Should the Minimum Wage be Abolished?

The minimum wage, the hourly amount that employers can legally pay employees. Going around for the past decades, there have been questionable voices on if the minimum wage should really be a thing anymore. In many countries, the minimum wage has been really successful. However, countries like the United States have shown negative progress in the past years. The minimum wage has not been seen as a successful system, so it is clear they are not doing something right. The minimum wage should be abolished because there would be no difference for the citizens and the economy.

The history of the minimum wage goes way back to the early 1900s where citizens worked and received the legal minimum. According to Business Insider, the wage was introduced in 1938 starting at an amount of $0.25. The intention for the minimum wage has been for people to live a financially stable lifestyle. Throughout the years, the minimum wage has increased significantly due to the change in the economy. Today, according to the U.S. Department of Labor, the current minimum wage in California is 13-14 dollars, depending on how many employees are in the specific company. An article from History.com describes a timeline of the history of the minimum wage in America. In the source, the text explains the events ranging from the first increase to 75 cents in the year 1949 to the passing of the equal pay act signed by President Kennedy which guaranteed equal pay, regardless of gender. It is certainly clear that the minimum wage has been through a very long and famed history, but the argument of whether the act should or should not be abolished still stands today. When viewing the minimum wage, there are certainly different sides and points of views that are represented. Some being for and some being against the wage that is theoretically supposed to support and help individuals live a comfortable life. Today, those who are being supported with the minimum wage, are simply not receiving enough to live a stable life. A 2021 article from CNBC shares an analysis by researchers from the Massachusetts Institute of Technology, “Even with a raise to $15 per hour, a typical family of four couldn’t afford the basics in any U.S. state.” This analysis, shows what good the wage is currently doing to America, so why even keep it?

To begin with, the minimum wage doesn’t stop employers from cheating. In theory Without the minimum wage, workers can potentially cheat the system and find a reason to not pay certain employees the same amount as others. However, workers are still cheating their employees with the current minimum wage. Employees are being affected by wage theft more than ever. An article from The Conversation states, “Willis and her colleagues, however, claimed they were not paid for those extra few minutes worked before and after their shifts. Or for working during lunch breaks.” The fact that employees were unpaid for times where they worked shows the theft that is seen in today’s society. Adding on, a study by Elizabeth Tippet, a law professor at the University of Oregon, helped prove her point of wage theft still existing today. Tippet browsed through cases in the study, initially expecting a small handful of legal opinions but then being left with hundreds and hundreds of cases. As a result of her study, she later concluded that “real workers have lost real money to these practices.” Furthermore, The Conversation.com states, “a report from the Economic Policy Institute estimated that employees lose $15 billion to wage theft every year, more than all of the property crime in the United States put together.” It is no question that these acts of wage theft are occurring which helps understand that there being and not being a minimum wage serves no difference.

Additionally, poverty rates haven’t decreased as minimum wage rates are given, causing no purpose of the wage. Many believe that Without the wage, workers would not be able to live a financially stable life, especially those with families to take care of. However, this statement is simply just a theory and nothing else. With recent studies, there has not been a decrease as the wage taking place. According to Cato Institute, a study performed by Joseph Sabia, a labor economist from San Diego State University, “found no evidence that minimum wage increases were effective at reducing overall poverty rates or poverty rates among workers.” This study performed alongside Richard Burkhauser, professor at Cornell University, found that the minimum wage causes less work for lower-skilled people. He described how companies would look towards other options, leading to higher increases in poverty, rather than a needed decrease. Similarly speaking, only a few households who are guided with minimum wage are considered in poverty. It may sound surprising, however, data from Cato Institute helps support the claim. Sabia claims, “We find that only 13 percent of workers who would be affected live in poor households, while nearly two-thirds live in households with incomes over twice the poverty line, and over 40 percent live in households with incomes over three times the poverty line.” This quote goes on to show that the stereotype of the single mother who is raising her children while serving a job is not true. In fact, many who are living under the minimum wage are not considered to be living in poverty. Ultimately speaking, it is not true that the minimum wage decreases poverty, as it is just a stereotype.

