Research Paper on "Negative Effect of Minimum Wage"

Research Paper 5 pages (1323 words) Sources: 6

[EXCERPT] . . . .

Minimum Wage

The Case Against the Minimum Wage

Many people think of the minimum wage in the U.S. As being a central feature of the safety net provided to citizens. According to this conventional wisdom, the minimum wage especially supports low-skilled and under-educated Americans from being taken advantage of in the labor market. It assures a baseline for what employers can legally pay, and thereby props up the economy as a whole. It encourages skill development and creates conditions whereby people may gain work experience that will then allow them to obtain a higher-paying job. These arguments are loudly proclaimed from interest groups whenever Congress is considering a hike in the minimum wage. But this conventional wisdom is wrong. Decades of research clearly demonstrate that the existence of a minimum wage does little to help the very people it is intended to protect.

Background & History

The minimum wage was initially created through the Fair Labor Standards Act (FLSA) in 1938. At that time, the minimum wage was set at 0.25/hour. Since then, the rate has been increased more than 20 times to its current rate of $7.25. States are permitted to pass different minimum wage rates that are considered more appropriate for local costs of living. For example, several states have enacted minimum wage laws that set the base pay over $8.00/hour and then tie future changes to inflation rates; Wyoming currently has the lowest minimum wage at $5.15/hour (U.S. Department of Labor). Jobs that include compensation from tips, such as serving in a restaurant, are exempt from the minimum wage. Other exemptions exist for younger workers and temporary employment, but the vast majority of American workers are subject to the FLSA. At the time of its original passage in 1938, the Law was hailed as a tool for the "elimination of labor conditions detrimental to the maintenance of the minimum standards of living necessary for health, efficiency and well being of workers." (FLSA, 1938).

The Argument

If the FLSA and its subsequent rate increases were indeed providing protection for the working class, we might expect to see decreased poverty rates and increased standards of living for those who are paid at the bottom of the employment ladder. That has not been the case. In order to fully explore the impacts the minimum wage has had on those who receive it, it is important first to define who the recipients of minimum wage are. In 1998, 17% of all workers were paid minimum wage. Of those, 27% were teenagers, and 62% were women (Turner, 1999). The majority of minimum wage earners were working part-time, defined as less than 20 hours/week (Turner, 1999). Of all minimum wage workers, only 15% are living at or below the poverty line (Kersey, 2004). From this evidence it is safe to conclude that the minimum wage has the greatest impact on youth and women, that most of those people are working only part-time, and that most exceed the federally-defined lowest income category.

The bulk of the research on minimum wage has focused on the economic and social effects of raising the rate; for example, researchers want to know if raising the wage floor will lead to decreased job availability, increased unemployment, or changes in worker's skills. Scholars and economists have conflicting answers to those questions. Some will argue that reducing the minimum wage will actually increase employment opportunities, but others present evidence to the contrary (Krugman, 2009). Results of these and other, similar lines of inquiry have been so often contradictory that one researcher concludes that "little empirical evidence supports either the opponents' or the proponents' hypotheses." (Turner, 1999, p.9). Our interest here is less in the measurable effects of increases to the minimum wage, and more in the overall impact of a minimum wage as federal policy. However, calling upon research that focuses on changes to the minimum wage is revealing because it uncovers patterns. Research since 1938 has overwhelmingly shown that the goals… READ MORE

How to Reference "Negative Effect of Minimum Wage" Research Paper in a Bibliography

Related Research Papers:

Should the Minimum Wage Be Abolished? Essay

Minimum Wage

Is there anything more rewarding that working a 16-hour day, picking up your kids from the corner where they beg for food, doing this for thirty years and… read more

Essay 3 pages (1025 words) Sources: 2 Topic: Career / Labor / Human Resources

---

Minimum Wage Research Proposal

Minimum Wage

History of Minimum Wage

A federal minimum wage was first set in 1938. The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment… read more

Research Proposal 5 pages (1398 words) Sources: 2 Style: MLA Topic: Career / Labor / Human Resources

---

Does the Presence of Minimum Wages Stunt Job Market Recovery? Research Paper

Minimum Wage Stunts Job Market Recovery

The complexity of our economic situation lies in the fate of the United States Government's ability in finding a solution to increase the employment… read more

Research Paper 3 pages (1027 words) Sources: 4 Topic: Career / Labor / Human Resources

---

Compensation Management the Minimum Wage Research Paper

Compensation Management

The minimum wage should not be increased, for several reasons. These include the increased flexibility that a lower minimum wage gives to employers, the economic impacts of lower… read more

Research Paper 22 pages (7301 words) Sources: 30 Topic: Career / Labor / Human Resources

---

Price Floor Essay

Price Floor

The minimum wage was created in 1938 with the enactment of the Fair Labor Standards Act. The hourly wage was initially set at twenty-five cents per hour. Today,… read more

Essay 3 pages (1163 words) Sources: 2 Style: APA Topic: Career / Labor / Human Resources

---

View 100+ more related papers  >>