Effects of the National Minimum Wage

Having a national minimum wage sets the smallest required hourly wage. All businesses are required to pay this wage. As of 2009, the minimum wage in the United States is $7.25.

Adjusting Salary

Minimum wages guarantee that people who are employed will make a certain amount of money per hour. It does not necessarily guarantee that workers will make more per year because employers may not be able to hire workers full time.

Small Businesses

Small businesses that are not overly profitable could be hurt because they will not be able to pay a higher wage. This would cause them to go out of business, and jobs would be lost.

Jobs

A minimum wage can discourage companies from locating their businesses in a particular area if there are other locations where the company can get the same production for a cheaper price. For example, if a company can either pay $7 an hour in country A or $3 an hour in country B, based on employment costs alone, the company will locate in country B.

Worker Treatment

While a minimum wage guarantees a higher pay rate than if there were no minimum wage, it also creates a larger pool of workers at the minimum wage, which can cause employers to treat workers with less respect because they are replaceable.

Employment

A higher minimum wage will encourage more workers to enter the workforce because of the increased pay. It will also encourage more people to acquire the skills needed to get a job because the rewards of working are greater.

References

• Battle Over Minimum Wage
• Minimum Wage
• Minimum Wage Pros and Cons

Resources

• New Federal Minimum Wage Increase for 2007, 2008, 2009