The Government's Raise Of Minimum Wage To Fifteen Dollars Per Hour

Introduction of Current Policy

Most citizens believe it is the role of the government to provide essential policies. These policies may be crucial in several ways such as economic, cultural and political development. The Democrats in the United States introduced a congressional bill to raise the minimum wage of federal employees to fifteen dollars an hour. This suggestion was received with varying reactions with some individuals arguing against the bill while others support its adoption. However, both parties have valid reasons largely derived from the other cases such as the Seattle case, since the city adopted a similar policy in 2014. The results from other counties with the same policy are varied hence it is imperative to explore arguments from both parties to propose a viable option. Additionally, this memo highlights several recommendations that should be adopted to reinforce the applicability of this legislation.

Importance

Many governments including the US government uses minimum wage policies to control the least amount of compensation a worker can receive for their services. This approach is mostly aimed to promote low earning citizens to earn more and resultantly, create more parity between them and higher earners. In many instances, workers receive low payments such that they are incapable of affording important services including education and health. Moreover, supporters of these policies claim that most people affected by low wages in the US are minorities, for example, African Americans and Mexican Americans. Therefore, raising the minimum wage bridges the gap between federal employees equally regardless of their race or gender. Frustratingly, other issues such as increased unemployment threaten the application of this policy. Some employers may be incapable of affording increased wages hence they may result in cost-cutting efforts such as reducing the number of workers. These assertions depict the dire need to carefully evaluate the strategy before its execution.

Available options

The debate on $15-hour minimum wage draws much attention from people that support its implementation while others are against its implementation. Many counties have implemented the law in previous years and the results are inconclusive. These reasons have been used to support the disbandment the minimum wages policy. Peter Baker (2018) asserts that 'Every time a government debates whether to raise the lowest amount it is legal to pay for an hour of labor, a bitter and emotional battle is sure to follow.' This argument is logical because many employees have unique relationships with their employers. Therefore, these laws interfere with the bond between the two parties leading to stringent working conditions. Further, the policies put business managers under duress to solve the financial crisis that ensues from an increased wage budget. This pressure results in unintended consequences for the business including closure, movement of operations or downsizing. Therefore, a careful critique of the positive and negative aspects of each approach is necessary.

Reasons for the $15 Hour Minimum Wage Bill

Many societies including the US depict a growing difference between the wealthy and the poor. Bivens and Mishel (2015), argue that “this difference is as a result of stagnated wages while productivity has improved immensely over the past years.” The productivity of most firms has improved over the past and this trend may be interpreted to indicate improved efficiency of the employees. Consequently, it would be expected that the organizations should raise the earnings of workers to match their increased inputs. Regardless of these assumptions, few businesses offer attractive low-income wages, signifying the profit mindedness of these firms. Therefore, the $15-hour minimum wage policy serves to compel these organizations into harmonizing employee wages with their inputs.

Apart from reducing the wage gap between workers in different sectors, the wage bill aims to save costs. Most individuals believe the policy will lead to more taxes to raise funds that would be used to increase the salaries of many state workers. However, a study by Allegretto et al (2013), details that 'most of the people that apply and access public benefit programs, were from low-income families.' These results indicate that currently the taxpayers indirectly take part in providing for these groups. Resultantly, introducing better wages is expected to improve the ability of these families to access basic commodities hence saving on public benefit programs.

Reasons Against the Wage Bill

Regardless of the aforementioned strengths, several weaknesses undermine its viability. Some scholars have argued that “the legislation has little effects on the unemployment rates.” (Schmitt, 2013). However, research conducted by Adam Ozimek (2015), reveals that “there is notable migration of low-income employees from counties that have imposed the minimum wage restrictions.” These results can be interpreted to mean that the employees go in search of new jobs due to unemployment. Also, the results may mean that the working conditions in these regions change forcing the workers to move. Extensive working hours and bigger workloads are some of the factors attributed to this shift.

Besides unemployment, high minimum wages may be strenuous to attain since they require additional funds. As realized in many instances, extra costs on these businesses compel the establishments to find means of adjusting to the costs, for example, passing costs to the consumers. These measures result in inflation which is characterized by generally high costs of commodities which negates the main objective of the idea, to make commodities and services accessible to low-income earners. Further, increasing the minimum wage improves the purchasing power of consumers. This aspect offsets the supply and demand dynamics which leads to increased commodity prices

Finally, the overall idea of minimum wage is challengeable from a logical perspective. Different people live under different circumstances hence, they have different needs and expenses. According to Glasmeier and Nadeau (2017), “there are different living wages for different regions.” He further explains that “it is illogical to create a standardized measure of how much all individuals should earn to afford basic amenities in all areas.” Based on this argument it is agreeable that in some instances the $15-hour minimum wage may be more or less than some workers require.

Recommendations

The debate on whether to adopt the policy is split between individuals who support it and those that oppose it. As highlighted above, individuals that support the move claim that it is pivotal to upgrade the living conditions of low-income earners. These people also argue that the law may be effective in mitigating constraints affecting minority groups in the country such as discriminatory compensation for services offered. While these assertions may be true, the negative implications of the policy are dire compared to its advantages. Many states and businesses lack the financial capability to fund more salaries for their employees. Thus, it is recommendable to oppose the implementation of the bill until the capabilities of these institutions are ascertained.

One of the main shortcomings of the policy is its perceived implications on the unemployment rates and company closure. These arguments are inconclusive due to limited study on its effect in other areas with a similar policy such as Seattle and California. Further available results fail to offer integral insights into the specific reasons why many workers migrate from counties with this legislation. These scholars, rely largely on assumptions rather than specific facts and figures. Therefore, the implementation of the $15-hour minimum wage should be averted to pave way for extensive and conclusive research into the results of the policy in other areas. This research would be relevant in providing integral facts into the applicability of the law in the country and other regions.

Based on the above arguments it is notable that the issue of minimum wages affects many people directly or indirectly. Moreover, it is relevant to plan carefully before implementing policies that affect the minimum wage. Resultantly, it would be mistaken to undertake the exercise without conclusive factual evidence on the effects of the policy and how to mitigate these issues. Therefore, the policy should be suspended and subjected to extensive research before its adoption