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Hot- Bottom Issues, Research Paper Example

Pages: 4

Words: 1145

Research Paper

Although minimum wage is designed to protect America’s work force by providing a minimum standard of living, it has not been increased enough to keep up with the economy. Because cost of living in the US has significantly gone up, minimum wage needs to be raised counter balance it.  Getting a college education is imperative in order to secure a job that pays higher than minimum wage. However the cost of an education is continuously on the rise. Income inequality is dramatically skewed as the top 10 percent of income earners are generating excessive amounts of what could be distributed towards closing the wage gap. An increase in minimum wage increase would not only benefit the close wage gap but would also stimulate the work force. Because the cost of living in the US continues to rise, it has become virtually impossible to support a family on a minimum wage. Even for a person living on their own, the minimum wage is just not high enough to provide them a reasonable standard of living as living expenses are above their income bracket. With these issues of minimum wage come the factors of the labor market and income inequality. (Burke, Miller and Long 2015)

The main parties involved in the hot button of minimum wage are the lower class labor workers as well as the federal government. The legislation of the Fair Labor Standards Act (FLSA) was enacted in 1938 in order to establish many labor laws to protect workers and their compensation. This is where standards of labor such as the 40 hour work week, overtime safeguards, and the national minimum wage were established. The legislation has been amended throughout the years, but the amendment of 1966 was particularly significant for tipped workers. This amendment extended provisions that would service employees working for tips that had initially been precluded from the FLSA, but also enacted a new base pay –or sub-minimum wage— for workers who were regularly compensated through tips. This is where the concept of tipping took a pivotal turn. As tips were initially a simple token of gratitude from the customer to the service worker, they essentially became a subsidy from the customers to the employers of these tipped workers. The minimum wage standard is primarily set by the executive branch of government. (Miller 2015)

Monetary policy is the system of a centralized bank or financial institution of a nation’s monetary government controls the flows of currency throughout the economy. This control over the supply of currency is maintained through establishing interest rates or economic inflation. The objectives of monetary policy are to cultivate price stability and obtain increased economic development. Monetary policy considers macroeconomic objectives such as lowering the unemployment rate, reducing poverty, and establishing federal minimum wage. The economic outcome of monetary policy sets the bar for what strategies should be set in place in order to create the most economically effective monetary policy. (Amadeo, 2014)

Monetary policy usually has two primary outcomes. The outcomes of monetary policy can lead to economic expansion. In this scenario, the monetary policy drives up the total supply of currency throughout the economy at a faster rate than how it is normally distributed. This form of monetary policy is primarily used to help reduce the unemployment rates during an economic recession or depression. This is done by reducing interest rates for businesses. When interest rates are reduced, businesses are more likely to finance their operations through loans or credit which gives them the opportunity for business expansion. This can open up new jobs and contribute to lowering the unemployment line. (Amadeo, 2014)

Income inequality is the uneven dissemination of income amongst workers across an economy. Workers are divided into classes based on income; lower class, middle class, and upper class, where upper class generates the most income. An economic concept of occupational classification defines two types of workers, blue collar and white collar. Blue collar workers perform manual labor, and usually pay by the hour. Although most blue collar jobs don’t require a high level skill set such as a college degree, some blue collar work requires certain experience and certifications such requirements possessed by a plumber or electrician. White collar work involves employees performing highly skilled duties set in an office environment, where they usually earn an annual salary. Most white collar work requires a higher level of education or demanding certifications, such as that of a lawyer or a certified public accountant. This concept is often referred to as capitalism, where the income earners in the upper brackets gain at the cost of those working for minimum wage. Minimum wage could easily increase if the top 10% of earners would be willing to share their fortune with the working class that keeps their pockets deep in the first place. (Meer and West 2015)

Change is necessary in the income brackets to balance out the scale of minimum wage to the top 10 percent of earners more fairly. It is true that executive workers will always earn more than janitors, but this does not mean the executive workers should continue to see excessive increases in their income at the cost of the janitor’s hard earned work. Research shows that this is happening in virtually every industry in America and it needs to be addressed for the sake of the working class citizens that keep this country running. (Burke, Miller and Long 2015)

Every nation has its own set federal minimum wage as well as its own concerning issues that come with it. The minimum wage issues regarding the US however are very unique to the US, making this a domestic issue. Considering the existing constitutional powers, I would recommend that minimum wage be adjusted to suit the needs of the common American employee. The effects of the labor market have an impact on minimum wage. The demand for labor is in conjunction with a set minimum wage, as businesses need to finance how many employees they can afford to put on their payroll. If there is an increase in minimum wage, it decreases the demand of labor. Although workers will receive a higher wage, they do so at the cost of other workers either having a decrease in hours or joining the unemployment line. However, labor market equilibrium dictates that higher minimum wages will increase production costs, which leads to greater costs for goods and services. Of course, different products and services have varying price elasticity. Supply and demand is dependent on its’ correlating market industry.  (Meer and West 2015)

Bibliography

Amadeo, Kimberly. What Is Monetary Policy? Objectives,Types and Tools. November 29, 2014. http://useconomy.about.com/od/glossary/g/Monetary_policy.htm.

Burke, Debra, Stephen Miller, and Joseph Long. “Minimum Wage and Unemployment Rates: A Study of Contiguous Counties.” Gonzaga Law Review, 2015.

Meer, Jonathan, and Jeremy West. “Effects of the Minimum Wage on Employment Dynamics.” Texas A & M University, 2015.

Miller, Roger LeRow. Business Law Today. Mason: South-Western Cengage Learning, 2015.

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