources, and services would still rise. The cost of

labor for businesses is one of the biggest payouts businesses make every year. If it starts costing

more money to pay low-wage working employees, then businesses must inflate prices of

products to keep a positive trend on their profit margin to pay for labor. According to a study by

Purdue University, Paying fast-food restaurant employees $15 an hour could lead to an

estimated 4.3 percent increase in prices at those businesses (McClure). In this study, the

minimum wage would be almost double what it is now, and $15 an hour is what many low wage-

earning employees are requesting the minimum wage increase to be.

Studies show that most minimum wage-earning workers tend to be teenagers between the

ages of 16 and 19. In theory, if a large percent of the U.S. population is youth between the ages

of 16 and 25 and the minimum wage increases giving this larger percent of U.S. population
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access to more money to spend in the economy, it should stimulate the economy more. The

increased flow of money pouring into the economy will benefit everyone in the U.S. that plays a

role in the working market. Another factor to consider is the federal minimum wage has not kept

up with the continuously rising inflation rate. The lower salary earning citizens trying to live off

minimum wage are unable to do so because the rate of inflation tops that of their annual salary.

To explain it better, lets say the minimum wage-earning citizen is a swimmer pulled out to sea

by the ocean current. In this scenario, the ocean current is the inflation rate. No matter how hard

they fight to swim back to shore the ocean current keeps pulling them right back out to sea, until

the inevitable happens. They get pulled under by debt, loans, car payments, or whatever the case

may be. It is a sad analogy, but it happens to many working-class citizens. Looking at the history

of the inflation rate, every time the minimum wage was increased inflation increased as well. To

fix the rising inflation, the answer lies with the supply and demand factors of the market. A

higher minimum wage will help many people in America, but the question is how long will it

help. In some cases, raising the minimum wage is not always the best choice to fix the problem

at hand.

The federal minimum wage has not been revised since 2009. However, inflation slowly

grows every day. Increasing the minimum wage to adjust for inflation will help many low wage

working employees in America. But looking beyond that, it will also have a larger impact on

businesses that employ these workers. Businesses that cannot afford to pay workers a higher

wage will be forced to lay off employees, reduce hiring, or even close. The answer to fixing the

problem of a minimum wage that is too low for low wage-earning employees to live on lies with

fixing the rate of inflation. Regardless of how high the minimum wage goes, inflation will
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always catch up to it. If the inflation problem is solved first, then the minimum wage problem

will fix itself.

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Works Cited

Alsalam, Nabeel et al. "The Effects of a Minimum-Wage Increase on Employment and Family

Income." 2014. Website. 15 October 2017.

<http://www.cbo.gov/sites/default/files/cbofiles/attachments/44995-

MinimumWage.pdf>.

Giuliano, Laura. "Minimum Wage Effects on Employment, Substitution, and the Teenage Labor

Supply: Evidence from Personnel Data." Journal of Labor Economics, vol. 31, no. 1, Jan.

2013, pp. 155-194. EBSCOhost, search.ebscohost.com/login.aspx?

direct=true&db=bth&AN=84334760&site=ehost-live. Accessed 09 Oct 2017.

Leigh, J. Paul. "Could Raising the Minimum Wage Improve the Public's Health?." American

Journal of Public Health, vol. 106, no. 8, Aug. 2016, pp. 1355-1356. EBSCOhost,

doi:10.2105/AJPH.2016.303288.

"Minimum Wage." ProCon, edited by ProCon.org, 2017. Credo Reference,

http://search.credoreference.com/content/entry/procon/minimum_wage/0. Accessed 09

Oct 2017.

McClure, Greg. $15 an hour wages could nudge fast food prices. 30 July 2015. Website. 15

October 2017. <http://www.futurity.org/fast-food-minimum-wage-

971132/?utm_source=Futurity+Today&utm_campaign=df28773c54-

July_30_20157_30_2015&utm_medium=email&utm_term=0_e34e8ee443-df28773c54-

206348761>.