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A Minimum Wage Increase Will Stimulate The Economy

1683 words - 7 pages

President Franklin Roosevelt endorsed the federal minimum wage law in 1938 while the Great Depression was at its utmost insolvent position. Because at this point in time the economy was at its lowest, the sole purpose for its enactment was to keep the majority of Americans out of poverty and increase consumer demand. Following the 1960’s, the minimum wage has had a very gradual increase to the point where it is now at a standby. At this moment with a recession occurring, minimum wages have not brought any benefits to those working for such a limited pay. In fact, it has affected an amount of factors rather than actually keeping the overall population out of impoverishment. Although opponents claim a rise in minimum wages will affect employment, an increase is the key to stimulate the economy and will further reduce those stepping in the poverty line, known as the “working poor.” All in all, raising earnings will be advantageous as a whole.
Raising the pay for minimum wage workers will be the proper way to create effective results, yet there exists those who oppose an increase. Neal Asbury, an American entrepreneur, writes “Raising the Minimum Wage Brings Minimum Benefits” to express how a hike in wages will increase unemployment levels. The author introduces a survey done in 1992 regarding economists’ beliefs towards an increase in minimum wage, where 72 percent claim it would hurt unemployment levels (Asbury). According to this claim, more than half of economists argue that if a rise in minimum wage is to occur, unemployment will soar among the country. Businesses will be prone to lay off employees or hire fewer workers because of higher costs and will lead low-skilled workers to be jobless. An increase in pay will leave those laid off without any jobs to support their families. Therefore, this will increase the percentage of individuals suffering from poverty and destroy families.
Although opponents claim higher pay will affect a number of factors, increasing the minimum wage will be ideal to lead economic activity to the right direction. The far most crucial concern for America today is the economy’s downfall and its position at its recession peak. Ralph Nader, a consumer advocate, and the author for “America’s Miserly Minimum Wage Needs an Upgrade” argues how increasing the minimum wage can lead to better off results concerning the market activity. Nader presents two studies to prove how effective the results will be regarding a raise to those paid at the minimum wage rate. The Chicago Federal Reserve study “showed that for every dollar increase in the hourly pay... the result was $2,800 in every consumer spending from that worker’s household” that year in 2011, according to Nader. In other words, a rise in pay will allow an employee to spend a greater amount of money for any needs, which is then put into the economy. The second study by the Economic Policy Institute “indicated that a $10.50 hourly minimum wage . . ....

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