The current minimum wage does not allow a full-time worker supporting a two-person family to reach the federal poverty line. However, increasing the minimum wage is not a simple undertaking. There are many concerns and questions to address. Business owners are concerned about the expense of raising the minimum wage. Many legislators believe the majority of the minimum wage workforce is teenagers earning money for luxuries. This report will discuss the history of the minimum wage, exceptions to the regulation, demographics of the minimum wage workforce, real value of the minimum wage, and economic feasibility of raising the minimum wage. Based on my research, it is my recommendation that the minimum wage should be raised.

The Beginning of the Minimum Wage: The Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) of 1938 set the work week and overtime guidelines, child labor restrictions, and the first minimum wage. Opponents of the act resented the governmental mandates on private business operations. Organized labor unions were concerned that the minimum wage would become a maximum rather than a beginning point. The proponents of the action wished to improve the li

Proponents of a higher minimum wage usually define adulthood as beginning at 20 in which case the majority of minimum wage earners are adults. They extrapolate from the data that most of the minimum wage earners have adult responsibilities such as paying for college, supporting themselves, or supporting families.

The guideline for $30 per month in tips is terribly outdated. A waitress who works 40 hours a week at half the minimum wage would be paid $443.76 ($2.58 half min wage x 40 hours x 4.3 weeks) per month by the employer. She would need to earn $443.76 in tips to simply meet the minimum wage. The guideline cited above for $30.00 per month is half of the minimum wage for an employee who works eleven hours a month. Employers following the dollar guide, rather than mathematically checking that employees are earning at least the minimum wage each month, are paying less than the legal minimum. The explanation of this commonly used exception ought to be on the minimum wage signs that employers are required to post, so employees may understand the law and check their own earnings.

“In September of 2000, the National Low Income Housing Coalition released a study finding that federal minimum wage earners are unable to pay for modest two-bedroom housing in any county in the country” (Mooney, 2000). Housing costs have increased far above the inflation rate while the minimum wage has steadily lost value. Shelter is a necessity that ought to be within reach of any person working full-time.

David Neumark submitted a statement to the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs that supported a small disemployment effect. “In our first paper on this topic, we used observations on the 50 states and Washington, D.C. over the period 1973 to 1989, to estimate minimum wage effects on the employment rate of young workers (aged 16 – 24). We concluded from the evidence in this study and subsequent work that the elasticity of employment with respect to the minimum wage is in the range of -.01 to -.02. To translate, these estimates imply that a ten-percent increase in the minimum wage reduces the employment rate of young workers by one to two percent. Given that the proposed increase is on the order of 20 percent, our results therefore predict an employment decline of two to four percent among young workers” (U.S. House, 1997, 4). It is important to notice that the study narrowed the focus only to young workers rather than all minimum wage earners or the workforce as a whole. The majority of studies examine all minimum wage workers rather than a select portion of the group for a more accurate picture of the effects on employment.

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