Introduction: The minimum wage has been a growing problem over the past few decades, since many individuals in our country began to question its effectiveness as a as a poverty reduction strategy. To determine the validity of the use of the minimum wage policy, it is necessary to understand why this policy was initially initiated and implemented. Background: This policy was originally established as a method to help reduce poverty rates in the United States and help low-income people meet their basic needs and be able to enjoy parts of their day to help them stay healthy and avoid burnout. . Poverty is defined as “a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living” (Chen, n.d.). Thesis Statement: Thus, to determine whether increasing the minimum wage is an effective strategy, we will need to analyze its effectiveness in improving the lives of low-income individuals and families and its ability to reduce the level of poverty. Many opponents of the policy have highlighted their fear that raising the minimum wage will increase the unemployment rate, which is a major determinant of the health of the economy. This article will analyze different studies and articles examining both the arguments for and against on the topic of raising the minimum wage and its various effects on improving or worsening our economy. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayTopic Sentence: Many studies have been conducted to show that raising the minimum wage is not necessarily an effective method to reduce poverty, but that it can even have a negative impact on the health of the economy as a whole. Evidence and citation: Drs. John P. Formby, John A. Bishop, and Hoseong Kim conducted a study that pools data to correlate raising the minimum wage with improvements in the lives of low-income families. They found no correlation between the increase in the minimum wage and monetary benefits for the population. targeted by this policy (Fomby, Bishop and Kim). The study argues that since the majority of low-income families have members who do not work or have a low-wage worker, this presents a fallacy regarding the effectiveness of this policy, since it only improves conditions of workers (Fomby, Bishop, Kim). Comment: They supported their claim by finding that "more than 85 percent of low-income families saw no direct monetary benefit from each of the three 70-cent wage increases." » (Fomby et al.); Thus, this study highlights a major problem with the proposed minimum wage increase policy, as it fails to target the individuals it was initially intended to benefit. This was also supported by a study by economists Joseph Sabia of San Diego State University and Robert Nelsen of the University of Georgia, which found that 54.7 percent of poor and less educated older people from 16 to 64 years old do not work. Furthermore, 53.6% of people who have missed a rent or mortgage payment do not hold any position (Sabia and Nielson, nd). Their study even found that about 87 percent of those who actually benefited from the 40 percent increase earned incomes more than twice the poverty line and lived in houses and that even a third of them themearned an income three times the poverty line. threshold (Sabia and Nielson, nd). Additionally, Michael Saltsman, a researcher at the Employment Political Institute (EPI), a nonprofit research organization that studies policies and issues related to unemployment, found that $9.80 earners who will benefit from the The minimum wage increase already earns $50,662 per year. , which is well above the poverty line of 15,080 per year (Saltsman, nd). These studies supported by their findings highlight a major misconception regarding the increase in the minimum wage, as they reveal that this policy does not contribute to improving the poverty level and financial conditions of the targeted population, as it does not take into account those who are below or at the poverty line, since the majority of them do not even hold any position. Topic Sentence: Additionally, the EPI found that raising the minimum wage would increase the level of unemployment, which would worsen the economy. Evidence and Citations: EPI studies have pointed out that an increase in the minimum wage would result in 467,500 job losses and that "given the post-recession shrinking workforce, job losses in the range of 256,200 to 768,600 are projected based on results found in previous studies. economic literature” (Saltsman, nd), which shows that these results are based on historical references and literature, which confirms their accuracy. Raising the minimum wage would also lead to a decrease in the teen employment rate, since according to the Bureau of Labor Statistics, nearly 50 percent of minimum wage earners are under the age of 25; therefore, raising the minimum wage would make employees less willing to hire teenagers, because it would require time and money for training, which would increase the labor cost that employees would have to pay; thus, they will reduce the number of workers and have fewer people already trained (Saltsman, nd). To further support the negative effects of increasing the minimum wage, a survey of the country's labor economists found that 73 percent of them supported the position that an increase in the minimum wage would increase unemployment levels (" Is there an economic consensus in favor of wage mandates? This highlights another important negative effect of raising the minimum wage, as it will lead to many job losses and increased unemployment rates, which would significantly affect the health of the economy and the stability of many families and communities. Topic Sentence: Opponents of raising the minimum wage Payroll find that an increase in the Earned Income Tax Credit (EITC) and a decrease in the Federal Insurance Contributions Act (FICA) tax would be more effective in reducing the level of poverty in the United States (Formby et al., nd). Evidence and Citations: The EPI study found that 1.95 million people living below 150 percent of the poverty line would escape poverty if an EITC growth policy were implemented and 1.65 millions would escape it thanks to a FICA deduction. The authors of the EPI study state: “In other words, 2.5 times as many Americans would escape poverty with an expansion of the EITC as with the FMWA” (Formby et al., n.d.). This was also proven in another study by EPI economists Joseph Sabia and Robert Nielsen, who found that "each one percent increase in the state supplement to the federal EITC reduces poverty rates of one percent. » (Sabia and Nielson, undated). Comment: This is an alternative approach that, according to numerous studies, is more effective thanthe increase in the minimum wage and avoids the economic problems and risks associated with its increase. Topic Sentence: Having reviewed the potential downsides of the minimum wage and the opinions of its opponents, we will now examine the opinions of its supporters and their evidence. Evidence and Citation: Jack Jenkins of the Center for American Progress states that more than 10 million people live on wages below the poverty line and that the majority of Americans believe that even when low-income workers work extremely hard, they still fail to do so. earn a sustainable wage to live on, due to low wages (Jenkins, 2013). According to a 2013 Hart Research Associates survey, eighty percent of Americans support raising the minimum wage and adjusting it for inflation so that it can support low-income families (Jenkins, 2013). Commentary: Jenkins' findings reveal that since the minimum wage was last increased from $5.15 to $7.25 in 2007, its value in 2013 is worth $2 less, further indicating the need to increase the minimum wage to improve the financial stability of low-income homes in the country. America, since inflation now causes them to endure many deteriorating living conditions in order to meet their basic needs. While many would say that most low-income earners are teenagers, which should make the current minimum wage sustainable for them, this is actually not true, since 70 percent of fast food workers are adults and are over 20 years old, and 1 in 20. 4 have and are raising children (Jenkins, 2013). Topic sentence: To counter the argument of opponents of raising the minimum wage that an increase in the minimum wage would have negative impacts on the economy, proponents of this policy raise the concern that, given that these low - income-earning individuals are unable to meet their needs, they depend on government assistance programs which are costly to the economy. Evidence and Citations: Studies show that $1.7 million is spent each year at one Walmart supercenter alone on public benefits, including food stamps, child and grandchild care subsidies. discounted school breakfasts and lunches (Jenkins, 2013). Comment: Another study from the Federal Reserve Bank of Chicago found that if the minimum wage increased from $7.25 to $9.00 an hour, annual household spending would increase by $48 billion and more than $30 million people would benefit from the wage increase, and 23.3 percent of children would have a parent who benefits from the minimum wage increase (Jenkins, 2013). This shows that lower incomes increase government spending on aid programs. If the minimum income was increased, the government would be able to invest in that money, rather than spending it on these programs, which would be of great benefit and allow the economy to grow. advantage because it reduces government spending and increases demand for commercial products. Topic Sentence: While many opponents argue that raising the minimum wage would increase the unemployment rate, many studies have shown that there is no correlation between a higher minimum wage and employment rates weaker (Jenkins, 2013). Additionally, raising the minimum wage has been shown to increase productivity and demand for new workers because there is higher demand for the products companies produce as incomes rise and families..