Is the Minimum Wage Law a Good Law?

Categories: Economy Employment Minimum Wage

Essay, Pages 4 (921 words)

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The American government sought to create a solution for the struggling, low-wage, working class of America. Therefore in 1938 Former President Franklin D. Roosevelt, signed minimum wage into law through the Fair Labor Standards Act. Victor Caron documents, "On October 26, 2000, the United States House of Representatives passed legislation to increase minimum wage immediately from $5.15 to $5.65 per hour [effective) on January 1, 2002. That date passed, and the United Senate has yet to approve the House bill thus the [federal] rate remained at $5.15” (1).

Many people accept the minimum wage as a good law for the nation's economy. Many hold the belief that minimum wage helps to protect workers from the loss of pay rates and the employers from the loss of profits. And although the minimum wage has been increased several times since 1938, it has actually only served to damage the nation's economy. Therefore the minimum wage should be abolished.

The majority of those who are negatively affected are the small family-owned businesses. Most of the negative impact is caused by rising overhead and inventory costs for the employer. The employer then must offset the cost by cutting the employees pay or freezing raises and bonuses. Many of the businesses try to compensate by laying-off some of their employees, cutting benefits such as healthcare or outsourcing. Beth Shulman predicts that, “low-wage jobs will make up 30 percent of the economy by the end of this decade” (3). Low wage jobs have proven to be both physically and emotionally challenging.

A minimum wage job can be physically strenuous.

Much of the low wage working class serves in the luxury business. For example cruise ships, waitresses, hotel managers, and cleaning services demand long hours, either day hours or night hours. Employees also battle exhaustion and chronic pain caused by heavy workloads over periods of time. Nils Timo writes, “The existence of a minimum wage set by statute or labor tribunal determinations attempts to protect employees from falling below the ‘poverty line’ in many developed economies. Interestingly despite these ‘safety nets, hospitality employees remain some of the lowest paid workers internationally" (1-2). Employees need to be compensated for their hard work; minimum wage does not provide enough income to account for the amount of work. Because the small local businesses are affected the national economy will be negatively affected. Much of the nation's economy is based on the small entrepreneurs of society.

Secondly, employers should have the responsibility to pay what the job is actually worth. Because of the federal minimum wage, the company neglects to fully compensate the employee for. Nils Timo explains, “Employers usually justify low wages by citing high fixed costs and a high ratio of labor to total costs (because of the labor-intense nature of the industry). In some cases this is justified as they can amount for around 50% of total costs, particularly in ‘luxury' enterprises” (2). Many of the businesses that pay low wage salaries justify their actions by claiming high overhead expenses or a rise in supplier's prices. Thus they claim that they cannot afford a higher salary for their employees.

In some rare instances this claim is true, but more often than not it is false. If the minimum wage did not exist and employers could set their own pay rates, company and employee alike would thrive. Because the government set the federal low-wage pay rate, it allows the companies and businesses a loop whole to short cut the employee's pay. The ability to customize a company's pay rate would keep the company honest in its treatment of the employees.

Finally, minimum wage has been a direct contributor in the issue of poverty among the working class in the United States. Most often the working class will work whatever job they can find because they are desperately trying to adequately provide support for their families. Most of the manual labor jobs that do not require a college degree are almost always paying minimum wage. Young single adults fill these positions because they will work for cheap and not require a raise due to the need to support family members. Working adults struggle to support a family on a minimum wage salary. It is a constant battle in order to make a decent living. In her article Jeanette Wicks-Lim writes, "The average hourly wage among the working poor is $10.00.

Full time, year-round earnings at this rate -$20,800-fall 52 percent short of the $43,500 that the average worker with a small family (two adults and one child) needs to maintain a minimally decent living standard. Even two adults working full-time, year-round, at $10.00 an hour would leave a $2,000 gap” (19-20). There are many reasons why the nation's economy is suffering, but one of the many contributors is the high unemployment rate and unacceptable wages.

Many of the minimum wage and national poverty issues can be completely eliminated or mostly avoided. By abolishing the minimum wage law we would return freedom to the employer who could set the pay rate of the company. Whether the rate was above or below the current minimum wage rate, would be their responsibility. If the nation could completely eliminate the minimum wage law, the result would be declining poverty rates and the nation would have more satisfied companies with happier employees. Abolishing the minimum wage would boost the nation's economy and help to end poverty in America.