Minimum Wage and Living Wage Laws

In my opinion, minimum wage and living wages ought to be eliminated because the two affect older people, minorities, and teenagers in negative ways (Bonello & Lobo, 2015). The high unemployment rates amongst minority communities are a testament to the adverse effects. By eliminating the minimum wage, a GDP increase would follow since every unemployment increase of 1% results in a 2-3% fall in GDP (Speltzer, 2009; Bonello & Lobo, 2015). Historically, several economists, their political persuasions notwithstanding, think that minimum wage laws though well-intended, tend to be counterproductive when it comes to improving low-wage workers’ well-being, especially when compared to other policies such as the expansion of the Earned Income Tax Credit. When an organization deems that an employee is unproductive to warrant the mandated higher wage, such an employee may become jobless or even not hired right from the onset (Kreider, 2019).

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Suppose minimum wage laws aim to reduce poverty, even where it could be considered adequate. In that case, the rules are perceived to be less efficient in targeting compared to policies that are designed to subsidize poor households’ income directly, for example, via tax credits, including expansion of Earned Income Tax Credit, or through in-kind transfers such as subsidized health insurance and food assistance. While the public may perceive that such programs are costly and yet an increase in the minimum wage would appear free, measuring actual cost is complicated compared to estimating the cost of running a program; an increase in the minimum wage is not free. Hence, it would make better economic sense to remove the laws and focus on other programs to reduce poverty (Kreider, 2019). In my opinion, the best option is to empower people to run small businesses by offering tax incentives. This would increase job opportunities and economic growth (Köehler, 2009). ‘Made in America’ should increase with incentives and more goods exported.

Reference”

Bonello, F., & Lobo, I. (2015). Taking sides: Clashing views on economic issues (16th edition). p. 214-218

Köehler, G. (2009). Job Creation: The Long-term Growth of Employment, Normal, and Abnormal. New York: Nova Science Publishers, Inc. Retrieved from https://search-ebscohost-com.ezproxy.ccu.edu/login.aspx?direct=true&db=nlebk&AN=243027&site=ehost-live.

Kreider, B (2019). Iowa State University: Department of Economics. What would happen if the minimum wage laws were repealed? Would businesses pay their employees a penny an hour? https://www.econ.iastate.edu/node/712

Speltzer (2009). Should living wage laws and minimum wage laws be eliminated? https://economicissuesandpublicpolicies.wordpress.com/

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Question

2.5 Should Minimum Wage and Living Wage Laws Be Eliminated?

Read the case study from our Taking Sides text in the Session 1 Readings entitled: “Should Min” mum Wage and Living Laws be Eliminated.”

Minimum W”ge and Living Wage Laws

We want as many people employed as possible in our domestic economy for healthy economic growth! But when the minimum wage is raised, companies trying to keep their costs down and profits up often must lay off workers to pay higher wages to the workers left. Articulate in 1-2 paragraphs your point of view on this issue. What is the most effective way to promote economic growth while providing for minimum wage workers? Remember that GDP and economic growth have both Consumption and Business Investment components!

Support your position with one to two sources.

Bonello, F., & Lobo, I. (2015). Taking sides: Clashing views on economic issues (16th edition).