The United States federal minimum wage was established in 1938 as a part of the Fair Labor Standards Act. It was introduced to establish a legal minimum standard of living to maintain the balance of labor and distribution of income. This is important so that the economy remains stable. The minimum wage was originally designed not to be considered a livable wage. It was made for workers to enter the job market and gain some experience, then later move on to better job through promotion. Minimum wage jobs have become the jobs for teenagers and other uneducated or unskilled workers that do not meet the requirements for higher paying jobs. The minimum wage has increased smoothly over time to keep up with inflation ever since it was created. The minimum wage started at twenty-five cents an hour and has changed to the current minimum wage of seven dollars and twenty-five cents an hour.  Low-income workers believe that the current minimum wage is too low to support and sustain themselves and their families. Due to the workers’ beliefs that the minimum wage is too little, they claim that the minimum wage is the direct cause to why they are living below the poverty threshold. This issue over the minimum wage’s relationship with poverty has caused the low-income workers to demand a significant increase in the wage. Low-income workers believe that the current minimum wage should be increased to a rate up to fifteen dollars an hour or high enough to be considered a living wage. A significant increase in the minimum wage like this could not be done because of the large-scale impact that it would have on the entire economy. Due to theories surrounding this issue, it is believed that if a significant increase like what it proposed were to occur, then it would cause certain economical disadvantages such as unemployment, more poverty, and inflation in prices. The United States Government is hesitant when it comes to raising the federal minimum wage because of these possible negative effects and the belief that it would destroy the United States economy. 

The cause of this demand for a significant increase in the federal minimum wage is the claim that the low-income workers are not getting paid enough. Workers have been arguing about how low they get paid for a while and recently came up with the proposal of a significant increase that is almost double the current wage. Most low-income workers should be teenagers and young adults, but a large amount of the workers are older and have families. The group of workers that propose this change in the wage are mainly the older bunch of workers that have families that they work for to support. The wage only causes poverty because the income is distributed throughout families (Addison and Blackburn 395). This statement made by Addison and Blackburn clearly shows that the minimum wage is not meant to be a living wage and is not meant for supporting families. The wage is not even high enough for a single person to live off without some other source of income of financial support. This idea that the minimum wage can be a living wage is what causes low-income workers and their families to be poor. This idea that the wage should be turned into a living wage would not exist if these workers with families moved on to a better job, but that is the problem. These workers are stuck with the low paying job because they are not skilled enough for the higher paying jobs. The only feasible option for these workers to get more money is to pay for an education for themselves and work harder. The low-income workers believe that raising the minimum wage so that it becomes closer to a livable wage will save them from poverty, but that is not the case. Raising the minimum wage to almost double the amount that it currently is would only put more money in some of the low-income worker’s pockets. This is because raising the minimum wage would likely cause a large percentage of the workers to lose their jobs. Therefore, since many workers are losing their jobs there is even more poor workers. According to a study on the relationship between the minimum wage and poverty in Card and Krueger’s book titled Myth and Measurement: The New Economics of the Minimum Wage, they claim that an increased wage would have an overall insignificant effect on the poverty rate for low-income workers (Addison and Blackburn 396). This is because only part of the low-income workers would benefit from an increase in the wage while the other part of the workers will suffer from unemployment. For the increased wage to cause a significant change in the poverty rate there would need to be a way to overcome the increased cost of labor without decreasing the amount of labor. 

