Essay about Macroeconomics: Minimum Wage Increase

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Kristin Staats
Macroeconomics
Doctor Flemming
April 8, 2014

Macro Economics: Increasing minimum wages in the United States

Throughout the 21st century, our views have drastically changed on minimum wage with some of these things in mind: cost of living, consumer index prices, education, health care and many other issues. The start of minimum wage occurred when President Franklin D. Roosevelt signed the 121 bills while in office, one of them being on June 25th, “The Fair Labor Standards Act of 1938.” This act was established with an hourly wage of .25 cents per hour, with a maximum of 44 hours per week. This all started because the President asked Francis Perkins to become the Secretary of Labor. She told the President this “ I would accept if I could advocate a law to put a floor under wages and a ceiling over hours of work and to abolish abuses of child labor”. Did you know that on average a car cost $860.00 and a home was $3,900.00 in 1938. We will see a rise in prices for these items in the coming years. This is a part of today’s history and still continues to make for a very wide spread discussion throughout the general public and legislation in our nation. Now today we look to see what has changed throughout the years and how increasing the minimum wage today would benefit our economy. My opinion on this is that the minimum wage increases should occur however there is a course of action that needs to be directed properly for this to make an effective change over all. What value are we to see by increasing the minimum wage throughout the United States or will there be none? The first point to discuss is how the dollar amount of minimum wage has evolved in America and the history behind it. To show a value of increase here are a few years of peak growth within wage increases; during 1957 it was $1.00 and in 1974 equaled $2.00 and in 1981 the average was $3.85 When I was a child I started working in 1996 and this is also when President Clinton signed and made effective “The Minimum Wage Increase Act” on October 1st. This jumped from $4.25 and had an increase of $4.75 after the act then it had a growth of $5.15 in 1997. This change in 1997 also made a subminimum wage of $4.25 an hour for young adults 20 year old and younger totaling $4.25 during their first consecutive 90 days of work with the same employer. Now we look into the year 2013, the minimum wage is $7.25 and remains in some states in the current year of 2014. Most wonder how we figure out how minimum wage is decided. Some states use the cost of living formula and the consumer price index. Some states do not establish a dollar amount for its own minimum wage but adopts federal minimum wage by reference. For example: currently Nevada has a minimum wage rate of $8.35 without healthcare benefits and the rate is $7.25 with healthcare. Now the District of Columbia the rate and wage is set automatically at one dollar above the federal minimum wage rate if lower when increased. Today President Obama has a proposal that minimum wage be increased yet again to an average projection for the year 2014 at $10.10 for the federal minimum wage. Many feel that this bill will not passed by congress so each state is taking its own action to tackle the increase. Currently there are a few states that have established their new minimum wage rates. The state of California has identified in July 1st, 2014 of an increase up to $9.00 and then January 1st, 2016 it will be set at $10.00. Delaware has decided as of June 1st, 2014 in the amount of $7.75 to follow in the year 2015 with $10.50. The last example I will give is New York State. The state has decided upon a wage of $8.75 as of December 31st, 2014 to follow the same time the next year with $9.00. I bring forth a Senator and his thoughts. Mr. Tom Harkin (D-Iowa) on March 29th, 2014 discussed his generated plan the “Rebuild America Act.” “This involves an increase in our current $7.25 (we have held for 3 years) to a new
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