Adequate minimum wage: Conclusion to the prolonged battle in the US

On November 11, 2014

The extended labour movement in the United States that petitioned for a minimum wage of $15 per hour finally came to the final success.




The former minimum wage in the States was $8 before it was increased by a sole dollar in 2013 thanks to the campaign of hotel workers in Providence. Still, that amount is nowhere enough to satisfy all the fundamental living fees. In fact, 50% of the fast foods workers of the nation still have to rely on social aids to meet ends

However, on Tuesday, workers in Alaska, Arkansas, Nebraska, South Dakota and many more have passed measures to raise minimum wage floor. Most of these states are Republican strongholds, yet minimum wage increase was passed overwhelmingly, 60% to 40% in average. However, the amounts of increase are distinctively different. For example, the liberal-oriented city of San Francisco agreed to escalate their minimum pay to the designated $15 per hour, whilst Oakland decided to take the change more tentatively to $12.25.

According to the Economic Progress Institution, an adult requires “$11.93 an hour to afford their most basic living expenses.” Therefore despite the non-uniform efforts to cope with the new minimum wages across cities and states of America, the change is still predicted to be saving grace for the country’s aggravating poverty rate (14.5% in 2013). Indeed, it can potentially relieve stress on financial debts and social assistance by making people more financially independent. The service industry will also recover as economic outlook is improved and people start to spend more in lieu of struggling to payout their monthly bills.


Speaker Mattiello announces the change

However, the policy’s effect on employment remains ambiguous. Obviously, a near 67% increase in wage floor would drop employers’ demand for employment as it would create a surge in production cost. “A $15 an hour minimum wage is an absurdity” said Worstal, T, economic writer at the Adam Smith Institute in London, who then explained that the Congress have not put the US’s earning tips into serious consideration, which usually are about 15% of the products/services’ prices (CNN 2013). He also adds:

The actual state of knowledge of the impact that the minimum wage has on employment in North America, and especially in Québec, leads to the conclusion that a minimum wage that is greater than 50% of the average wage is harmful to small wage earners and that a minimum wage that is less than 45% has very little risk for this group of workers. Between these limits, the area of 45% to 50% would represent an increasing danger to employment.

Therefore, the increase in wages is actually hurting US low paid workers, those who are paid minimum wages.

Although it is unsure whether this change will improve workers’ living standard or push them to unemployment, history proves that the new policy’s merits will outweigh its drawbacks because of the US market’s characteristic: a consumers’ market which is dependent on the wealth of its customers.



Dave DO

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