2010

Writing Contest: Third Place - Essay (Tie)

Raising Minimum Wage

Margaret Boehnlein, North Ridgeville High School, North Ridgeville, OH (Teacher: Lucky Varouh)

Minimum wage is the lowest hourly wage allowed by federal and state labor laws. With a few exceptions, minimum wage generally applies to unskilled or semi-skilled workers. Minimum wage began in 1938 to protect the unskilled and semi-skilled. Before 1938, employers and supply and demand determined wages (Pollick).

Minimum wage is a good thing, but the problem is that minimum wage is too low. Our current federal minimum wage is $7.25. This is not enough money for anyone to have the incentive to work. Minimum wage was created to help the semi-skilled or unskilled workers, yet these are the same people who make more on welfare than they do if they work. If the minimum wage is not raised, we are continuing the cycle of citizens being dependent on the government's programs (Kobos).

The solution to the problem would be raising the minimum wage by indexing it for inflation. Inflation indexing makes sure that those who are paid minimum wage can pay for the same goods and services they have been using.It provides a long-term solution to the problem of decreasing real wages for minimum wage workers, and inflation indexing should be used at the federal and state levels (Fox).

There are some costs and benefits to raising the minimum wage. The benefits are obvious. Raising minimum wage helps the poorest families, especially single mothers. Yeah while people or families will not be raised out of poverty, it will lift some of the burden they face and boost morale overall. Having a reasonable minimum wage is a step closer to ending poverty. It will help communities, because people will spend the extra money at their local businesses (Haussamen). The cost of raising the minimum wage falls upon businesses. Employers have to budget more money to pay their employees, which cuts into their profit margins. Employees may also have to pay in work hours, because employers may cut some hours to compensate for their increased costs.

There are some unintended consequences of raising the minimum wages, both negative and positive. The main negative effect is that businesses will not hire as many people because labor is more expensive, and that means losing profits. Businesses may also raise prices to compensate for their increased costs. Some teenagers will drop out of school to work, which ultimately hurts their lifetime earnings (Sherk). However, there are more important positive consequences. Teenage employment will not be significantly affected. While some teenagers, who make up 25% of all minimum wage workers, may lose work hours, the pay increase offsets the loss. Countries with a higher minimum wage have not found any adverse effects. Higher minimum wage rates cause more workers to enter the workforce, which means that workers have more choice. Employers also have lower turnover rates, which means increased productivity and reduced cost of recruiting and training employees. Raising the minimum wage will motivate the citizens on welfare to leave the welfare program to work, since they would be able to earn more money. Right now, welfare pays those on welfare more than they could earn in a minimum wage job. There has been evidence that raising the minimum wage lessens the number of people on welfare ("The minimum wage").

Overall, indexing the minimum wage for inflation will ultimately help our country and economy. It will lead us closer to a permanent solution that could end poverty, as well as benefiting the people and families that need it most. People will spend the extra money they earn in their local economy, ultimately stimulating the economy. While there are a few negative effects, there are a lot more positive effects that counteract the negative. These are all reasons why raising the minimum wage by indexing the minimum wage for inflation will solve more than one economic issue.


Bibliography

Fox, Liana."Indexing the minimum wage for inflation." Economic Policy Institute.

21 December 2009

http://www.epi.org/economic_snapshots/entry/

Haussamen, Brock. "The Benefits of Raising the Minimum Wage."The Minimum Wage: Information,

Opinion, Research. October 2009. 21 December 2009 http://www.raiseminwage.org/id24.html

Kobos, Genesis."Minimum wage too low for living." Gonzaga Bulletin. 30 October 2009. 21 December 2009

http://www.gonzagabulletin.com/2.5525/minimum-wage-too-low-for-living-1.850714.

Pollick, Michael."What is Minimum Wage?" WiseGeek. 21 December 2009

http://www.wisegeek.com/what-is-minimum-wage.htm.

Sherk, James. "Raising the Minimum Wage Hurts Vulnerable Workers" Job Prospects Without

Reducing Poverty "The Heritage Foundation. 25 July 2006. 21 December 2009

http://www.heritage.org/research/economy/wm1176.cfm.

"The minimum wage and welfare reform." Economic Policy Institute. 27 September 2009. 21

December 2009

http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_Archive_09272000/).