Minimum Wage Does Not Impact The Poverty Rate - 600 Words

Minimum Wage Does Not Impact The Poverty Rate The Working Poor Gain Little Other than Protection In the 1930’s, during his second term as president, Franklin Roosevelt fought for and constructed many versions of legislation to end the exploitation of women and children. Finally on October 24, 1938 the Fair Labor Standards Act became effective. The Act limited the hired workers to be no less than sixteen, the work week to no more than forty hours and the minimum wage to be twenty-five cents an hour (Grossman, 1978). Proponents claimed the legislation was the start to socialism and that this would allow the government to control private businesses. Amazingly, the same arguments are reiterated today with the 2014 proposed increase.†¦show more content†¦However, the minimum wage hikes are sold to the low-skilled workers, the studies show the hikes can equate to job loss or hours substantially reduced. Further, compounding income disparity or causing income losses and increased poverty. The net loss, the families of the low-skilled worker are not better off and in many cases, such as single mothers, worse off. (Sabia Burkhauser, 2010 p 5) Providing a slightly more positive view but statistically insignificant, some low-skilled workers who remain employed tend to move toward the high side of the poverty level but not out (Neumark Wascher, 2002). Reduced Jobs In economic times similar to what the U.S. has experienced from 2007 to 2014 the challenge of dropping a twenty-five plus percent minimum wage increase is detrimental to small business profitability. In 2012 addition of Business Week the article titled, â€Å"Why a minimum wage increase divides small business† author Karen Klien stated â€Å"When you are faced with 10 employees in a low-profit business you put your money into increasing wages of you best employees and hiring is suppressed. Further, the article goes on to say the fact of retaining the best employees is the focus, thereby reducing part-time employee’s hours to meet the minimum wage requirements (2012). The reduction of hours for part-time further strains the working poor and thus the minimum wage has a limited if any impact on the reduction of poverty. Options The minimum wageShow MoreRelatedThe Economic Impact of Raising the Minimum Wage1474 Words   |  6 Pageswith it a national minimum wage. Echoes of that speech are still heard today. Senator Edward Kennedy (1989: S14707), in his criticism of the most recent increases in the minimum wage, declared: The minimum wage was, as it should be, a living wage, for working men and women ... who are attempting to provide for their families, feed and clothe their children, heat their homes, [and] pay their mortgages. The cost-of-living inflation adjustment since 1981 would put the minimum wage at $4.79 today, insteadRead More Min Wage Essay1461 Words   |  6 Pages Should Minimum wage be increased? Introduction For many decades now, there has been heated debates concerning minimum wages and increases in those wages. Most people have a tendency to assume that when the minimum wage is increased people will benefit. They do not stop to think of the consequences that come from minimum wage increases. The general population merely assumes that people should make an adequate amount of income and never stop to consider the consequences, nor do they stop to considerRead MoreThe Benefits of Raising the Federal Minimum Wage1334 Words   |  6 Pagesat a minimum wage paying job, you struggle to put food on the table to feed your family, and then you receive a call from the bank saying that your home is being foreclosed. This is the situation faced by thousands of Americans every year due to low income and wealth inequality. The federal minimum wage (FMW) as of April 2014 is $7.25, which is not enough to keep a family of two above the poverty line. There are certain questions on this topic that should be addressed, such as why is poverty and wealthRead MoreThe Effects Of Raising The Minimum Wage1311 Words   |  6 PagesThe Negative Impacts of Raising the Minimum Wage While the debate over the effects of raising the minimum wage continues, there are countless studies and statistical data to support both sides of this controversy. Often the negative impacts of these wage increases are overshadowed by those who want to help the working class who live at or below the poverty level. Do these increases actually help the ones that they were intended to help? 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The first minimum wage was $0.25Read MoreMinimum Wage971 Words   |  4 PagesThe concept of minimum wage is to ensure that employers do not pay wages below the mandated level. However this does not always happen instead this policy en ds up hurting these workers and the economy in terms of lower job opportunities. This is because the increase of labor costs keeping all other things constant would eat into the net profits of the company. Therefore in order to offset the decrease in profits, the need for low skilled labor decreases and companies look for higher productivityRead MoreThe Federal Reserve s Goal Essay897 Words   |  4 Pagesnational inflation rate at 2 percent. This change is seen when buying groceries. The price of milk goes from $2 to $2.04. This can prove costly when the 2 percent is added over time. So, why is inflation out pacing minimum wage? The answer, because it will do harm to employees and business owners. Supporters of an increase in minimum wage, the McDonalds employees that demand $15 per hour, argue that they need a â€Å"living pay†. They state that it will bring workers out of poverty and will have littleRead MoreSunday, July 24, 2016, Marks Seven Years Since The Last1539 Words   |  7 Pagesfederal minimum wage was raised (U.S. Department of Labor). Since raised, the cost of living has increased by nearly 12 percent. When President Obama called for an increase in 2013 19 states, have raised their minimum wage between $8.15 and $11.00. But is the hike beneficial to everyone? According to conventional economic analysis, increasing the minimum wage reduces employment in two ways. First, higher wages increase the cost to employers of producing goods and services. Second, a minimum wage increase