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17 October 2013

Should Minimum Wage and Living Wage Laws Be Eliminated?

The intention to adopt Minimum Wage law was to fight the poverty and to help people with law wages to increase their income. The U.S. government has the tendency to raise the rates of the minimum wage with the time. As it was stated, it helps poor people with low salaries to afford more commodities of the contemporary civilization. According to its specific costs of living, every state has its own rate of the minimum wage. Living wage is the modern innovation of the strategy in the Wage movement. The government decided that some people need the special approach in the terms of income. Living wages law is applied locally to workers whose employers received subsidies from government. However, both minimum and living wages triggered the arguments of their effectiveness and flaws.

From one point, the goal of adopting the laws to destruct the poverty and bring people’s income to the normal level is very effective. In theory, recurrent increase of the minimum wage rates has to boost the income of people and reduce the poverty. As the market enhances the prices on the various things and services, people do not have to suffer from this. At the same time, it is important to analyze the question from different angles. The main drawback of the minimum wage law is in its affect on people who do not have enough skills due to many reasons. The raise of the minimum wage lead to the situations where the employers overlook the workers who did not gain any experience or enough education. It is a dead end for the teenagers, older workers or ethnic minorities. In this point, Minimum Wages law supports poverty. Minimum wages can destroy a worker for whom this law was developed. Some scholars defending minimum wages state that the jobs poor people could miss are already lousy. It is true, but it is rather problematic for a person with not enough education or experience to find any kind of job. As a result, minimum wages law can take away even the accessible jobs for this group of people.

Douglas McKenzie is the outspoken opponent of the idea of minimum and living wages. He insists on the point of the negative impact of such laws oppose to its positive achievements. McKenzie takes the example of the unemployment rates to show how minimum wages law influencing people. “According to the US Census, national unemployment rates were 3.3% in 1927, 1.8% in 1926, 3.2% in 1925, 2.4% in 1923, 1.4% in 1919 and 1918, 2.8% in 1907, 1.7% in 1906, and 3.7% in 1902.”(McKenzie)  Today the unemployment rates did not change, and some states still have these indicators high. As the matter of fact, the minimum wages had little effect on those who already is facing poverty. The economists who support the wages movement insist that a person, who gains more money, is more productive. Though, what about people with no experience or no education? The ethnic minorities still have the poverty level higher than the others; the unemployment rates are also high.

The problem with the minimum wages is that economists look at the issue only from one side, never mentioning those who really need the low-waged jobs. The living wages reforms can cause even greater problems, as it demand even higher salary from the employer. There is no chance that, for example, a young African American teenage will get a living or even a minimum wage job. This practice leads to speculation on the status of low income families and hiring the workers illegally to bypass the law and the reason to pay more. Having the aim of fighting the poverty, wages movement has a side effect of stagnation in this issue. As the result, the most vulnerable employees suffer from the minimum and the living wages laws. 

Works Cited

McKenzie, Douglas, W. Mythology of the Minimum Wage. Ludwig von Mises Institute, 3 May. 2006. Web. 17 Oct. 2013. < http://mises.org/daily/2130>.