Minimum Wage Good or Bad

Minimum Wage Good or Bad Rachel L. Hathaway Professor Myung Han Economic Problems and Issues – ECO 40500816 March 15, 2009 Whether minimum wage is good or bad, has been an ongoing debate since before 1938 when the government set the first federal minimum wage at $0. 25/hr thanks to the Fair Labor Standards Act. The federal minimum wage is currently at $6. 55/hr with yet another increase to come July 24, 2009 to begin the federal minimum wage up to $7. 25/hr. Minimum wage was ideally set to help the working poor to stay out of poverty. Let’s do the math $6. 5* 2080=$13624 per year. 2008 HHS Poverty Guidelines SOURCE: Federal Register, Vol. 73, No. 15, January 23, 2008, pp. 3971–3972 Well, based on the 2008 poverty guidelines if you are a single person you are considered above the poverty line, however, if you are a head of household say a single parent with a child you now fall below the poverty line. It is easy to see that minimum wage will not cut it to make end s meet and provide for just basic needs for food and shelter and the need for child care that you have to have in order to work for the minimum wage of $6. 55/Hr. A hike in minimum wage is fun to talk about, but, in the end, economically speaking, it isn’t a worthy option. Higher wages mean higher costs, which mean higher prices across the board. With a $10 minimum wage, the ninety-nine-cent value menu at Wendy’s becomes the $1. 99 value menu, and so on, so what’s the point? If $7 an hour isn’t supporting your current lifestyle, then you have other options: a) team up with a friend or family member to help cover living expenses, B) change your lifestyle, or C) use that job as the stepping stone it is meant to be in you quest for better opportunities. Shepard, 2008, page 229-230) Ok so the minimum wage is increasing to $7. 25 in July 2009 that will make the annual income a total of $15,080. Congratulation! Single parents working at minimum wage you are now technically above the poverty line, however, you can almost bet on the cost to purchase everyday items to also go up as well. Economically in a mixed market like o urs in the US this is the normal course of things as costs to produce goods or services go up so will the sales price for the goods or ervices will follow suit to compensate for the increased labor cost, i. e. the $0. 70 raise from $6. 55/Hr to $7. 25/Hr come July. I found that even though we have federal minimum wage-state minimum wages vary widely with â€Å"27 states + DC being above the federal minimum, 12 states being equal to federal minimum wage rates, 6 being less than minimum wage, and 5 states do not have a minimum wage rate at all. â€Å"Note: Where Federal and state law have different minimum wage rates the higher standard applies. †Ã¢â‚¬  (WHD, 2008, consolidated table and p. 1) Why do the states vary so? The cost of living of within each state is so different the main logical reasoning. Some states are proactive with their higher wages by linking their increases to the Consumer Price Index in hopes to keep up with inflation. Others are lower but are held to the federal minimum wage anyway. The attempt to at least keep up with inflation is an honorable one however the output effect of inflation seems to keep the wages on the lagging side. You would expect minimum wage workers to typically be teenagers or young adults working their first jobs trying to gain skills and experience. However, many older adults are also filling those minimum wage jobs as while taking away taking away valuable experience needed to move on to higher paying positions. So how do we make more jobs? In our current state of recession in this country and the jobless rate mounting, we should consider placing a freeze on the minimum wage instead of adding to the unemployment rate with the next increase due in July 2009. By holding wages steady businesses are more likely to hire more laborers instead of letting go of laborers due to increase costs. We need all the help we can get to lower or at least slow the unemployment rate. It is estimated that for every one entry level/minimum wage position opening there are now 5 to 7 applicants. Minimum wage, good or bad, it is not helping those it was intending too. References Ehrenreich, B. (2001). Nickel and Dimed. New York: Owl Books Henry Holt and Company, LLC Messerli, J. (2007, December) A 20-Point Plan for Fixing America. Retrieved March 10, 2009 from http://www. balancedpolitics. org/editorial-point_plan. htm Sharp, A. , Register, P. , and Grimes, P. (2008). ECO 405 Economic Problems and Issues third custom edition. USA: The McGraw-Hill Companies, Inc. Shepard, A. (2008). Scratch Beginnings. Chapel Hill, NC: SB Press The 2008 HHS Poverty G _uidelines, _One Version of the [U. S. ] Federal Poverty Measure. (2009, February). Retrieved March 13, 2009 from http://aspe. hhs. gov/poverty/08poverty. shtml WHD. _ _(2008, December), Minimum Wage Laws in the States – January 1, 2009, Retrieved February 13, 2009, from http://www. dol. gov/esa/minwage/america. htm Wikipedia. (2009, February), Minimum wage in the United States, Retrieved February 13, 2009, from http://en. wikipedia. org/wiki/Minimum_wage_in theUnited_States Minimum Wage Good or Bad Minimum Wage Good or Bad Rachel L. Hathaway Professor Myung Han Economic Problems and Issues – ECO 40500816 March 15, 2009 Whether minimum wage is good or bad, has been an ongoing debate since before 1938 when the government set the first federal minimum wage at $0. 