Minimum Wage Debates in the US: Implications for Workers and Employers

In the United States, the federal government sets a minimum wage of $7.25 per hour that applies nationwide, but individual states can choose to set their minimum wage at a higher rate.

However, the ongoing discussions surrounding the minimum wage in the United States have fueled a robust and often contentious debate.  

Some proponents advocate for a higher minimum wage ($15 per hour) to address income inequality and improve the standard of living for low-wage workers, while opponents express concerns about potential adverse effects on businesses and employment.

This article delves into the heart of the minimum wage debates in the US, putting out the arguments put forth by both advocates and critics.

From economic considerations and labor market dynamics to social justice concerns, this analysis will provide you with the nuanced terrain of the minimum wage discussions and their far-reaching effects on the diverse tapestry of workers and businesses across the nation.

Also, if you receive 1.5 times the regular hourly wage for each hour worked beyond 40 hours in a workweek, by calculating time and a half you can see actual earnings when you work overtime.

So, whether you are a worker or an employer, this article will become your pocket guide to the minimum wage debate in the USA.

Raising the Minimum Wage Will Lead to Job Losses and Increase the Prices of Goods and Services

In competitive markets, if the minimum wage is enforced and raises wages above the prevailing levels, certain companies may be reluctant to comply and pay the increased wage, which will lead to job losses.

According to a Congressional Budget Office (CBO) report, 1.4 million jobs will be lost by the year 2025, when the federal minimum wage reaches $15. That would also result in an increase in the federal deficit by $54 billion over the next ten years due to increased spending on federal programs to address rising unemployment.

But Arindrajit Dube, a professor of economics at the University of Massachusetts, found the CBO’s methodology to be incorrect and said that with an increase in the federal minimum wage to $15 per hour, using the CBO report’s evidence, under 500,000 jobs would be lost.

Yet, Daniel Kuehn, a research associate at The Urban Institute, believes that increasing the minimum wage will result in jobs lost and wage hikes will raise the prices of goods and services, but the overall impact will be smaller and bearable.

Increased Minimum Wage Will Improve Workers’ Standard of Living

The minimum wage has not kept pace with increasing inflation, leading to a decline in the purchasing power of workers.

Raising the federal minimum wage to $15, and indexing it to inflation would help in ensuring that the low-wage workers can adopt a standard of living that is commensurate with the current economy.

However, one of the counterarguments that should be considered here is that raising the minimum wage might result in a decrease in employee benefits, with a simultaneous increase in tax payments, which might again threaten their standard of living.

$15 Minimum Wage Will Reduce Income Inequality

A study in 2015 found that a significant factor contributing to high levels of inequality in the United States is the decline in the real value of the minimum wage since the 1980s.

Therefore, a $15 minimum wage is seen by proponents as a means to address income inequality in the US through the following mechanisms:

• Closing the wage gap: By setting a higher baseline for wages, a $15 minimum wage can help reduce the wage gap between low-wage workers and those in higher-income brackets. This can contribute to a more equitable distribution of income across different segments of the workforce.
• Mitigating poverty: A key objective is to lift individuals and families out of poverty by ensuring that full-time workers earn a wage that enables them to cover basic living expenses. This can be particularly impactful in reducing poverty rates among low-wage workers.
• Promoting economic justice: Implementing a higher minimum wage is viewed as a measure of economic justice, aligning with the principle that all workers should receive fair compensation for their labor. This can contribute to a more socially just economic system.
• Stimulating local economies: With low-wage workers having more disposable income, there is potential for increased consumer spending at the local level. This can stimulate economic activity, benefiting businesses and communities.

While these arguments highlight the potential positive impacts, it's crucial to acknowledge that the debate around a $15 minimum wage also involves considerations of its potential effects on businesses, employment levels, and overall economic dynamics.

Critics often express concerns about unintended consequences, emphasizing the need for a balanced and comprehensive approach to addressing income inequality.

$15 Minimum Wage Will Increase Usage of Robots and Automation

As a response to higher labor costs, some businesses may explore automation and technology solutions to maintain efficiency. Why?

First, they can realize that automated systems could replace certain tasks traditionally performed by low-wage workers, potentially leading to long-term cost savings. So, investments in automation technologies may become more attractive to businesses facing increased labor expenses.

This can be particularly accepted in sectors that rely heavily on low-skilled, routine tasks. Jobs in manufacturing, fast food, and certain service industries may be particularly susceptible to automation.

The conclusion is that a minimum wage hike to $15 might speed up the whole job transition between humans and machines.

Final Words

The ongoing minimum wage debates in the United States carry significant implications for both workers and employers. The multifaceted nature of this discourse involves considerations of economic impact, social justice, and the overall well-being of the workforce.

As policymakers navigate the complexities of setting and adjusting minimum wage standards, finding a balance between addressing income inequality and considering the concerns of businesses remains paramount.

The potential consequences for employment, industry competitiveness, and the overall economy underscore the importance of a nuanced and comprehensive approach.

Ultimately, the resolution of the minimum wage debate will shape the landscape of the American workforce, influencing the livelihoods of millions and impacting the broader socio-economic fabric of the nation.