MINIMUM WAGES

Minimum wage is defined as the lowest amount that
employers can legally pay their workers per hour of
labor. Most jurisdictions do have laws in place to
enforce a minimum wage. However, there are both
benefits and drawbacks of this type of policy. Many
supporters of minimum wage say that it increases the
standard of living and keeps people out of poverty.
Those who are opposed to it tend to believe that it
increases unemployment and harms the less skilled
workers.
The first minimum wage law was passed in New
Zealand in 1894. Since then, many other nations have
adopted similar policies. In the United States, the
current minimum wage is $7.25. The state of
Washington has chosen to establish a higher minimum
wage of $8.67. These rates are not established
randomly. In fact, they are the result of much research
in the areas of economics, standard of living and
inflation. Labor supply and the effects of rising
unemployment are also considered when establishing
minimum wage.
Minimum wage laws were established and are upheld
with certain goals in mind. Those who support minimum
wage laws usually believe that these goals are being
adequately achieved and that this alone is enough
justification to keep the laws in place. Minimum wage
was initially established to reduce poverty. Establishing
a minimum wage in the United States helped do away
with sweat shops and insures that people are paid
properly for their work. Minimum wage also protects
younger workers and minorities from being paid less
than others to some extent.
Proponents of Minimum Wage
Many do believe that minimum wage laws achieve these
goals. They do ensure that workers on the low end of
the pay scale are not underpaid because of their gender
or race. They also do ensure that workers are given a
fair wage. However, their effect on society as a whole
and on those who are not currently employed is
questionable. Supporters of minimum wage also believe
that a minimum wage stimulates consumption and thus
puts more money into the economy by allowing low
paid workers to spend more. They also believe that it
may increase the work ethic of those who are paid little
and thus benefit employers. It also encourages people
to join the work force, rather than seek other illegal
means of earning money such as selling drugs or
prostitution.
Opponents of Minimum Wage
Some people who are opposed to the idea of minimum
wage believe that it is not accomplishing the goals it
was designed to meet. In several instances,
employment has decreased more than the increase in
wages and thereby overall earnings are still reduced.
Businesses are sometimes forced to hire fewer
employees because they must pay minimum wage.
Thus, fewer people have a job. Studies also show that
very few low-wage workers actually come from families
in poverty. Thus, minimum wage is more often imposed
on the sixteen-year-old worker with his first job than on
people who would otherwise be unemployed.
Other opponents of minimum wage believe that it can
cause price inflation as businesses must raise their
prices to accommodate the higher wages. They also
believe it discourages further education of the poor. The
United States currently has laws in place to ensure a
minimum wage. Whether or not these laws should
remain in place is a matter of debate. There are benefits
and downfalls to minimum wage laws and nothing is
cut and dry.