The Need To Increase Minimum Wage - Essay Sample

The discussion on minimum wage and whether to increase it or not is an issue that has drawn controversial opinions from diverse sectors. Some economists argue that an increase in the minimum wage has an overall negative effect with the assertion that it increases production costs and results in a rise in unemployment (Gindling, 2018). however, other scholars posit that a steady and slight increase in minimum has tons of positive effects like GDP growth, less criminal activities, and reduced suicide rates. This paper supports this line of thought, highlighting these merits and calling upon policymakers in The United States to continually bridge the wage gap between high-earners and minimum-wage earners.

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Albeit, the most significant merit associated with increasing minimum wage is the positive growth impact it has on Gross Domestic Income per Capita. A study conducted in the state of Arizona in 200 revealed that an increase of minimum wages by 1 resulted in a 1.13% growth of the GDP (Congressional Budget Office. 2014). an explanation provided was that lower-income earners save less and have a higher propensity to consume (PTC) while higher earners save more and have a lower PTC. When the minimum wage is increased, consumption is likely to sore since the lower-income earners can now spend more, thus creating increased demand, resulting in more employment and GDP growth.

An increase in the minimum wage also has been associated with a decreased rate of suicide. A study conducted by Dangor (2020). revealed that raising the minimum wage by a single dollar could be why suicide rates dropped by 27,000 between 1990 and 2015. the study also argues that an increase of $2 would save 57, 000 more individuals from committing suicide. This is because an increase in wage leads to more satisfaction on the employees' side and also reduces poverty rates, which is a suicide causative(Dangor, 2020). moreover, research shows an increase in the minimum wage reduced crime rates. Besides, data shows that raising the minimum wage decreased crime rates by 4% in the USA within the same period (Gindling, 2018).

Conclusively, despite the argument that an increase in minimum wage bares adverse economic effects, the merits might outweigh the demerits, decreased suicide rates, increased productivity, and a growing GDP is worth pushing for better pay for those earning minimum wage. The ripple effects of an increased wage boost the employees' productivity and boost the health of the economy.

References

Congressional Budget Office. (2014, February 18). The effects of a minimum-wage increase on employment and family income. Retrieved May 29, 2020, from https://www.cbo.gov/publication/44995

Dangor. (2020, January 8). Raising the minimum wage by $1 may prevent thousands of suicides, a study shows. NPR.org. Retrieved May 29, 2020, from https://npr.org/sections/health-shots/2020/01/08/794568118/raising-the-minimum-wage-by-1-may-prevent-thousands-of-suicides-study-shows

Gindling, T. (2014). Does increasing the minimum wage reduce poverty in developing countries? IZA World of Labor. https://doi.org/10.15185/izawol.30