Difference between revisions of "Minimum wage"
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Most countries have a minimum wage. The minimum wage in the United states was most recently raised to $7.25/hr, on July 24, 2009. At this rate, a person working a 40-hour week for 52 weeks a year at minimum wage earns $15,080.00 for the year. The minimum wage is higher in many states, such as [[New Jersey]], due to state minimum wage laws. | Most countries have a minimum wage. The minimum wage in the United states was most recently raised to $7.25/hr, on July 24, 2009. At this rate, a person working a 40-hour week for 52 weeks a year at minimum wage earns $15,080.00 for the year. The minimum wage is higher in many states, such as [[New Jersey]], due to state minimum wage laws. | ||
| − | Like all market forces, wages are payed based on interactions between the supply curve (how much workers are willing to supply a particular type of labor at a certain wage) and a demand curve (how many workers of a particular type a firm is willing to hire at a particular wage). Wages are typically set at [[equilibrium]]. If a minimum wage is imposed that is above this equilibrium, it leads to structural [[unemployment]]. If a minimum wage is set below the equilibrium point, it is unlikely to affect that | + | Increases in the minimum wage cause students to drop out of school in order to join the workforce, rather than continue their education for higher paying jobs in their future. |
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| + | Like all market forces, wages are payed based on interactions between the supply curve (how much workers are willing to supply a particular type of labor at a certain wage) and a demand curve (how many workers of a particular type a firm is willing to hire at a particular wage). Wages are typically set at [[equilibrium]]. If a minimum wage is imposed that is above this equilibrium, it leads to structural [[unemployment]]. If a minimum wage is set below the equilibrium point, it is unlikely to affect that job's wage unless a complement or substitute job's equilibrium wage is less than the minimum wage (causing ripple effects throughout the related markets). | ||
==Political views== | ==Political views== | ||
Revision as of 14:53, January 10, 2010
The minimum wage is the lowest wage that an employer may legally pay their workers. More than 90% of countries in the world have minimum wage laws.
Most countries have a minimum wage. The minimum wage in the United states was most recently raised to $7.25/hr, on July 24, 2009. At this rate, a person working a 40-hour week for 52 weeks a year at minimum wage earns $15,080.00 for the year. The minimum wage is higher in many states, such as New Jersey, due to state minimum wage laws.
Increases in the minimum wage cause students to drop out of school in order to join the workforce, rather than continue their education for higher paying jobs in their future.
Like all market forces, wages are payed based on interactions between the supply curve (how much workers are willing to supply a particular type of labor at a certain wage) and a demand curve (how many workers of a particular type a firm is willing to hire at a particular wage). Wages are typically set at equilibrium. If a minimum wage is imposed that is above this equilibrium, it leads to structural unemployment. If a minimum wage is set below the equilibrium point, it is unlikely to affect that job's wage unless a complement or substitute job's equilibrium wage is less than the minimum wage (causing ripple effects throughout the related markets).
Contents
Political views
The left wing in American politics tends to present a minimum wage as benefiting the lower class by helping to lift poor people out of poverty. Conservatives and libertarians generally counter this argument with statistics showing that every increase in the minimum wage has increased unemployment, especially among black inner city youth; see entry-level jobs. It also obliges companies to outsource many jobs to China and the Third World.
Fiscal conservatives tend to oppose increases in the minimum wage because in a free market, the price of labor, like any other commodity, should be set by negotiations between the buyer and seller without undue interference from the state.
