Minimum Wage in the US - Article Example

If the growth in minimum wages had been at par with the growth in average Wages, minimum wages in America would have been $10.50 today. Moreover, if they had been concurrent with ‘productivity,’ then the minimum wage should have been $18.75 and if it had grown at the same rate as the upper 1% wage paid to workers, the minimum wage would have been $28 per hour today. (Cooper and Hall) There are many returns associated with increasing the minimum wage. Firstly, contrary to many who believe that increasing minimum wages create unemployment in the economy, it creates more employment.

Secondly, an increase in minimum wages would give more money in the hands of the workers, which would mean extra spending in the economy. According to the economic analysis done by Cooper & Hall (2013), they say that a “$115,000 increase in economic activity results in the creation of one new full-time-equivalent job in the current economy.” (Cooper and Hall). Considering this analysis, they conclude that an increase in the minimum wage from the current level to $10.10 an hour would result in extra employment opportunities for about 140,000 new workers.

However, Jacob Mincer (1974) believed that there was no real evidence to suggest that an increase in minimum wages would lead to unemployment or create employment. (Mincer). Currently, for each job opportunity in the US, there is the unemployment of approximately 3.4 (Shierholz cited by Cooper and Hall). This is because employers do not have to offer adequate wages to employ a worker, nor do they have to increase wages to retain the worker. Cooper and Hall quote American Enterprise Institute scholar Desmond Lachman, a former managing director at Salomon Smith Barney, as told to The New York Times, “Corporations are taking huge advantage of the slack in the labor market—they are in a very strong position and workers are in a very weak position.