Effects of Raising the National Minimum Wage - Essay Example

The president however said that this increment would enable the Americans who work hard to ensure that they get ahead of their challenges. From the current federal minimum wage rate of $7.25 an hour, various states have proposed different figures to raise the wage rate to a favorable amount (Shemkus 2). One of the bigger challenges in increasing the minimum wage rates is increasing the costs for employers. Although the initiative ensures that the employees get reasonable payment for their services, it forces the employers to incur huge costs (Jacoby 3). Federal labor statistics reported that about 70% of the minimum wage rate employees work for less than 35 hours a week.

This makes their earning to be less thus the increment will give such individuals the opportunity of living decent lives. Left-leaning Economic Policy Institute concluded that “by increasing workers’ take-home pay, families gain both financial security and increased abilities to purchase goods and services, thus creating jobs for other Americans.” Nevertheless, the business-backed nonprofit Employment Policies Institute remarked that increasing the minimum wage rate does not lower poverty.

Studies indicate that there is no relationship between high wage rates and the reduction of poverty therefore; this initiative might not be used as a way of reducing the poverty rates in various states. According to Shemkus (2-3), further studies have also found a relationship between unemployment and increasing the minimum wage rate. Opponents of increasing the minimum wage rate reiterate that by increasing the minimum wage rate, employers would be overburdened that they may not hire more workers.

This will make it more badly when many people will be unable to be employed. On the other hand, the rise in wage rate is seen as a special move that will enhance the consumer patterns of purchasing. Nonetheless, consumer goods and services will increase in correspondence to increased minimum wage rates. Studies have indicated that by improving the minimum wage rates, individuals will live improved lives, as they will be able to access several products and services. Idyllically, supporters of the motion to increase the minimum wage rate said that this policy stems the increases in income inequality in the U.S. while the opponents said that it was a blunt way of addressing the income inequality in the U.S. According to Conservative, businessperson, and politicians have noted that the proposal of increasing the minimum wage rate is not going to have a serious effect on the businesses. They noted that businesses can work out the challenges of increasing wage rates by increasing the costs of their products as well as by reducing the payments of highly paid employees.

Some proponents say that since the American economy is made up of 70% consumer spending, the increment of minimum wage rate would help the economy; however, opponents report that the money used for increasing the wage rates is cyclically coming from the wallets of same Americans; thus, the proposal would be expensive for all Americans (Bernstein 2-4).