25/hr thanks to the Fair Labor Standards Act. The federal minimum wage is currently at $6. 55/hr with yet another increase to come July 24, 2009 to begin the federal minimum wage up to $7. 25/hr. Minimum wage was ideally set to help the working poor to stay out of poverty. Let’s do the math $6. 5* 2080=$13624 per year. 2008 HHS Poverty Guidelines SOURCE: Federal Register, Vol. 73, No. 15, January 23, 2008, pp. 3971–3972 Well, based on the 2008 poverty guidelines if you are a single person you are considered above the poverty line, however, if you are a head of household say a single parent with a child you now fall below the poverty line. It is easy to see that minimum wage will not cut it to make end s meet and provide for just basic needs for food and shelter and the need for child care that you have to have in order to work for the minimum wage of $6. 55/Hr. A hike in minimum wage is fun to talk about, but, in the end, economically speaking, it isn’t a worthy option. Higher wages mean higher costs, which mean higher prices across the board. With a $10 minimum wage, the ninety-nine-cent value menu at Wendy’s becomes the $1. 99 value menu, and so on, so what’s the point? If $7 an hour isn’t supporting your current lifestyle, then you have other options: a) team up with a friend or family member to help cover living expenses, B) change your lifestyle, or C) use that job as the stepping stone it is meant to be in you quest for better opportunities. Shepard, 2008, page 229-230) Ok so the minimum wage is increasing to $7. 25 in July 2009 that will make the annual income a total of $15,080. Congratulation! Single parents working at minimum wage you are now technically above the poverty line, however, you can almost bet on the cost to purchase everyday items to also go up as well. Economically in a mixed market like o urs in the US this is the normal course of things as costs to produce goods or services go up so will the sales price for the goods or ervices will follow suit to compensate for the increased labor cost, i. e. the $0. 70 raise from $6. 55/Hr to $7. 25/Hr come July. I found that even though we have federal minimum wage-state minimum wages vary widely with â€Å"27 states + DC being above the federal minimum, 12 states being equal to federal minimum wage rates, 6 being less than minimum wage, and 5 states do not have a minimum wage rate at all. â€Å"Note: Where Federal and state law have different minimum wage rates the higher standard applies. †Ã¢â‚¬  (WHD, 2008, consolidated table and p. 1) Why do the states vary so? The cost of living of within each state is so different the main logical reasoning. Some states are proactive with their higher wages by linking their increases to the Consumer Price Index in hopes to keep up with inflation. Others are lower but are held to the federal minimum wage anyway. The attempt to at least keep up with inflation is an honorable one however the output effect of inflation seems to keep the wages on the lagging side. You would expect minimum wage workers to typically be teenagers or young adults working their first jobs trying to gain skills and experience. However, many older adults are also filling those minimum wage jobs as while taking away taking away valuable experience needed to move on to higher paying positions. So how do we make more jobs? In our current state of recession in this country and the jobless rate mounting, we should consider placing a freeze on the minimum wage instead of adding to the unemployment rate with the next increase due in July 2009. By holding wages steady businesses are more likely to hire more laborers instead of letting go of laborers due to increase costs. We need all the help we can get to lower or at least slow the unemployment rate. It is estimated that for every one entry level/minimum wage position opening there are now 5 to 7 applicants. Minimum wage, good or bad, it is not helping those it was intending too. References Ehrenreich, B. (2001). Nickel and Dimed. New York: Owl Books Henry Holt and Company, LLC Messerli, J. (2007, December) A 20-Point Plan for Fixing America. Retrieved March 10, 2009 from http://www. balancedpolitics. org/editorial-point_plan. htm Sharp, A. , Register, P. , and Grimes, P. (2008). ECO 405 Economic Problems and Issues third custom edition. USA: The McGraw-Hill Companies, Inc. Shepard, A. (2008). Scratch Beginnings. Chapel Hill, NC: SB Press The 2008 HHS Poverty G _uidelines, _One Version of the [U. S. ] Federal Poverty Measure. (2009, February). Retrieved March 13, 2009 from http://aspe. hhs. gov/poverty/08poverty. shtml WHD. _ _(2008, December), Minimum Wage Laws in the States – January 1, 2009, Retrieved February 13, 2009, from http://www. dol. gov/esa/minwage/america. htm Wikipedia. (2009, February), Minimum wage in the United States, Retrieved February 13, 2009, from http://en. wikipedia. org/wiki/Minimum_wage_in theUnited_States