Minimum Wage Effects

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The minimum wage amount causes an effect on the economy. Can one raise a family in our economy with minimum wage pay? This is a good question considering there has been a recent push to increase minimum wage. An increase in the hourly dollar amount of the minimum wage could negatively affect many of the employees and the economy in the United States. What is minimum wage and what effects does it have on the economy. “Boston University defines minimum wage as, the lowest level of earnings for employees set by government legislation” (Richason). On June 25, 1938, President Roosevelt signed into law the minimum wage as part of the Fair Labor Standards Act of 1938. This new wage affected approximately 20% of the labor force. In the beginning, the…show more content…
The wage increase could hurt small business who rely on paying lower wage to keep costs down. According to data from Mike Patton’s article in Forbes regarding the increase in minimum wage from $7.25 to $15.00 an hour, it could cause an issue on other low paying jobs. Even though these jobs pay slightly more than the existing minimum, these individuals will anticipate an increase to cover their job skills and level of experience. According to Ben Zipperer, “the available economic research on these ripple effects, finding that increases in the minimum wage do raise the wages of those earning above the minimum wage. These ripple effects are critical to reducing wage inequality between those earning low- and middle-class wages” (Zipperer). In addition, it could make it more difficult for disadvantaged adults to find jobs; if employers are expecting more abilities due to a higher minimum…show more content…
As analysis have shown, “for each additional dollar they earn they pay 15 cents in additional payroll taxes, 15 cents in income taxes, an average of 5 cents in state income taxes,” (Sherk) these taxes along with “ losing 21 cents of their EITC benefit and forgoing 24 cents of SNAP benefits – an effective marginal tax rate of 80 percent. Each extra dollar earned increases their net income by only 20 cents” (Sherk). Based on this scenario, in many states the raise would actually financially hurt families. Consequently, by raising the minimum wage substantially, low-income workers could face very high tax rates as well as lose benefits from multiple

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