BUS 626 W1D2

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Ashford University *

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626

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Economics

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Jan 9, 2024

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Uploaded by cc0909n

Increasing the minimum wage is a contentious issue with both pros and cons, but there are strong arguments in favor of raising it. First and foremost, an increase in the minimum wage is a means to address income inequality. Currently, the federal minimum wage in the United States is $7.25 per hour, which has not kept pace with the rising cost of living. According to the Economic Policy Institute, in real terms, the minimum wage is lower today than it was in the 1960s. Raising the minimum wage can help lift millions of working people out of poverty and reduce income inequality. Additionally, a study by UC Berkeley's Institute for Research on Labor and Employment found that increasing the minimum wage can stimulate economic growth (2022). Berkeley). When low-wage workers receive higher pay, they tend to spend the additional income on goods and services, boosting local economies. This is often referred to as the "multiplier effect," and it can create jobs and support businesses. Furthermore, an increased minimum wage can also reduce the reliance on social safety net programs, such as food stamps and Medicaid. A report from the Congressional Budget Office (CBO) estimated that a $15 minimum wage could lift 1.3 million people out of poverty and reduce federal budget outlays for these programs. This shows that while there may be some job displacement, the overall social and economic benefits can outweigh the costs. In conclusion, raising the minimum wage has the potential to address income inequality, stimulate economic growth, and reduce the burden on social safety net programs, as supported by research and economic analysis. However, it's essential to strike a balance between wage increases and potential impacts on employment and business viability, which requires careful policy consideration. References: A $15 minimum wage would cost jobs, right? Probably not, economists say. (2022). Berkeley. https://news.berkeley.edu/2021/03/18/a-15- minimum-wage-would-cost-jobs-right-probably-not-economists- say#:~:text=In%20a%20groundbreaking%202019%20study Forbes, S., Lewis, N., & Ames, E. (2022). Inflation: What it is, why it’s bad, and how to fix it . Encounter Books The Budgetary Effects of the Raise the Wage Act of 2021 [Review of The Budgetary Effects of the Raise the Wage Act of 2021 ]. Congressional Budget Office .

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