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Minimum Wage Essay: Rates Up – Jobs Down

minimum-wage-essayAll over the United States workers are hardly making ends meet, usually staying at work for up to 50 hours for lower wages than they used to. One of the solutions includes the increased minimum salary of $10 per hour. Some of the American states have successfully implemented their own level of minimum wages that is higher than in the rest of the country. The other states are also considering potential changes.

The conservatives are extremely concerned about increasing the minimum wage level which may cause more businesses outsourcing their positions elsewhere – in the countries, where employees get less than $4 per hour (much less!).Their biggest fear is to be forced to pay employees over $10 per hour, which will make all US companies simply ship jobs abroad for wages lower than American workers would work for.

At the same time, liberals tend to consider the proposed increase a so-called moral obligation to ensure employees, who are engaged in a full-time job, have an opportunity to make a decent living – an annual income that left the poverty line behind. With that in mind, Barack Obama signed an order that guarantees all employees working on federal contract will get $10.10 hour minimum.

Some have already pointed at the idea that we must concentrate on the increase in the employee’s’ skill level, by means of academic support and requalification programs. The idea that workers with higher skill level would provide more jobs is not likely, seeing that so few products are still produced in the USA. Through rapid outsourcing of the manufacturing infrastructure, America had lost the very job opportunities that would require those better skills.

The heart of the problem lies in the fact that the current economy of the USA has been stripped of the manufacturing core, as well as its middle class jobs. For that very reason the US economy cannot provide an average worker with a job with a good salary. The issues like the USA decimating manufacturing base are usually caused by the agreements such as NAFTA.

The so-called ‘free trade’ agreements are the reason why the US manufacturers now have to compete with the countries of the third world, where the salaries are typically less than $4 per hour without any particular safety regulations. This made a lot of American manufacturing leave our shores.

Since well-paid positions in manufacturing field have left the territory of the USA, the workers with low skills set have switched to the service jobs that are low-paid, thus, taking the places that were usually filled by high school teens. Most of the jobs available now are created within the service sector. For instance, over 24 000 jobs provided last month were focused in restaurants and hotels. Even with excellent educational background all you can do is nothing since over the half of the recent grads are either underemployed or jobless.

To cut it, the policies that the USA is following nowadays should be changed through eliminating or modifying the existing ‘free trade agreements’. This will let the goods manufactured in the US compete all over the world. In case no appropriate measures are taken in the nearest future, the disparity of the wage will go on increasing, and there will be no middle class at all. And we all will have to serve to the plutocracy since there will be nothing but service jobs.

References:

  1. Thompson, J. P. (2009). Using local labor market data to re-examine the employment effects of the minimum wage. Industrial and Labor Relations Review, 62(3):343–366.
  2. Reich, M. (2009). Minimum wages: Politics and economics. In Brown, C., Eichengreen, B., and Reich, M., editors, Labor in the Era of Globalization, pages 353–374. Cambridge: Cambridge University Press.
  3. Lester, Richard A. “Employment Effects of Minimum Wages.” Industrial and Labor Relations Review, January 1960, 13, pp. 254-64.
  4. Burdett, Kenneth and Mortensen, Dale T. “Equilibrium Wage Differentials and Employer Size.” Center for Mathematical Studies in Economics and Management Science Discussion Paper No. 860, North-western University, October 1989.
  5. Neumark, D., and W. Wascher. “Minimum wages and employment: A case study of the fast-food industry in New Jersey and Pennsylvania: Comment.” American Economic Review 90:5 (2000): 1362−1396.
  6. Sabia, J. J., and R. V. Burkhauser. “Minimum wages and poverty: Will a $9.50 federal minimum wage really help the working poor?” Southern Economic Journal 76:3 (2010): 592−623.
  7. Daniel Aaronson, “Price Pass-Through and the Minimum Wage,” Review of Economics and Statistics, vol. 83, no. 1 (February 2001), pp. 158–169.
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