The federal minimum wage was introduced in 1938 as a minimum standard of living. The minimum wage was intended to be the lowest amount of legal income. It was meant for workers that are first entering the job market. The wage first started at a rate of twenty-five cents an hour. It has been increasing slightly ever since it was established. If the wage only increased due to keeping up with inflation, then the current wage would be between four and five dollars an hour. Since the current wage is seven dollars and twenty-five cents, the extra increase was due to low-income workers demanding more. This means that this issue existed in the past to a certain degree but on different circumstances. The difference between the past increases of the federal minimum wage and now is that low-income workers now are demanding almost a one hundred percent increase. Since this minimum wage has been increased many times before, economists and other experts understand what kind of effects that it would have on the economy. They know what kind of effects that raising the wage would have now by analyzing the relationship between the change in the wage and the change it had on the economy. According to Belman and Wolfson, their studies indicates that changes in the minimum wage affect twenty to thirty percent of the labor force (Belman and Wolfson 4). This shows how many workers there are that receive the minimum wage. It also means that any changes in the minimum wage will have noticeable effects on the economy. In the past, there has only been subtle changes to the economy from wage raises, but changes did exist. For example, between 1981 and 1986, the poverty line for a family of three increased from $7,250 to $8,737(20.5 percent) and the number of poor workers increased from 8.6 to 8.9 million (2.7 percent) (Mincy 18). This study shows how the change in the wage changed the poverty line and number of poor workers. This amount in which the minimum wage of this period changed was not even that large and it still had somewhat of a significant effect on the economy. Now that there is a demand for a more significant increase that is nowhere near proportional to increases in the past, experts predict more significant effects on the economy. 

The most prominent theory of what will happen if the minimum wage were to be significantly increased is a large-scale increase in unemployment of low-income workers. This is because when the cost of labor is increased something must be cut to maintain profit. Lowering the number of workers is an easy way to cover the extra expenses for labor. Most of the minimum wage workers are teenagers and young adults. Most of the studies that exist about minimum wage are based on the effects that the wage has on this age group. David Card and Alan B. Krueger are two researchers who analyzed the effect of past minimum wage changes on unemployment of this specific age group. According to Card and Krueger, a ten percent increase in the minimum wage resulted between a one to three percent decrease in employment of teenagers that receive the minimum wage (Card and Krueger 238). In the event of a significant wage increase teenagers would likely be the first workers to lose their jobs because they are the least experienced. However, after the teenagers the next group to lose jobs will be the older workers, which includes people that are working to feed their families. This study was based on data from the 1970s, which is quite different from the state that this issue is in now. Low-income workers demand about a one-hundred percent increase of the current minimum wage to a rate up to fifteen dollars an hour. This means that experts only expect the economy to suffer even larger consequences such as a larger percentage of unemployment. Unemployment is also a significant problem for businesses because it means that it would lower their production. This would then lead to the workers that still have jobs having to work harder and they will probably demand more money. Then it is possible that this issue could be repeated. 

The other consequence other than unemployment of workers that would happen is inflation of prices. In the event of significant increase in the minimum wage the economy could suffer from either large-scale unemployment or inflation. However, since the current demand is much larger and not proportional to past demands the economy could experience both consequences to a certain degree. Increasing the prices of products would be one of the easiest ways for businesses to maintain profit after the cost of labor increases. This would affect every consumer because the prices of products in establishments that contain minimum wage workers would be significantly increased. Most businesses would not want to pay their workers more money just because of this disadvantage. If the prices of products become inflated due to the increased cost of labor than consumers will not want to buy products. Also, inflation of consumer products could result in a domino effect which then causes the inflation of other things such as gas, transportation, and production. A significant increase in the cost of these factors of production would cause businesses to suffer drastically. This large-scale effect also effects every other working citizen and consumer. 

A large percentage of low-income workers work in the fast food industry. If a raise in the minimum wage were to occur there would be a dramatic change in the fast food industry and how it operates. This is because of how popular and the immense the size of the fast food industry. According to Pollin, 47 percent of all workers in the fast food industry receive the federal minimum wage (Pollin 1). This means that it is easy to see the types of effects that an increased minimum wage would have by observing the fast food industry alone. The most predicted effect of raising the minimum wage for the fast food industry is a large-scale unemployment of low-income workers. Fast food businesses can easily replace workers with technology and end up saving money. Businesses would then not have to hire as many workers and not have to worry about an issue like workers demanding more money. The main goal of most fast food businesses is to maintain profit so when they must pay extra for labor they find the easiest thing to get rid of to maintain profit. Also, when the employers of these businesses decide to pay their workers more they do not have to pay do not have to pay everyone extra. Businesses would rather fire half of their workers instead of raising the prices of all their products. This is because raising the cost of products would make them lose customers which would reduce the amount of revenue they produce. Overall, businesses only care about making money and will do anything they can to not obstruct their profit. 