Socialists, and many economic liberals, disagree with this view of labor as a commodity because they believe it dehumanizes laborers by permitting companies to pay employees less than necessary to live a decent life, support a family, etc; see living wage. Even without legislation, the minimum wage as of 2007 is far below the lowest wage paid by most large companies.[1]
Empirical evidence from the 2009 recession
The 2009 recession gave a compelling picture of how an excessive minimum wage can exacerbate the employment climate. None of the five states with the lowest unemployment rates in May 2009, all below 5.5%, had a minimum wage higher than the federal minimum wage of $6.55. Five of of the six states with the highest unemployment rates, all above 11.2%, had minimum wages above the federal minimum wage. Oregon, with a minimum wage of $8.40, had an unemployment rate of 12.4%. Generally, states with a higher minimum wage than the federal minimum wage had unemployment rates that were higher than states that did not have a higher minimum wage.[2][3]
| State | Minimum Wage prior to 7/24/2009 increase | Unemployment Rate as of 5/2009 | Minimum Wage Rank | Unemployment Rate Rank |
|---|---|---|---|---|
| Nebraska | $6.55 | 4.4% | 1 | 1 |
| North Dakota | $6.55 | 4.4% | 1 | 1 |
| South Dakota | $6.55 | 5.0% | 1 | 3 |
| Wyoming | $6.55 | 5.0% | 1 | 3 |
| Utah | $6.55 | 5.4% | 1 | 5 |
| Iowa | $7.25 | 5.8% | 31 | 6 |
| Oklahoma | $6.55 | 6.3% | 1 | 7 |
| Montana | $6.90 | 6.3% | 23 | 7 |
| New Hampshire | $7.25 | 6.5% | 31 | 9 |
| New Mexico | $7.50 | 6.5% | 42 | 9 |
| Louisiana | $6.55 | 6.6% | 1 | 11 |
| Arkansas | $6.55 | 7.0% | 1 | 12 |
| Kansas | $6.55 | 7.0% | 1 | 12 |
| Texas | $6.55 | 7.1% | 1 | 14 |
| Virginia | $6.55 | 7.1% | 1 | 14 |
| Maryland | $6.55 | 7.2% | 1 | 16 |
| Vermont | $8.06 | 7.3% | 49 | 17 |
| Hawaii | $7.25 | 7.4% | 31 | 18 |
| Colorado | $7.28 | 7.6% | 38 | 19 |
| Idaho | $6.55 | 7.8% | 1 | 20 |
| Connecticut | $8.00 | 8.0% | 45 | 21 |
| Delaware | $7.15 | 8.1% | 25 | 22 |
| Minnesota | $6.55 | 8.2% | 1 | 23 |
| New York | $7.15 | 8.2% | 25 | 23 |
| Pennsylvania | $7.15 | 8.2% | 25 | 23 |
| Arizona | $7.25 | 8.2% | 31 | 23 |
| Massachusetts | $8.00 | 8.2% | 45 | 23 |
| Maine | $7.25 | 8.3% | 31 | 28 |
| Alaska | $7.15 | 8.4% | 25 | 29 |
| West Virginia | $7.25 | 8.6% | 31 | 30 |
| New Jersey | $7.15 | 8.8% | 25 | 31 |
| Wisconsin | $6.55 | 8.9% | 1 | 32 |
| Missouri | $7.05 | 9.0% | 24 | 33 |
| Washington | $8.55 | 9.4% | 51 | 34 |
| Mississippi | $6.55 | 9.6% | 1 | 35 |
| Georgia | $6.55 | 9.7% | 1 | 36 |
| Alabama | $6.55 | 9.8% | 1 | 37 |
| Illinois | $8.00 | 10.1% | 45 | 38 |
| Florida | $7.21 | 10.2% | 30 | 39 |
| Indiana | $6.55 | 10.6% | 1 | 40 |
| Kentucky | $7.25 | 10.6% | 31 | 40 |
| Tennessee | $6.55 | 10.7% | 1 | 42 |
| District of Columbia | $7.55 | 10.7% | 43 | 42 |
| Ohio | $7.30 | 10.8% | 39 | 44 |
| North Carolina | $6.55 | 11.1% | 1 | 45 |
| Nevada | $7.55 | 11.3% | 43 | 46 |
| California | $8.00 | 11.5% | 45 | 47 |
| South Carolina | $6.55 | 12.1% | 1 | 48 |
| Rhode Island | $7.40 | 12.1% | 40 | 48 |
| Oregon | $8.40 | 12.4% | 50 | 50 |
| Michigan | $7.40 | 14.1% | 40 | 51 |
See Also
Sources
- ↑ Alan Renolds, Cato Institute. Below the Minimum Wage
- ↑ Bureau of Labor Statistics
- ↑ Department of Labor
