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The Economic Effects of Raising the Minimum Wage of Low Income Workers

ARTCAR7 1 / -  
Apr 1, 2016   #1
This is a research paper that will run between 8-10 pages (not including the cover and works cited page), will integrate sources from a diverse array of resources using MLA style, will have a clear thesis/research question as the backbone of the paper, will avoid fallacious rhetoric, and will construct logical arguments to advance the ideas in the paper. If there is any help, I am looking for constructive criticism focusing on grammar, use of citations and flow of ideas

The Economic Effects of Raising the Minimum Wage of Low Income Workers
The United States economy is a massive economy and it is home to 320 million people and overall a 16 trillion dollar economy. With such great magnitude of economic size, it is a chaotic system that can easily get out of hand. The average person does not realize or understand the importance of the American Economy. Most importantly the countless benefactors that can alter and completely adjust the system that all Americans work with today. These adjustments can open a whole new door to the U.S. economy, change people life's and or lead the economy to plummet downhill. Low-income class workers have raised their voice and continue to fight for a raise of the standard minimum wage. Several headlines have been accomplished by the media in the world of economics and contributed to the melting pot of thousands of protests and proposals. Such protests that are ignited by countless hardworking people that are living off their weekly check and with no extra earnings left over. Also, the amount of overtime hours and multiple jobs have no effect on their financial standings. Despite all the causes for a raise of the standard minimum wage, our main focus should be on the counter attack on the economy. It is also important to note, any claims and evidence of the economy if such proposal is passed. The Unites States is experiencing a highly controversial topic that is, how does raising the minimum wage for low-income workers affect the economy's employment, growth and whereabouts?

Firstly, mounting data shows that raising the minimum wage for low-income workers will have a positive effect on the employment rate and effect the economy on a national scale. Statistical data illustrates that if the minimum wage is increased there will be more jobs generated and therefore increase the employment rate. In fact, " increasing the national minimum wage from $7.25 to $9.80..., would result in a net increase in economic activity of approximately $25 billion over the phase-in period and over that period would generate approximately 100,000 new jobs" (Cooper and Hall, Poverty2014). Obviously, if there are more jobs created there will be more people earning money. Which leads to more sending on goods and services. Moreover, the leading contribution of more jobs, earnings and spending. Will lead and direct the economy into the correct path to improve itself on positive scale. As mentioned before, it is important to note skeptical claims and true data that can affect the economy. There is evidence that targets low-income works and limits their spending power. Large monopolies like McDonalds and Walmart increases the wage of its workers but then goes and raises the price of goods and services. Thus leading to no effect to the economy whatsoever, it remains the same. Also, skeptics claim that there will be a rise of unemployment. Since companies are already paying more for their employees. Why would they want to hire more staff and pay them a higher wage? It seems logical at first but low income class works are the back bone of our economy. Approximately 58 million low income workers will be affected by higher wages. Fortunately, the amount of low income workers will overcome the limited amount of companies whom do give raises to their employees and settle this skeptical claim.

In addition, now that there are more jobs generated, the rate of unemployment and federal government spending's decreases and thus leads to economic growth. After the last wage increase analysis show, "the economy boomed with extraordinarily high growth, low inflation, low unemployment and declining poverty rates..."(Bernstein and Michelle, Poverty2004). With less people unemployed, the more people are working and earning money. Ultimately, Government spending power will be limited and then utilized on other trades that can lead to healthier economy. For example, on average low income class workers make close to 13,500 dollars annually. If we take into account housing, healthcare, transportation and food. There is no way low income workers can get by and live a healthy financial life. The government then spends money on several services paid by tax payers to aid these people. Now that there is no longer of financial instability. The economy as a whole can slowly progress in a positive fashion. Moreover, if there was a raise in the standard minimum wage, the government will no longer need to offer there subsidies. Thus more money will be going into the economy and low income workers will have financial freedom for once. Once the majority of low-income class are financially free. People can invest into new ideas and generate their own business. The possibilities are limitless and the economy will surely grow and be stronger than ever.

Secondly, if the minimum wage increases, the demographics of minimum-wage workers that is age, state, race and overall families will lead to an economic boost. Data demonstrates that the majority of minimum wage workers are of 20 years of age, variations from state to state and race have a large contribution to an economic boost. In regards to age and state "87.9 percent of workers who would be affected by increasing the federal minimum wage to $9.80 are at least 20 years old. This share varies from a low of 77.1 percent in Massachusetts to 92.4 percent in Florida (and 93.9 percent in the District of Columbia)" (Cooper and Hall, Poverty2014). The data concludes that more than three-fourths of the data collected are 20 years old. If more than three-fourths of the people affected by a raise of minimum wage are 20. How does that affect our economy? Well, are youth are the largest contributors of spending and earnings. Most of them either have families, jobs, and focus most of their energy and time to buy goods and services. Thus, constantly and actively adding to the cash flow cycle. In addition, both minority and non-minority works would benefit from increased wage rates. Data shows "nationally, 56.1 percent of workers who would be affected are non-Hispanic white workers. Nearly a quarter (23.6 percent) are Hispanic, 14.2 percent are black, and 6.1 percent are Asian or of another race or ethnicity" (Cooper and Hall, Poverty2014). Overall, a diverse multitude of American workers would thus have widespread economic benefits. Culturally speaking, each minority group will have different likes and dislikes. They will spend their money in a variety of places, items and services. One way or another, all minority groups as a whole will add and boost the economy in a positive manner.

