Minimum Wage Essay

American workers will scram a 1.75$ increase in their hourly pursue by the end of 2015, as President Barack Obama recently c each(prenominal)ed to attire the federal token(prenominal) wage from $7.25 an hour $9.00 an hour. This increase in the minimum wage of American citizen aims to cooperate people with a low annual wage cooks, employees of the janitorial industry and many others working these necessary petty(a) occupations are set to benefit. The white house estimates that this measure will boost the wage of approximately 15 millions low-income workers.Raising the minimum wage, according to the White House press, will have some positive take for low-income families however, many companies are opposed to raising the minimum wage. A high wage will have a direct impact on the cost of business. Some economists argue that higher minimum wage will offspring in an increased unemployment percentage.Although minimum wage laws can fix hourly pay, they can non guarantee jobs. Emp loyers are not willing to pay a worker to a greater extent(prenominal) than the value of the additional growth that he produces. For example, if a worker produces 4$ worth of goods per hour and because of the minimum wage he has to be paid 5.15$. Since he cost more than what he produces it makes it hard for him to find a job.At virtuoso point in the article, the President said that one of the best ways to get the economy freeing again is to put money in the pockets of people who work. (Lowrey)It is true that families with low income will earn more money it is projected that a family that is earning $20,000 to $30,000 a year will see an additional $3,500 in their income. (Lowrey) This cosmopolitan positive outcome of increasing the minimum wage has led many law makers to wrongly light upon that increasing the minimum wage is an effective way to fightpoverty.From the point of view of an economist, raising the minimum wage may increases the probability that a poor family will esc ape poverty through higher engage, but it does increase the probability of another family with average income will become poor as a result of minimum wage giving rise to inflation. It also decreases the proportion of families with income near the poverty line, suggesting that it more will be more difficult to escape poverty. We all know that if the minimum wage increases consequently the cost of living will inevitably increase as well as a result of inflation.Economists are against minimum wage laws because they create a price bag. In this case, a price floor is not the price that products can be sold for, but what price employers can spend on their employees. For non-economists, legislating a minimum wage is commonly seen as an effective way of giving raises to low-wage workers. unluckily it, like any other price floor, creates a surplus. In this case, the surplus is a larger than evaluate number of workers more of are willing to work in minimum-wage jobs than there are employ ers willing to use at that wage.Economists think that there should not be any policies concerning wages an employee should be paid what the employer thinks he/she deserves. Minimum wage increases make unskilled workers more expensive and therefore undesirable relative to all other factors of production. (Mankiw) For example, if skilled workers make 15$/hour and unskilled workers make three dollars an hour, skilled workers are five-spot multiplication as expensive as the unskilled. Imposing a minimum wage of five dollars an hour makes skilled workers relatively more attractive by making them only three times as expensive as unskilled workers.Another important characteristic of the policy to increase minimum wage that was not discussing in the article is that it may also negatively impact workers by changing how they are compensated. Benefits such as paid vacation, free room and board inexpensive insurance and subsidize childcare are an important part of the total compensation for many low wageworkers. (Mankiw) When minimum wages rise, employers can control total compensation costs by cutting benefits such is the case for the join States today.The employer always had to follow the minimum wage in order to pay their employee. The minimum wage should not be existent nowadays the employer should have the choice to pay their employee based on their knowledge. An employee that knows more and produces more should have an higher hourly range.SourcesTextbookMankiw, N. Gregory. Principles of Economics. 6th. Mason, OH, USA 2012. Print.WebsiteLowrey, Annie. Raising Minimum Wage Would Ease Income faulting but Carries Political Risks. New York Times. N.p., 13-02-2013. Web. 5 Oct 2013. .