Minimum Wage Low Skilled And Young Workers - 1553 Words

Introduction Minimum wage, a program created to help the poor, has every contrary effect to its well intentions. Throughout the history, people who hurt the most during minimum wage hikes are the low-skilled and young workers. Drastically raising minimum wage is meaningless as high inflation usually comes alongside with wage increases. Past economic statistics have shown that the rate of increase in inflation usually outpaced the rate of increase in minimum wage. Thus, the real value wage workers receive worth less than if there had been no minimum wage increase. This paper will employ empirical studies and theoretical analysis to show that minimum wage has exacerbated the problem of unemployment as well as increased income†¦show more content†¦(p. 94) In 1938, significant job losses were caused by the first 25 cents minimum wage increases. With the first federal minimum wage, â€Å"there was a 23 percent decrease in the number of hand-transfer machines, a 69 percent increa se in converted transfer machines, and a 10 percent increase in fully automatic machines.† (Seltzer) This employment effect still holds true nowadays. Indeed, the negative effect of minimum wage is larger in magnitude for unskilled labors than their skilled counterparts because skilled labors are relatively less easy to substitute for technological change. In additions to low-skilled workers, teenagers are the second largest victims of mandated wage. Contrary to â€Å"teens represent 5.2 percent of workers who would only be affected by the proposed $15 New York State minimum wage.† (Reith, p.12), the actual numbers are far higher. According to Economist David Neumark at University of California, Irvine, â€Å"for every 10 percent increase in the minimum wage, employment for high school dropouts and young black adults and teenagers falls by 8.5 percent† (Eastlick). With the 50% increase in minimum wage from $10 to $15 in New York City, there will be a reduction o f 42.5% teen employment as opposed to 5.2% claimed by Reith. Consequently, the massive youth unemployment will not only inhibit teens’ opportunities to gain valuable work experiences, but also causes other social problems which could lead to larger employment gap, high crime rates, andShow MoreRelatedHigher Federal Requirements For The Minimum Wage Essay1741 Words   |  7 Pagesfor higher federal requirements for the minimum wage in the United States, as a means of combatting income inequality, have remained a highly debated topic of discussion over the course of many years in the United States. On one side of this debate you have more progressive economists who believe that if minimum wage is increased the standards of living for many minimum wage employees will be improved, thus spurring economic prosperity for this class of workers and helping to bridge the gap in incomeRead MoreThe Effects of Raising the Minimum Wage on US Economy1507 Words   |  6 Pagesyear, the min imum wage has been increasing from less than a dollar to $7.25 now. The question that comes to everybody is that should we increase the minimum wage by too far. Does the minimum wage increase reduce the unemployment since now the current wage is high enough? Some people might think that we should increase the minimum wage in order to increase the labor supply. However, if we think deeply than this, there are more disadvantages than advantages of increasing the minimum wage. The fartherRead MoreMinimum Wage And Its Effect On The Economy1015 Words   |  5 Pageshigh unemployment rate is the issue of minimum wage. 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It was concludedRead MoreThe Regulation Of Minimum Wage1055 Words   |  5 PagesRegulation of Minimum Wage In today’s society, people face to many serious issues which affect the society both in a positive and negative ways such as increasing the employment rate and increasing the unemployment rate. The increasing of the unemployment rate is caused by some reasons, and one of the problems that causes the high unemployment rate is the issue of the minimum wage. Depending on the states in the U.S., the price of minimum wage is different, but the low minimum wage may cause theRead MoreRaising The Minimum Wage1037 Words   |  5 PagesRaising the minimum wage from $7.25 to $10.10 is not a good idea. The unintended consequences that would come about as a result is reason enough to shy away from such a proposal. Those who support an increase contend that it will alleviate poverty. Suppose these advocates are right and a spike in the minimum wage does reduce poverty for some fortunate workers. 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