Minimum Wage Increase Law out—what’s the reaction?

Federal law’s minimum wage increase has been received with mixed reactions and there is a great deal to be said about it. The basic contention leading to the minimum wage increase is that hundreds of thousands of hardworking U.S. employees are not earning enough to support themselves and their families. Analysing the prevailing rates of food, transportation, housing and other basic necessities, some economists suggest a single adult today needs to earn not less than $11.82 per hour. This rate might even go up to $14.03 per hour in cases of families with four members even with two working parents. It can be expected that US labor will now look towards federal labor law posters with more confidence knowing that it is going to protect their interests better.

Experts identify that minimum wage has been losing out its value year on year on account of congressional and legislative inaction. Going back the study the conditions during 1968, the federal minimum wage facilitated the highest buying power. If those levels need to be matched today, minimum wage must be raised to $10.55/hour. While it is very hard to live on minimum wages, if no action is taken, it might add more bruises to the existing injuries. The only way out that can yield concrete results can happen through legislative measures and this forms the basis for the hike in minimum wage proposed by President Obama. 

The President's proposed $9.00/hour federal minimum means that there would be a 24% increase from the present rate of $7.25. Notably, this will be the first ever increase in the minimum wage over the past four years, and the second over the past 14 years. Estimates show that if put to work, the proposed minimum wage increase will result in a condition that prevailed during 1980s while adjusted for inflation. The rates will be adjusted annually considering the inflation.

The implications of the minimum wage increase can be noted both in the positive as well as in the negative sides. The contention that this measure will cost jobs does not seem to happen practically. While this happened last time in 2005, ironically, there was a net increase in jobs. On the other hand, minimum wage increase will mean the low-wage workers can be a part of the nation’s economic recovery. This can be understood in this way. Every increase in the minimum wage will consequently boost up the consumer spending over the following year, which will be a good sign for the nation’s overall economy. Rep. Edwards of Roc states raising the minimum wage will help stabilize businesses besides getting employees out of poverty. This will also pave a path to millions of Americans to become the middle class. 

Why the principal objective of the increase in minimum wages is not realised often could be due to poor targeting. This means that about 60 percent of people below poverty line does not work and therefore not able to access the benefits of the said raise. In several cases, it is not uncommon that layoffs and reduction in working hours could mean the take-home gets less rather than more. Therefore, a careful analysis of the situation across the nation needs to be studied considering the holistic picture and weighing both the sides objectively. The implication is that mere legislative measure will do no good unless the implementation is practically studied, observed and regulated to achieve what we want through minimum wage raise.