How Does Minimum Wage Affect People?
The impact of the minimum wage has long been a subject of debate in the United States. Some economists blame the minimum-wage law for increased unemployment rates. However, news reports note that the federal minimum wage is not enough for most people to live on, even though it has gone through several significant increases.
Other People Are Reading
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Benefits
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A "Time" magazine article titled "Could the Courts Outlaw the Minimum Wage?" notes that some politicians question the government's right to set a minimum wage. Yet the United States raised the wage to $7.25 per hour in 2009, and the article indicates that 63 percent of the workers who benefited from the increase were women. Furthermore, 2.2 million children were among families whose incomes rose at the time. The article also asserts that liberals often support minimum-wage increases because they provide more money to people in need. Conservatives reportedly like them because they make employment more worthwhile.
Theories
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Some critics of minimum-wage hikes claim they place too much of a financial burden on businesses, which ultimately increases unemployment. That's because companies may be reluctant to hire as payroll expenses rise with wage increases. Nonetheless, the "Time" article notes that people who work a 40-hour week on minimum wage only earn about $15,000 per year -- about 70 percent of the U.S. poverty level.
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Effects
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In a post to the New York Times "Economix" blog, University of Chicago economics professor Casey Mulligan notes a correlation between unemployment and a minimum-wage increase. Mulligan says part-time employment in the United States "headed sharply downward" in 2009 when the minimum wage was raised to $7.25 per hour. Mulligan notes significant labor-market problems linked to a U.S. recession and asserts that the minimum-wage law ultimately added more people to the unemployment ranks.
Considerations
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Another economics professor at Rhodes College in Memphis, Tennessee asserts that repealing the minimum-wage law would help create jobs. Professor Art Carden makes that point in an article posted on the Forbes website titled "Scrap the Minimum Wage." Carden says repealing the law would create more employment opportunities for teenagers in particular who need job experience more than they need a high wage. According to Carden, the job experience teens would gain can lead to higher future earnings.
Geography
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Carden also notes that between 2007 and 2009, the U.S. federal minimum wage increased by 41 percent, which he says had a big impact on some states. For example, Tennessee's teen employment dropped by more than 6,300 jobs in that time. Furthermore, Carden says government programs don't stimulate job creation for long periods because they simply redistribute resources, creating more jobs in some sectors at the expense of others.
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References
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