Raising the minimum wage would increase most low-wage employees’ earnings and household revenue, reducing poverty. However, the rest of the low-wage workers would lose their jobs as their household income crashes down.
What Is the Federal Minimum Wage?
Federal minimum wage is the hourly minimum wages’ intended amount. The prices range from $10 to $15 with a $1 increment. Every year, the federal minimum wage changes by variable percentages until it hits the objective amount for that year.
History of the Federal Minimum Wage
For public and private-sector U.S. employees, the Fair Labor Standards Act of 1938 (FLSA) introduced the minimum wage, overtime compensation, recordkeeping, and youth employee rights.
Since its inception, the FLSA was modified several times to implement different methods for food production and other enterprises, change contractual working hours, adjust school staff pay rates, and grant extra time off in exchange for extra hours to government workers.
Most of these amendments included adjustments to the payments. Because of this, the minimum wage climbed gradually from $0.25 per hour to $7.25 per hour from 1938 to 2009. In the past twelve years, however, it has seen no rise.
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Effect of Rising Minimum Wage for College Students
Minimum wage strongly impacts education in the US. Demonstrating this, college students in Florida and throughout the country believe that a $15 minimum wage would be key to funding their learning, balancing jobs, and juggling courses.
Florida is the eighth and second-most populated state to establish a $15-an-hour minimum wage, following an increasing number of states and localities.
Due to the pandemic, teachers are pursuing online studying with students. This has been a matter of concern since they can’t go to work.
The surveys show that about 70% of all college students in the United States work. However, due to a constant minimum wage and the rising expense of secondary school, money does not stretch as far as it formerly did for most university students.
As per the Urban Institute, in the 1960s and 1970s, a student working extra during the academic year and full-time during the summer at the subsistence wages could cover minimum costs at an average four-year public institution.
At the current minimum wage, the same workload would only pay 57% of college tuition costs and 27% of the room, boarding and other expenditures. A greater minimum salary may also assist some university students in finding work. College kids and other individuals without cars would benefit from a $15 wage.
Some economists and labour advocates believe that raising the minimum wage would eliminate poverty and put more income in the hands of Americans, who would then spend more and stimulate the economy. They also claim that such a minimum wage hike would aid women and people of colour, who are predominantly found in low-paying jobs.
Given the important role of gender inside the human capital model, women may find that their work efforts are more devalued in the future. For instance, they may expect smaller and more volatile careers than men. Workers with such careers receive lesser investment returns, which may dissuade women from investing that much. Other factors may influence women’s investment decisions less in their human capital. For instance, women who plan to be less active in the labour field in the future may opt for lower-skilled occupations.
Discrimination based on race or ethnicity can also contribute: students who are discriminated against are less interested in investing in their human capital and have a higher probability of dropping out of campus. At the same time however, women place a higher value on investing in human capital on average. This causes boys to have greater dropout rates as compared to girls. On the other hand, women would be much more inclined to drop out when the minimum wage is raised. Women who place a higher emphasis on human capital investment would be less inclined to drop out as the wage goes up.
If women perceive bigger job impediments than their male counterparts, they may not work that hard. However, due to these hurdles, they are more committed to reach a better bar and hence stay in school longer than men. Lastly, there may well be factors at home that encourage women to drop out of high school, such as increased demands for caring for siblings or adolescent motherhood. Because of this, the expectations regarding the distinction between girls and boys are vague.
To wrap things up, the negative impacts of lowering the minimum wage for young unskilled workers have been reduced. Although some working youngsters would gain from higher earnings, others would be limited in their choices and earn less over the course of their career. On the other hand, youth who have yet to obtain jobs because of the low minimum wage will have lower lifetime earnings, causing delays in labour market entry and job experience. Furthermore, if the minimum wage does not include a sub-minimum or training salary, businesses may decrease on-the-job training chances, lowering young workers’ lifetime earnings even more.
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