Matthew King
Liberty University
BUSI 620 – D11, Global Economic Environment
Dr. Obinna Olowu
December 12, 2014
Research Paper – Raising the Minimum Wage
Introduction
Defining Minimum Wage
The minimum wage in the United States is a constant point of contention
for many Americans. Often this issue can be found at the foundation of man y
political arguments. Though it can be politically polarizing, many times the
issue of raising the minimum wage is not viewed the scope of economic
environment, although this is the crux of the argument. Minimum Wage can be
defined as “The minimum amount of compensation an employee must receive for
performing labor. Minimum wages are typically established by contract or
legislation b y the government. As such, it is illegal to pay an employee less than
the minimum wage”[ CITATION Inv14 \l 1033 ] .
After winning the election in 1936 by a landslide, President Franklin D.
Roosevelt signed into law the Fair Labor Standards Act (FLSA). Through this
law the President issued regulations on businesses to ensure the American
worker would always have a minimum amount to earn [ CITATION min09 \l 1033
]. The minimum wage was introduced at twenty–five cents per hour. Since then,
Congress has elected to raise the minimum wage every few years citing the
rising cost of living.
Raising minimum wage rates could affect employees, employers,
consumers, and the economy as a whole. When assessing these effects, it is vital
to recognize the existence of differing and controversial viewpoints. This is an
issue that is not going to go away. Nor will the passion about this issue, from
both sides, ever subside.
Effects on Employees
Proponents of Raising Minimum Wage
When considering an increase to the national minimum wage, one must
consider those individuals of whom the minimum wage was originally designed
for. President Roosevelt originally desired a living wage for all employees
working in the country. Economists tend to be divided on whether a rise in
minimum wage is good for employees or not.
The argument by proponents of raising the minimum wage on the behalf of
the employees is fairly obvious. The belief is that of the original design by
President Roosevelt. As the cost of living rises, employees need a working wage
that reflects the amount of money it takes to survive in the current culture
climate. “A higher minimum wage will lead to a significant boost in incomes for
the worst off in the bottom 30th percent of income, while having no impact on
the median household” [ CITATION Mik14 \l 1033 ].
Opponents of Raising Minimum Wage
The opponents of raising the minimum wage argue that raising the
minimum wage would in fact hurt employees. Certain economists would assert
that if minimum wage was raised it would force employers to make tough human
resourcing decisions. Economics professor Antony Davies points out that “The
minimum wage does not force employers to pay a particular wage to every
worker; it forces employers to pay a particular wage to every worker they
choose to keep”[ CITATION Ant12 \l 1033 ] . If raising the minimum wage did,
in fact, force terminations by employers, one could obviously see how that
would not work out for those employees who are no longer employees.
In this way it is a counter–argument to the proponent’s case that states
raising the minimum wage would have the most benefit for the bottom
percentages of individuals. One must ask the question of why the bottom income
earners are the bottom percentage. If it is because they are a less–qualified
worker then they may the main targets of an employer ’s cost cutting decisions.
“Minimum wage increases do not help the worker at the expense of the
employer; instead they help the most productive workers at the cost of the least
productive workers”[ CITATION Ant12 \l 1033 ] .
