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Should the minimum wage change?

There continues to be debates over the impact of raising the federal minimum wage on the economy. The federal minimum wage was introduced in 1938 during the Great Depression under President Franklin D. Roosevelt.  It was initially set at $0.25 per hour and has been increased by Congress 22 times. 

The most recent increase in minimum wage was in 2009 when it increased from $6.55 to $7.25 an hour.  In 2015, prominent members of Congress proposed raising the minimum wage to $15 per hour, more than doubling the federal minimum wage.

Increasing the minimum wage would have two effects on low-wage workers. Most of them would receive a pay increase which would boost their family’s income.  In order to get this pay increase, there would have to be a cut in jobs somewhere in the workforce.  The workers who become jobless would suffer due to the loss of  income.  If the minimum wage is increased, there should also be an increase in the hourly rate of others workers in the work force.

In February 2014, the nonpartisan Congressional Budget Office issued a report, “The Effects of a Minimum-Wage Increase on Employment and Family Income.”  The report demonstrates two scenarios: raising the minimum wage to $10.10 or to $9. The report concludes that there are distinct trade-offs.

Under the $10.10 scenario, there would likely be a reduction of about 500,000 workers across the labor market as businesses cut jobs, but about 16.5 million low-wage workers would see a great increase in their pay in an average week. Under the $9 scenario, the labor force would see a reduction of 100,000 jobs, but an estimated 7.6 million low-wage workers would see a boost in their weekly pay. 

These two scenarios show that if the desired $15 hourly rate is made the new minimum wage, there would be a severe cut in jobs.  This cut would be even greater than the 500,000 jobs lost with the hourly rate of $10.10.  (Information from minimum-wage.procon.org and journalistsresource.org)

by Bethany Morris

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