1. Many Americans argue that boosting the minimum wage from $5.15 an hour to $7.25 an hour is a good thing for the economy and will help bring more people out of poverty. They think that with the help of food stamps, EITC, and the minimum wage at $7.25, many people will be able to rise above the poverty threshold. They also believe that raising the minimum wage will positively effect groups like single mothers, who are at a risk of ongoing poverty. Also, that by more people having more money, this will help the economy because those people will have money to spend. On the other hand, some people disagree with raising the minimum wage. They think that raising minimum wage is only affecting a small percentage of the workforce, and mostly targets teens, not necessarily people in poverty. They also say that this will lead to higher prices on business products will lead to more job cuts, which will hurt business and overall more low- income workers. Instead, they say that the EITC program should be extended, because this wouldn't interfere with the market.
2. I believe that the minimum wage hike is actually hurting more people that it is helping. With business' having to pay their employees more, they have to increase their prices on products on order to make a profitable income. With this, I think that Americans are actually buying less products, which leads to unnecessary employees, and therefore business's are firing more low- income employees. Overall, this is just hurting our economy, beacause less money is actually being spent by the low-income people. Professor Stiglitz also disagrees with raising minimum wage saying, "If government attempts to raise the miminum wage higher than the equilibrium wage, the demand for workers will be reduced and the supply increased. There will be an excess supply of labor."
Links:
Issue #1 All Things Being Equal : http://rachaelbeers951.blogspot.com/2010/04/issue-1-all-things-being-unequal.html
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