Why the U.S. Minimum Wage Should Not Be Raised

Both the House and Senate made a number of attempts to increase a minimum wage for low-income workers; these debates on bills were caused by high prices on gas, education and medical costs, except for other expenses. The U. S. minimum wage history has started in 1938 to federally determine the fair pay for an hour of labor that employers should pay to their employees. However, a minimum wage can be set on local levels of individual states also. At present, 21 of the U. S. states have minimum wage above $5. 15.

On January 10, 2007, the House approved increase in minimum wage from $5.15 to $7. 25 in three steps: $5. 85, $6. 85 and the final one $7. 25 in 2009. Nevertheless, this increase may result in tax breaks for small businesses and the deterioration of the U. S. economy as a whole. The federal minimum wage is not guaranteed to all the U. S. employees. Those, who deserve federal minimum wage, are: – employees, who work in enterprises with $500,000 turnover/year; – workers, who are employed by firms with interstate commerce or goods’ production for commerce; – employees, who work in government agencies of federal, state and local levels;


– employees, who work in schools and hospitals. Nevertheless, the U. S. government has predetermined several exceptions to rules: young workers of 20 years old and under may expect only $4. 25/hour during the 90-calendar-day period of employment, and only one-half of workers under 25 years old and one-fourth of workers between 16 and 19 years old get the minimum wage of $5. 15; the Department of Labor has issued certificates for disabled workers, full-time students, apprentices and student learners; employee’s tips and cash must be equal to $5.15/hour, otherwise, employer must cover the difference; teens and those under 16 years old can work in non-farm, non-manufacturing, non-mining and non-hazardous jobs 18 hours/school week or 40 hours/non-school week from 7 a. m. till 7 p. m.

Teenagers make up 8 percent of minimum-wage workers, comparing to 2 percent of 65-year-old employees. (According to data obtained from “The Federal Minimum Wage” on About. com and Characteristics of Minimum Wage Workers: 2006).

Steny H. Hoyer, the House Majority Leader, stressed the words of Dr. Martin Luther King Jr.: “Equality means dignity. And dignity demands a job and a paycheck that lasts through the week” (Weisman, 2007). The House has supported these words with actions on January 10, 2007 – it has approved the first increase in the federal minimum wage that is supposed to end in two years. In their turn, as it is stated in the Washington Post, Republican leaders argue “that raising the minimum wage would cripple the economy and must be accompanied by significant tax cuts for small businesses to lessen the effect on them” (Weisman, 2007).

It is considered that over 13 million of workers would raise their financial status. But the question remains: ‘Who will pay for this increase? ’ Democrats have laid this burden on small businesses that are the engines of the U. S. economy’s growth and opportunities. Is this sector strong enough to hold this pressure or is the minimum wage increase necessary for the average American citizen? Let’s have a look at the second part of the question. According to the data, provided by the Oregon State University (OSU), the highest minimum wage was in 1968 – $9.

27, signifying high purchasing power; while during the ten-year period from 1997 till 2007 the minimum wage adjustments were frozen and the real minimum wage was lower than nominal one. The House’s bill assumes that low minimum wage will deplenish purchasing power and the U. S. economy as well. But, if we compare first three graphs, given on the OSU website, we will see that the minimum wage is in direct proportion to the poverty level. So, the higher minimum wage does not increase purchasing power, but rather leads to poverty.

It is not a myth, but the real facts from the American minimum wage history. Next goes the first part of the question – small businesses and their role in minimum-wage increase. Last year, the Senate has also proposed an increase of minimum wage, but the casting summed up that “small-business tax breaks by next week would cost the Treasure up to $10 billion over the next 10 years” (Weisman, 2007). Why should the wage increase depend on business’ payoffs? Sooner or later, government may face the tax-breaks’ problem.

Jim Kuhnhenn, in his article “Senate Clears Way for Minimum Wage Vote”, estimated that the raise of wage to $7. 25 will result in $8. 3 billion tax breaks for small businesses. (Houston Chronicle, 2007). This cost will cover tax credit for those employers, who hire disadvantaged or low-income workers. In another article, the author commented that tax-breaks extension would lead to up to $112,000 tax deduction for small businesses for new investments. (Associated Press, 2007).

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