The Benefits of Increasing the Minimum Wage in the United States

Abstract

This paper is about the benefits of minimum wage increase. The benefits include allow people to afford high priced living standard, reduce the amount of poverty, and would increase economic activity and spur job growth.

Multiple sources were used to reinforce the argument. This paper was written to show the reason of why minimum wage needs to be increased to at least $10.10 in the United States.

Benefits of Minimum Wage Increase

President Franklin D. Roosevelt signed the Fair Labor Standards Act to start of minimum wage in the United States. The minimum wage has been around since the Great Depression originally at twenty-five cents per hour in 1938. It has been increased twenty-two times since the act was introduced (Should, 2016).

The federal minimum wage currently is $7.25 and many people think it should be increased to a living wage. A living wage is a wage needed to maintain the cost of the basic necessities of living. The increased minimum wage would allow people to afford high priced living standard, reduce the amount of poverty, and would increase economic activity and spur job growth. In the United States, the average cost of living is considerably high. The annual living cost for a single adult in the United States ranges from $19,000 to $43,000 and the average annual living cost is $29,000 (Elkins & Gould, 2015). Living cost is broken up into a few categories to make up the expenses, such as: housing, food, healthcare, transportation, taxes, and other dividends. Using the average annual living cost to find the average hourly wage (for the average full time work year of 2080 hours), it comes out to .

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With the needed minimum wage being $6.69 below the actual minimum, that is a problem. This shows the United States needs to increase the minimum wage. The average single American needs a wage increase to keep up with the increasing cost of living. If the minimum wage was increased to $12 per hour, it would benefit a lot of people who are struggling to make ends meet. Many people could argue that only a small part of the work force are making minimum and are only teenagers, but there are still workers making a little above minimum who are not being counted in the “small workforce” making minimum wage (Harris & Kearney, 2014). The minimum increase to $12 “could raise the wages of up to 35 million workers [which] is 29.4 percent of the workforce” (Harris & Kearney, 2014) in the United States. It is important for the US to raise the minimum wage to at least $12 so the average American can afford to live. In 2013, 45 million Americans were below the poverty line which is 14.5 percent of Americans. The poverty line is the minimum amount to needed to have the necessities in life (Income, 2014). The poverty line for single adult is S11,770 in one year. If the government were to increase the minimum wage to $9 per hour, it would raise 300,000 people above the poverty line.

If the minimum wage was raised to $10.10 per hour, it would raise 900,000 people above the poverty line (The effects, 2014). Imagine what the number would be if the minimum wage was increased to $12 per hour. Some people say the minimum would increase the poverty in the United States due to companies cutting hours and jobs on their employees to reduce costs. But the prices of the services and goods would not increase because the minimum wage has not been increasing along with inflation. As goods and services prices are increasing the minimum wage has the stayed the same. Either way the goods and services will increase. The minimum wage just needs to go up with it. A few dollar increase in minimum wage could make the difference to hundreds of thousands of people. Currently the United States has 5.1 percent unemployment rate of people ages 16 years and older which is about 16 million people (Cooper, 2013). The increase of the minimum wage would spur job and economic growth in the United States. The few dollar increase would allow people to have more financial stability to buy more goods and services therefore increasing the economy. There is a myth that “small business owners can’t afford to pay their workers more, and therefore does not support an increase in the minimum wage” (Minimum).

Three of five small business owners support the increase of the minimum wage to S12 per hour. Most owners said “would immediately put more money in the pocket of low-wage workers who will then spend the money on things like housing, food, and gas. This boost in demand for goods and services will help stimulate the economy and help create opportunities” (Minimum). The increases would also cause more jobs due to people having more incentive to have a job and keep the job. The increase of the minimum wage will be helpful overall to the economy and job growth. The minimum wage needs be increased in order to allow people to afford high priced living standard, reduce the amount of poverty, and would increase economic activity and spur job growth.