Impacts of Increased Minimum Wages

Impacts Minimum Wage on Employment
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Impacts of increased minimum wages
The idea of having a mandatory minimum wage is an essential element in protecting the low and unskilled workers from discrimination as well as improving employee’s standards of living. A minimum wage is the lowest compensation an establishment is obliged to pay workers for tasks performed during a given period, which cannot be amended through cooperative bargaining or individual contracts (Bartels, 2016). Controversial debates have heated up among politicians and economists on whether an increase in the minimum wage is worthwhile. Commonly, these debates are focused not only on the merits and demerits of increasing the minimum wage but also on the possible alternatives to address the underlying challenges. While the politicians believe that raising the minimum wage will lead to adverse consequences to the economy and again to the working class, the economist argues that this will have insignificant effects. The impacts of increasing the earnings have greater impressions not only to the individual’s but also to the economy at large, (Flinn, 2010).
First, the most significant potential benefit of increased minimum wages is the improvement of the standards of living among the low incomes and low-income families. For instance, when America wage was 7.25$ per hour, most workers were forced to work over 40 hours a week but still faced poverty encounters despite having full-time employment. When the minimum wage was improved to $ 10.00, a 25% decrease in poverty level was recorded for the blacks and Asians (Bartels, 2016). On the other hand, an increase in the minimum salaries discourages firms in the recruitment of low wage and low skilled personnel. Economists argue that an increase in fees results in an increased supply of Labor in the market. As a result demand of Labor eventually drops. Conversely, two scenarios may arise with increased minimum wages, minimum wages raises the income levels and inspires consumption, hence, and increased level of spending which leads to increased demand for products and labor, alternatively, it creates increased costs discourages employment (Weil, 2005). For example, in New York, when the minimum wage per hour $ 10, ten percent decrease in the work is recorded. Further, when the minimum wage increases $ 15, a twenty-five percent decrease in employment is experienced.
Second, minimum wages stimulate small business growth. Increased earnings lead to increase of disposable incomes, expanded customer base as well as a growth in the gross domestic product. Although increased remunerations lead to increased operating costs among the small businesses, the benefits outweigh the challen...