Loudoun County Public Schools



Minimum WageMinimum wage has been a controversial topic in our society for decades now. Many Americans are unaware of both sides of the argument. Our job for this activity is to learn both sides of the argument and write a paper giving our stance on the minimum wage topic.Some common arguments in favor of the minimum wage:It goes toward providing a living wage for individuals and families.It helps reduce poverty.It increases workers’ standard of living.It helps close the income gap between the rich and the poor.It minimizes the exploitation of workers by employers. For example, asking employees to work longer hours will cost the employer a set amount.It stimulates the economy/ stimulates aggregate demand. Low-wage workers are more likely to spend a higher percentage of their income thanare well-to-do individuals.It increases the incentive to take a job rather than receive welfare andother services.In countries where there is no minimum wage, there are many workerswho live in poverty (China, e.g., has more than 700 million poor people).Some common arguments against theminimum wage:It costs jobs.For employers, it acts as a deterrent against creating new jobs.It also makes employers less likely to hire teenage or inexperienced workers whose productivity might be less than the market minimum might justify.It also hurts small businesses. They don’t have the flexibility that large companies have to adjust their workforce given greater labor costs.It can cause inflation. A company will typically try to pass on the added expense of an increase in wages to consumers, making a company’s products cost more.Rising labor costs would make U.S. goods less competitive internationally.This could also cause businesses to shift their operations overseas, to countries where labor costs aren’t so high.It encourages illegal hiring practices. Companies may turn to the black market for cheaper workers. (See e.g. sweatshops)Based on your research I want you to take a position on the Minimum Wage argument. You will write an argumentative paper in favor of your stance. Paper Requirements: Times New Roman12” FontDouble Spaced2 page minimumWork cited pageMLA formatPaper Requirements Continued: You will need to have a thesis and three main map points to use in your paper. I would highly recommend using the other side in your paper. Use the other persons argument against them. Total Grade: _______/ 30 PointsMinimum Wage: Pro and ConArguments for Minimum Wage: (Pro)Raising the minimum wage would increase economic activity and spur job growth. The Economic Policy Institute stated that a minimum wage increase from the current rate of $7.25 an hour to $10.10 would inject $22.1 billion net into the economy and create about 85,000 new jobs over a three-year phase-in period. Economists from the Federal Reserve Bank of Chicago predicted that a $1.75 rise in the federal minimum wage would increase aggregate household spending by $48 billion the following year, thus boosting GDP and leading to job growth. A 1994 study by economists Alan Krueger, PhD, and David Card, PhD, compared employment in the fast food industry after New Jersey raised its minimum wage by 80 cents, while Pennsylvania did not. Krueger and Card observed that job growth in the fast food industry was similar in both states, and found "no indication that the rise in the minimum wage reduced employment." Their findings were corroborated by economists Hristos Doucouliagos, PhD, and T.D. Stanley, PhD, in a review of 64 minimum wage studies. The authors found "little or no evidence of a negative association between minimum wages and employment." Increasing the minimum wage would reduce poverty. A person working full time at the federal minimum wage of $7.25 per hour earns $15,080 in a year, which is 20% higher than the 2015 federal poverty level of $12,331 for a one-person household under 65 years of age but 8% below the 2015 federal poverty level of $16,337 for a single-parent family with a child under 18 years of age. According to a 2014 Congressional Budget Office report, increasing the minimum wage to $9 would lift 300,000 people out of poverty, and an increase to $10.10 would lift 900,000 people out of poverty. [A 2013 study by University of Massachusetts at Amherst economist Arindrajit Dube, PhD, estimated that increasing the minimum wage to $10.10 is "projected to reduce the number of non-elderly living in poverty by around 4.6 million, or by 6.8 million when longer term effects are accounted for." A higher minimum wage would reduce government welfare spending. If low-income workers earned more money, their dependence on, and eligibility for, government benefits would decrease. The Center for American Progress reported in 2014 that raising the federal minimum wage by 6% to $10.10 would reduce spending on the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) by 6% or $4.6 billion. The Economic Policy Institute determined that by increasing the minimum wage to $10.10, more than 1.7 million Americans would no longer be dependent on government assistance programs. They report the increase would shave $7.6 billion off annual government spending on income-support programs. Arguments against Minimum wage: (CON)Increasing the minimum wage would force businesses to lay off employees and raise unemployment levels. The Congressional Budget Office projected that a minimum wage increase from $7.25 to $10.10 would result in a loss of 500,000 jobs. In a survey of 1,213 businesses and human resources professionals, 38% of employers who currently pay minimum wage said they would lay off some employees if the minimum wage was raised to $10.10. 54% said they would decrease hiring levels. San Francisco's Office of Economic Analysis said that an increase to $15 would reduce the city's employment by about "15,270 private sector jobs." In 2014, Steve H. Hanke, PhD, Professor of Applied Economics at Johns Hopkins University, surveyed the 21 European Union (EU) countries that have a minimum wage and found they had an average unemployment rate of 11.8%, about a third higher than the 7.9% average unemployment rate in the seven EU countries that have no minimum wage. Raising the minimum wage would increase poverty. A study from the Federal Reserve Bank of Cleveland found that although low-income workers see wage increases when the minimum wage is raised, "their hours and employment decline, and the combined effect of these changes is a decline in earned income... minimum wages increase the proportion of families that are poor or near-poor." As explained by George Reisman, PhD, Professor Emeritus of Economics at Pepperdine University, "The higher wages are, the higher costs of production are. The higher costs of production are, the higher prices are. The higher prices are, the smaller the quantities of goods and services demanded and the number of workers employed in producing them." Thomas Grennes, MA, Professor Emeritus at North Carolina State University, and Andris Strazds, MSc, Lecturer at the Stockholm School of Economics in Riga (Latvia), stated: "the net effect of higher minimum wages would be unfavorable for impoverished households, even if there are no job losses. To the extent that some poor households also lose jobs, their net losses would be greater." A minimum wage increase would hurt businesses and force companies to close. 60% of small-business owners say that raising the minimum wage will "hurt most small-business owners," according to a 2013 Gallup poll. Jamie Richardson, MBA, Vice President of fast food chain White Castle, said that the company would be forced to close almost half its stores and let go thousands of workers if the federal minimum wage were raised to $15. Forbes reported that an increase in the minimum wage has led to the closure of several Wal-Mart stores and the cancellation of promised stores yet to open. ................
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