Macroeconomics: Should the Minimum Wage Increase?

Topics: Minimum wage, Economics, Macroeconomics Pages: 4 (1355 words) Published: September 17, 2013
Should the Minimum Wage Increase?
Minimum wage is the lowest wage permitted by law or by a special agreement that can be applied for an employee or put simply, the lowest amount of pay that an employee can make. Governments set a minimum wage on businesses in hope for reduced poverty and increases in the standard of living. Minimum wages are beneficial up to a line, when minimum wage is too high, it makes businesses make crucial decisions and must save money by firing workers, reducing output, and increasing prices on products. Over the years, the federal minimum wage has increased and has been beneficial up to the minimum wage increase in July 24, 2009 from $6.55 to $7.25. After the increase, the unemployment rate has soared and businesses fired worker and increased their prices. For this reason, it would be beneficial to the economy if the minimum wage is reduced back to $6.55 because it will decrease the unemployment rate, increase GDP, and help youth and unskilled workers in the job industry.

The Great Depression was a devastating time for the United States with families having no income, there was no economic growth, and the poverty rate was at an all time high. To aid with the matter, President Roosevelt attempted to impose a federal minimum wage but was struck down by the Supreme Court. The Court continued to refuse to have a federal minimum wage over and over again. It was until chose a presidential nominee, and made a platform that supported minimum wages by the party’s presidential nominee, Alf Landon. After this, the Court decided to allow a minimum wage. Over the years, the government has increased the minimum wage from 25 cents in 1938 to $7.25 in 2009. The current debate in Congress now is that President Obama wants to raise the minimum wage to $9.50 which is going to be a bad idea for the economy, decreasing the minimum wage will benefit the economy for reasons that will be stated now.

Human labor is very important to businesses even...

References: 2050., & 2000, u. f. (n.d.). Congressional Budget Office (CBO). Congressional Budget Office (CBO). Retrieved July 24, 2013, from http://www.cbo.gov/
Brownstein, R. (n.d.). A Short History of the Minimum Wage Fight - NationalJournal.com. NationalJournal.com. Retrieved July 24, 2013, from http://www.nationaljournal.com/politics/a-short-history-of-the-minimum-wage-fight-20130214
Macroeconomics, global edition (19 ed., p. 175). (2012). 9. S.l.: Mcgraw Hill Higher Educat.
Shemkus, S. (n.d.). Increasing the Minimum Wage: Pros & Cons - Salary.com. Welcome to Salary.com - Salary.com. Retrieved July 24, 2013, from http://www.salary.com/increasing-the-minimum-wage-pros-cons/
U.S. Bureau of Economic Analysis (BEA). (n.d.). U.S. Bureau of Economic Analysis (BEA). Retrieved July 24, 2013, from http://www.bea.gov/index.htm
U.S. Department of Labor - Wage and Hour Division (WHD) - Minimum Wage. (n.d.). United States Department of Labor. Retrieved July 24, 2013, from http://www.dol.gov/whd/minwage/coverage.htm
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