Furthermore, Low-income families are also influential contributors to the economic growth on national scale. First, we must understand where families earning the standard minimum wage already stand. Data on minimum wage earning families indicates "70.7 percent of affected families have a total family income of less than $60,000, and nearly a quarter (23.6 percent) have total family income of less than $20,000. Among all U.S. families, the median family income in 2010 was $60,395 (according to data from the Current Population Survey)" (Cooper and Hall, Poverty2014). Also, "the share of families affected by increasing the federal minimum wage to $9.80 with family income under $60,000 varies considerably by state, from about half (49.0 percent) in New Hampshire to more than four-fifths (83.1 percent) in Mississippi" (Cooper and Hall, Poverty2014). By interpreting the information provided above. One can infer that families may be struggling financially nationwide. Since 2010, the median family income remained the same and failed to increase. In fact, increasing the federal minimum wage to $9.80 by July 1, 2014, would give an additional $39.7 billion over the phase-in period to directly and indirectly affected workers, who would, in turn, spend those extra earnings. Not only would low-income class families gain spending power they would also gain fair distribution of earnings. For example in "1980, the average CEO at a major corporation made as much as 97 minimum wage workers. In 2000, they made as much as 1,223 minimum wage workers" (Bernstein and Conlin, Working Poor 2007). With that being said there has been and still continues to be this idea and practice of economic inequality. But what will a "fair" or a minute raise to the minimum wage has to offer? In fact after the last raise wage, the economy boomed with high growth, low inflation, low unemployment and declining poverty rates. Overall, the economy will have a helpful effect and the workers will also be well off.

Lastly, the results of an increase to the minimum wage seem to have promise but the economy's whereabouts is pushed to the unknown. As we know, change can either be for the better or the worse, increasing the minimum wage sets the nation's economy in an experimental phase. Since 2009, the Federal minimum wage stood at $7.25 but states individually have made some increase. Recently, New York, California and other states around the nation are putting up a fight for a $15 minimum wage rate. Now that is a vast increase from $7.25 to $15, which can be daunting. Moreover, "the sheer magnitude of the recent minimum wage increases sets up an economics experiment the country has rarely if ever seen before" (Scheiber, 2015). Therefore, since the economy has not been exposed to such a dramatic change. The economy can drive into several unknown paths. Its' direction can be predictable but it is not certain. This potential wage increase can either have a positive, negative or no effect to the economy. Furthermore, "there could be quite large shares of workers affected, and research doesn't have a lot to say about that," said Jared Bernstein, a former White House economist now at the Center on Budget and Policy Priorities who generally favors higher minimum wages. ""We can't assume that because the proposal is out of sample it's going to blow up. But we have to be less certain about the outcome.""(Scheiber, 2015). Overall, the economy's whereabouts are unknown. There is no telling where our economy will be nor where it will stand.

Moreover, not only is the economy in an experimental phase, raising the minimum wage can also alter with political powers and lead to an unstable economy. In July of 2015, "the fight for a $15 minimum wage had gained momentum in New York, California and other places around the country in recent months. But as a national strategy to raise incomes at the bottom of the pay scale, it faces major obstacles, both political and economic" (Scheiber, 2015). Political parties bump heads in these sort of topics and they tend to make the situation worse. For instance, "Congressional Democrats have introduced a proposal to raise the minimum wage to $12 by 2020, but Republicans typically argue that raising the wage floor costs jobs and hurts the very people it is intended to help" (Scheiber, 2015). Moreover, this issue will be a back and forth battle between political parties will fail to resolve the situation. California has settled an agreement to raise their minimum wage to $15 in the year 2022 or 2023. New York is also on the same boat as California but their hopes seem to come sooner around the year 2018 and or 2022. In addition, organized political action can raise the minimum wage however "in any case, they add, the narrow economic logic of the minimum wage misses the broader rationale for their efforts" (Scheiber, 2015). Personal political efforts will outweigh the debate of raising the minimum wage. Which will then lead the economy to unknown presence and or remain the same. Furthermore, President Obama has proposed to raise the federal minimum wage to 12$ and of course targeting low class income workers. But many skeptics claim that there middle class workers will also want a raise and perhaps even the high class. There will be sense of uneasiness between all classes and lead the economy nowhere. Thus, the change of the increased wage rate will less likely happen and lead to an unstable economy

We know the United States economy is vast system with several implications and can be altered with any interface exposed to it. It can be seen as a fragile and or unique system depending on the viewer. One thing is for certain, raising the minimum wage for low-class income workers can bring forth several effects to the economy. A highly controversial topic that has the nation believing, doubting and thinking. These beliefs, doubts and thoughts can have the power to make a difference in the economic world. On a national scale raising the minimum wage can affect the economy's employment, growth and whereabouts. Data illustrates that the nation's employment can either increase or decrease. The nation can potentially see new jobs being generated and higher earnings Furthermore, the economy can have this economic boost both in a positive and even negative way. There will be more consumers spending by taking into account of the demographics of our nation. The economy will be open to widespread economic benefits. The economy can also be pushed into the unknown if there is a raise to the minimum wage. We can look back at the last raise to the minimum wage and speculate where the economy will stand. Ultimately, it is a sets the American economy into an experimental phase. An experiment to test what might happen. Overall, raising the minimum wage can pose as an aid and or a threat to the people whom work with it. The economy can either stay the same or prosper and or crumble to the ground. It is in our human nature to take risks and the economy will soon see its' results in the mere future.

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