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Salma Benbrahim
Dr. DeArmas
ENC1101
November 24, 2020
Why the Federal Minimum Wage Should be Raised
The premise of minimum wage has long been debated. It is a known fact that as the
economy expands and inflation occurs, that the minimum wage should also be raised. The Fair
Labor Standard Act of 1938 established and created the right to a minimum wage. Many research
analyses have shown that the rise of the current minimum wage is long overdue. While the
economy booms and harvests, minimum wage workers are forced into deeper and darker holes of
despair, in which they simply cannot keep up due to inflation and other factors. It is often found
that much of these minimum wage jobs are filled by people already in situations of poverty or
are struggling paycheck-to-paycheck in order to provide for their families. In general, the federal
minimum wage should be raised because it will decrease the rate of poverty, If the minimum
wage is raised it will also stimulate the economy, and it will reduce government spending on
welfare programs. This essay will analyze these benefits and provide reasoning as to why the
federal minimum should be raised.
One reason why the minimum wage should be raised is because it will have a longlasting effect on the decrease of poverty rates. Poverty as it is known today is one of the greatest
issues that exists worldwide. While everyone says it is a bad thing, not enough people think
about how we could actually reduce the poverty rate. Today minimum wage workers are some of
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the largest percentages of people in debt as well as group that tends to fall under the poverty line.
One reason to argue for the raising of minimum wage is because it would intentionally and
exponentially decrease the rate of poverty in America, lifting millions of people out of debt and
systemic poverty. In the following research conducted by Neumark and Wascher it is remarked
“As noted, minimum wages are much more likely to raise incomes of poor families if they
redistribute labor earnings toward low-wage workers” (2). When looking at the data and quote
from the source, it is seen how based on the amount that most minimum wage workers make
annually, they are far more likely to fall under the poverty line; however, as a result of minimum
wage hikes, more families are likely to be released out of poverty. Raising the minimum wage
will have an overall benefit and reduce the poverty rate which is the ultimate goal. A large gap
between the wealthy and the poor only further divides our nation. It is understandable that our
nation's leaders would want to aid the bottom percent of our society, so that they have the
resources to provide for their families, which in turn decreases the ongoing poverty for future
generations. Lifting people out of debt and poverty is one of the main goals of raising the
minimum wage because it will further lead to the prosperity and continuation of our American
people, which is why raising the minimum wage is a top priority. While raising the minimum
wage reduces poverty, another aspect of raising the minimum wage are its benefits in stimulating
the economy.
Not only does raising the minimum wage give gain to humane efforts, it also appeals to
the business side of America, in that raising the minimum wage will stimulate the economy and
allow for economic growth in the long run. According to various economic models it is shown
that if the minimum wage is raised, minimum wage workers will be able to afford spending
money other than bills. As a whole this will stimulate the economy and allow a multitude of
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various economic groups to be a part of the commerce process in America. While many think
that raising the minimum wage will cause the economy to crash due to the extra compensation of
minimum wage workers, it will have adverse effects and actually cause a boost in spending in
general. For example, Dreier, a political science professor, states “In fact, many economic
studies show that raising the minimum wage is good for business and the overall economy.
Why? Because when low wage workers have more money to spend, they spend it, almost
entirely in the local community, on basic necessities like housing, food, clothing, and
transportation.” (3). Dreier's assertion only solidifies the fact that when minimum wage workers
make more money, they are more inclined to spend more money into the economy, because they
are no longer surviving off of the bare minimum in order to pay for bills. The economic effects
of raising the minimum wage alone are highly sufficient; however, raising the minimum wage
may also have an overall benefit for the middle class as well.
When looking at the overall benefit of raising the minimum wage, a major selling point is
the reduction of taxes for the middle class as a result of reducing government spending on
monetary aid. There is the benefit of raising the minimum wage, because it can additionally
reduce government spending on welfare programs, as it will reduce the millions of people out of
relying on these programs. In turn, this will allow for lower taxes on the general lower middle
class. In Reich’s and West’s analysis on SNAP enrollments they explain the results of data
conducted as follows: “According to this model, a 10 percent increase in the minimum wage
would result in a 1.9 percent reduction in SNAP expenditures. This result is reassuringly similar
to Dube’s result for poverty reduction” (15). These findings based on various data models
support the idea that with the rise of the minimum wage, less people will be enrolled in SNAP
programs which in turn will reduce government spending. Taxes from middle class families
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generally are used for these purposes so having the reduction of enrollments has lasting benefits
for middle class families as well.
While the benefits of raising outweigh the negatives of raising the minimum wage; there
is a following precedent that is held towards raising the minimum wage, which is its correlation
with employment. Many believe that if the federal minimum wage were to be raised, then
employment will be stalled as a result due to the extra expenses business owners will have to pay
as a result of raising the minimum wage. For example, in the following text, Doucouliagos and
Stanley provide in a journal report that there are negative effects on employment in correlation
with the minimum wage increases. “Column 1 of Table 1 reports FAT for C-K’s original data on
minimum-wage effects. It contains evidence of publication selection (i.e., selection for negative
employment effects of the minimum-wage” (Doucouliagos and Stanley 5).
While one of the cons of raising the minimum wage is a decrease in employment, this
decrease is only slightly temporary and doesn’t show adverse effects on employment in the long
run. Many studies have established that while these effects on employment exist, they are
extremely small and relatively slim. It has many times been refuted that there are any significant
effects on unemployment at all. Schmitt explains the realistically insignificant effects on
unemployment in a journal study on the effects of raising the minimum wage “the weight of that
evidence points to little or no employment response to modest increases in the minimum wage.”
(Schmitt 1).
After analyzing the reasons why, the federal minimum wage should be raised, it is
sufficient to say that there would be great benefits to the change in minimum wage. As
previously stated, due to the way our economy has supported continuous inflation; the minimum
wage should be reflective of such changes.
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Works Cited
Doucouliagos, Hristos, and T. D. Stanley. “Publication Selection Bias in Minimum-Wage
Research? A Meta-Regression Analysis.” British Journal of Industrial Relations, vol. 47,
no. 2, June 2009, pp. 406–428. EBSCOhost, doi:10.1111/j.1467-8543.2009.00723.x.
Dreier, Peter. “The Battle over the Minimum Wage, City by City.” New Labor Forum (Sage
Publications Inc.), vol. 23, no. 3, Sept. 2014, pp. 85–88. EBSCOhost,
doi:10.1177/1095796014542615.
Neumark, David, and William Wascher. "Do Minimum Wages Fight Poverty?" Economic
Inquiry, vol. 40, no. 3, 2002, p. 315+. Gale Academic OneFile,
https://link.gale.com/apps/doc/A89274964/AONE?u=lincclin_vcc&sid=AONE&xid=cd5
d1e30. Accessed 24 Nov. 2020.
Schmitt, John. “Explaining the Small Employment Effects of the Minimum Wage in the United
States.” Industrial Relations, vol. 54, no. 4, Oct. 2015, pp. 547–581. EBSCOhost,
doi:10.1111/irel.12106.
West Rachel, and Reich Michael, "The Effects of Minimum Wages on SNAP Enrollments and
Expenditures," Center for American Progress website, Mar. 2014