Minimum Wage Issue: Political Regulation

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Ever wonder what the minimum wage is and why it’s important? In this article, I will answer these questions as well as shed light on the political regulation of Minimum Wages of industrial soap company. This all-encompassing topic will teach you about how to use legislation appropriately and how to enforce regulations for your business. Whether you are for or against the idea of a minimum wage, this article will give you some insight into understanding why regulations are important for society.

Due to recent social movements such as Occupy Wall Street rallying over income inequality, many different states across America have seen an urgent increase in people demanding a raise in their paycheque.

1. Introduction

The topic of minimum wage is one of a great debate on how to regulate the economy effectively. Supporters argue that minimum wage regulation helps people from being exploited by employers by allowing them to work for a more fair price point. Opponents argue that this action mainly benefits employers, who can afford better prices to employees and make higher profits overall.

In this article I will break down the economic history of wages in America and I will explore what happens when political decisions are made towards the issue of a minimum wage. These subjects are important because they allow us to understand not only minimum wage regulations but also what motivates people with regards to economic legislation in modern society.

2. Economics of Wages

In order to understand the necessity of a minimum wage, we must first understand wages in America. In the US, wages are regulated and set by politicians. This means that Congress sets the federal level minimum wage at $7.25 per hour and states can also determine their own minimum wages. This makes sense as Congress sets forth laws for a federal level but it is up for states to determine how much money should be taken out of workers’ pockets on a state level.

During the Great Depression, Roosevelt increased the federal minimum wage to seventy cents in 1933 when businesses were not able to afford paying workers more than fifty percent of what they made.

3. The War on Poverty

In the 1960s, President Lyndon B. Johnson launched his “War on Poverty” and also increased the federal minimum wage to sixty-five cents per hour. The minimum wage that was decided upon was extremely low for the time; however, it was something different than what America had seen in World War II when over sixty percent of workers were paid over a dollar per hour.

Johnson understood that wages needed to increase in order to help lower-class families and individuals afford rent, utilities and food. In 1967 the federal minimum wage finally hit its current equilibrium at $1.60 per hour, forty cents higher than the original 1913 rate at ten cents per hour. Despite the importance placed on minimum wage throughout history, the federal rate still remains fairly low compared to other countries.

4. The Political Bureaucracy

In order to understand how politicians regulated the minimum wage, we must first understand what drove them to make these decisions. There are two main factors that approach political decision making on issues such as this one: people and money.

Firstly, politicians choose their stances on an issue because of their constituencies’ demands and their own personal beliefs. In regard to a minimum wage, many believe that the root-cause of poverty is not solely from employers paying workers less than they make; instead, it is from businesses in general not paying employees enough in wages so that they can afford a higher standard of living.

Secondly, politicians are incentivized to regulate the minimum wage mainly because of the large businesses that benefit from changes in law. Many businesses, such as Walmart and McDonald’s, make billions of dollars in revenue a year and can easily afford to pay their employees more money. These companies are not concerned with small additions to their bottom line but they are extremely concerned with how they appear in the public eye.

5. The Minimum Wage as a Political Tool

Now that we understand why politicians tend to enforce minimum wage legislation on society, we can now begin to look at examples of when this regulation has been used effectively and when it has been used inappropriately.

Moving forward in time, we will examine the minimum wage regulation of Obama’s administration. Obama increased the federal minimum wage to seven dollars per hour in 2009. At this stage, the rate was very high for what it was set to be at fifty cents per hour in 1973. The post-war period brought about a great degree of prosperity for average Americans, who could afford to purchase popular brands such as Ford and Chevrolet cars, working with American steel companies like U.S Steel and banks like Goldman Sachs that provided mortgages to thousands of Americans throughout the country. This prosperity led many politicians to push the federal minimum wage similarly up on an upward trend from forty cents per hour from 1963 until 1968 until reaching sixty-five cents per hour by 1969.

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