The Minimum-Wage Controversy

Econ 102 - Research Paper

"The Minimum-Wage Controversy"

The Minimum-Wage Controversy When receiving paychecks, most employees will agree that one can never be paid enough, however, their employers may disagree with that statement and believe that they are getting paid far greater than they are entitled to. Thus creating a conflict between minimum wages. Minimum wage is the least amount of money that an employer may pay their employees. The federal minimum wage that is experienced by many members of the United States, currently is at $5.15, and is under debate as to whether or not it should be raised an additional dollar per hour, to make the minimum wage $6.15 (1). As a result of dissatisfaction with the minimum wage, debates whether or not the wage should be lifted to please more workers are currently taking place. The process to finding the perfect minimum wage to please both employee and employer are still under way, and has been an important controversial issue for many decades. For many, a raise in minimum wage would be fantastic, mainly employees. For others such as employers, they look down upon the idea of increasing the salary for their workers. The process for increasing the minimum wage would start by paying fifty cents more on January 1st of 2001, and adding the other fifty cents exactly one year later on January 1st of 2002 (1). "Through this proposal, it would allow for business tax breaks worth $76 billion dollars over ten years, which is down from $122.7 billion in an earlier House version of the bill" (1). As unemployment has reached a recent 30-year low, some employers are looking to change this fact around by hiring in greater numbers (3). But as employers may in fact do try to change this unemployment trend, this also means more money will be spent on trying to match the minimum wage. If they should try and match the minimum wage, the employer will be spending more money just to have more workers that he may not need. Say the minimum wage stayed the same for a while, employment may not be such a big problem for some for a little while, but as inflation makes its mark, sooner or later, minimum wage will raise. As long as salary is down, demand for employment can raise, however, if the salary was to increase, employment opportunities for the unemployed would decrease (3). Employment would be more "stable" and more people would be employed. In contrast, the minimum wages increased, then more employment cuts would be made since the employer would dislike the fact of losing more money in pay checks, and would rather lose staff, and have the smaller work force work harder. Many feel as though raising the minimum wage would help fight poverty, in that raising the income, would help families to strive to move from slums or building projects and promote them to live a richer lifestyle (3). To help people in the working industry, minimum wages must go up to help eliminate poverty and to keep increasing the employment rate. A new issue that has risen recently, is the impact upon small businesses (4). With the rise in wages for employees, small businesses would be greatly affected. These small businesses wouldn't be able to handle an increase in salaries the way that a large well-known business could. A small business could be lost as a result of the inability to continue to pay their employees at least a minimum wage. However, there may be light at the end of their tunnel. A possible $76 billion dollar tax budget would be supplied as a result of the increase in the minimum wage, which can be used to help small business overcome their predicament. The money would be spent in tax breaks over ten years to help provide businesses with a deductibility of health insurance premiums(4). Nearly a 30% rise in meal deductions would be experienced(4). The amount of company equipment eligible for a write-off will increase form $19,000 to $35,000(4). Also with small businesses, it would "restore the law that allows a business seller to pay taxes in installments rather than a lump sum in the year of the sale"(4) With all of the advantages of the one dollar raise in minimum wage, it will save small businesses a lot of well earned money in the long run. With a rise in the amount of minimum wage including the addition to the $76 billion tax aid, small business would be able to save a small fortune dealing with health insurance, meal deduction, and the more favorable tax treatment for corporations. Another issue to consider is the value of the current dollar. If the minimum wage were to stay the same, the value of America's money would drop (6). Every two years the minimum wages must be increased to keep the value of the US dollar stable. With an increase of $1 towards minimum wage, one living off of minimum wage would see an annual increase of nearly $2,000