Minimum wage hike on the agenda for federal government

JIMMY JANCARELLI
STAFF WRITER

Many probably will not be surprised when I say this, but there is a crazy layout of government legislation regarding minimum wage that actually allows many employees to be paid much less than minimum wage. In simpler terms, the government laws are confusing and allow for loopholes. This might be old news, but this is actually very important because minimum wage is a hot topic lately and will directly affect the economy.

Without being politically biased, will try to explain two of the main arguments behind whether or not minimum wage should be raised. The first is a simple theory which is related to the supply and demand model. Think of the labor market as the supply of labor and the demand for labor. Without any intervention, the market will come to an equilibrium wage through the interaction of those who need labor and those who want to provide labor. Minimum wage is nothing more than a price floor set by the government; a price floor will artificially set the wage higher than equilibrium. This means that supply for labor will be less than the demand for labor, resulting in excess demand, also known as unemployment. In addition, the higher the minimum wage is compared to the equilibrium wage, the more unemployment increases.

On the other side is a more of a social argument. By definition, minimum wage is the minimum amount of compensation an employee must receive for performing labor. Minimum wage attempts to protect employees from exploitation, allowing them to afford the basic necessities of life. Now take a look at the definition of poverty. It is defined by Merriam- Webster as a state or condition in which a person or community lacks the financial resources and essentials to enjoy a minimum standard of life and well-being that is considered acceptable in society. Now, that would mean that minimum wage would allow for an individual to afford the basic necessities and to not live in poverty. If an individual was to not take one day off and were to work 40-hour weeks the entire year, they would only make $15,080. A person is in poverty when his or her income level is less than $12,000. That is only a $3,000 buffer and it is very rare for someone to work every single day for an entire year without a day off.

One last thing to consider would be the real minimum wage, which negates inflation. The real minimum wage has been, on average, lower since the mid-70s, but it has pretty much stayed at a steady level since then. However, if the minimum wage is to be increased to $10.10, that would be a sharp increase in the real minimum wage and the highest by far since 1969. This steep increase in the cost of labor will affect businesses and could ultimately raise the unemployment level. These arguments make minimum wage a very complex issue because everyone has to look at both issues affecting the economy and also society. Maryland has already taken steps toward raising the minimum wage to $10.10, so now everyone will have to see how the rest of the country reacts.

Contact the writer:
jimmy.jancarelli@scranton.edu

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