There are many implementations of higher minimum wages that exist is certain cities all over the United States. These cities do not follow the federal standard for the minimum wage. This is because the federal minimum wage is not a requirement, it is more like a suggestion. However, most state and local governments tend to follow the federal standard because it works well with their state and local economies. On the other hand, there is also many cities that choose to make their own standard for the rate of the minimum wage. These cities have chosen to appease the demand for a higher minimum wage and have experienced some benefits and consequences on their local and state economies. According to an article by Paul Davidson of USA Today, the trend of the fifteen-dollar minimum wage that started a couple of years ago became a reality in 2015 (Davidson 1). These cities started a push for a fifteen-dollar minimum wage as a part of the National Employment Law Project. The main initiative for these cities to start this movement was the overwhelming number of claims that minimum wage workers do not have enough money for their families and believe that this increase will benefit these workers. Some of the implementations of higher minimum wages include larger businesses such as Facebook, Google, and Nationwide Insurance (Davidson 1). These large businesses can have a higher minimum wage without experiencing any consequences due to the number of high skilled workers that they have and the amount of revenue that they produce. Also, many states have considered changing their wage rates in response to how large this movement is. The rates in which that these states plan to change to vary. For example, states such as New York, California, Oregon, and Missouri have all considered changing to a fifteen-dollar an hour pay floor while other states such as Massachusetts, Nebraska and Alaska agree to change to modest rates of about nine to ten dollars an hour (Davidson 1). Along with these states that are motivated by the sudden movement there is still states that have decided to stay with the current pay floors. These states do not see any benefits from raising the current wage. The states that did decide to increase the wage did see a decrease in the amount of poor low-income workers, but they also experienced one consequence. This consequence is the unemployment of many workers. According to the article a sharp minimum wage raise to $12 an hour in some cities has resulted in business closures, layoffs and reduced hiring as restaurants and other businesses replace workers with technology (Davidson 1). This implementation of a twelve-dollar rate shows that there are serious consequences for low-income workers with an increased rate that outweigh any benefit. 

The United States Government has been hesitant in coming up with a decision regarding the issue of raising the federal minimum wage. They cannot simply raise the wage because a sudden significant increase would cause a large shift and changes in the economy nationwide. Raising the minimum wage would benefit low-income workers by lifting them out from below the poverty line but the disadvantages would outweigh this benefit. Raising the minimum wage would not be a bad idea if it could be done without people losing jobs and prices becoming inflated. Instead of a significant increase in the minimum wage there have been some proposals by researchers of alternate solutions. The first alternate solution to increasing the minimum wage in one step is called the two-step plan. This two-step plan consists of raising the minimum wage in two steps over two four year intervals (Pollin 5). This is a way for the fast food industry and economy to adjust to the increased wages and prevent loss of jobs while maintaining profit. The problem with this issue is that the workers are demanding for a sudden increase which is not rational. The minimum wage can be increased but it will take time so the economy does not suffer from it. 

The minimum wage does not seem to be that important to people, but it is necessary for the economy to survive. The minimum wage is meant to be the lowest amount of income for low experienced workers. This would include teenagers, young adults, and any other workers first entering the job market. However, there is still some workers that are receiving the minimum and trying to support their families with it. The problem with this is that the minimum wage is not meant to be a living wage. These workers that are trying to make the wage a living wage are struggling and claim that the current wage is too low. They claim to be living in poverty because of how low the wage is. The current wage is at a rate of seven dollars and twenty-five cents an hour while the low-income workers demand it to be changed to a rate up to fifteen dollars an hour. This cannot be done suddenly because of the extreme effects that it would have on the economy. Workers would lose jobs, prices would become inflated, and businesses would struggle due to these consequences. Many states, local governments, and some businesses have implemented higher minimum wages due to the fifteen-dollar wage movement. These implementations reflect the consequences of unemployment and inflation with little benefits. The government has been hesitant in appeasing the demand for this significant wage increase because of the disadvantages that come with. The workers can still get what they want but not so suddenly. The only way to increase the wage without causing even more problems is to increase it over time to keep up with inflation. Even then the wage may still be proportional to what it is now and then this issue would just happen again.