To add on, many believe that employees would find themselves more productive with a minimum wage. However, how can we really make this a factual statement without getting tons of feedback from those who are receiving the wage? Studies show that employees on a day-to-day basis waste good chunks of time. A source called Bluewater Credit states, “89% of U.S. workers admit to wasting company time while they’re on the clock every day. More than one out of ten admit to wasting “several hours” at work.” The fact that the majority of these employees are taking so much time, results in a lack of productivity. As an example, a study by Marsha Egan who is a workplace productivity coach explained how “it takes the average person at least 4 minutes to get back on task after a distraction. Thus, the more distractions, the lower employee productivity.” The act of wasting time and causing a lack of productivity proves how the minimum wage has nothing to do with productivity. Though others may argue that people may feel more focused and productive as they feel more financially comfortable, it still does not matter as there are millions and millions of people wasting their own time. An article from CNBC about how distractions cause a change in productivity states, “Bosses say workers waste too much time on their personal phones. Employees tell a very different story, a recent poll has found. While only 10 percent of employees with smartphones said the devices decrease their productivity during work hours, employers pointed to mobile phones as the number one reason for interruptions, according to a new survey from Career Builder.” This shows that no matter how one is doing financially, there will always be distractions. As a whopping 89% waste time, there is no doubt that lack of production is mainly caused by time-wasting, and not the idea that people are not being productive due to a lack of pay.

Today, countries all over the world are using minimum wage and are seen to be the wealthiest and successful nations. These nations include Netherlands, United Kingdom, and Germany. All of these countries have a successful system which leads to their overall wealth. Germany and the United Kingdom sitting in the top 6 show how impactful the minimum wage is. According to Springer Open, In countries like Germany, the minimum wage is so successful due to the fact that they are very good at reducing the risk of poverty and welfare dependency. This scenario is not seen in all countries, as many cannot support conflicts like poverty. One country that simply cannot find success is the United States. A huge part of why the minimum wage does not work is because the U.S. is a capitalist nation. This meaning that the “Capitalist economies use a free market that is not controlled by the government to let private businesses and people determine the value of products,” as stated in an article by Study. Meanwhile, European countries who mainly tend to be socialist nations, are countries that “use a planned economy in which the government controls the production and distribution of necessary goods and services.” This heavily impacts how the minimum wage is performed as socialist countries provide enough income for citizens. On the other hand, capitalist countries like the United States, have a corrupt system where often the rich get richer and the poor get poorer. According to investopedia.com, “Nevertheless, some economists and political philosophers have contended that the capitalist model is inherently flawed. Such a system, they say, necessarily creates clear winners and losers.” This demonstrates why the minimum wage is not working in the United States, while socialist countries are seen to have more success. Going forward to a new point, there are wealthy countries with less poverty rates that do not have a minimum wage. A source named Nomad Capitalist states, “Today, countries like Sweden, Norway, Denmark, Singapore, Hong Kong, and Austria are great examples of how things should be done everywhere else. In fact, these societies might be a couple of steps ahead of the rest.” Additionally, they state, “All of these nations have lower unemployment rates and higher average salaries than most of their European and Asian neighbors. They also permit a large degree of labor freedom by allowing employees to freely unionize.” This clearly demonstrates how countries without a minimum wage are being one of the most wealthy states, or they could be considered a “couple of steps ahead of the rest”.

The minimum wage, a controversial act in the United States, is simply not doing enough for families and individuals. Many would argue that the benefits of the minimum wage could be a life-changing solution, however, many are just theories. For example, theories include living a comfortable life with the minimum wage, but that is clearly not accurate. Those who are being supported with the minimum wage today are just not making enough to survive. Investopedia.com specifically states, “The hourly rate hasn’t kept up with the cost of living since the late 1960s.” With this piece of evidence, the overall idea and purpose of the minimum wage does not make sense. Overall, the idea is just a theory but does not make sense in reality.

Throughout the past years, many have begun to rethink if the historic minimum wage should be abolished or not. To many, the hourly wage has seen as a way to support families by paying individuals the bare minimum. However, this understanding has not been accurate. Families are not able to survive, nor are independent workers. So why even have a law that is increasing poverty rates, rather than decreasing? There is simply no need, and society is only getting informed of the positive sides of the wage that are clearly not true. Too many people are understanding the wage to be a positive act as many are being informed of the theory or possibility of the minimum wage. What people don’t understand are the negative effects that certainly outweigh the positive effects. Therefore, as a society, it is only right to inform others around us in order to create a world with less poverty and comfortable households. That being said, go out and enlighten others if you truly want to be part of a propitious society.

Bibliography

“State Minimum Wage Laws.” United States Department of Labor, www.dol.gov/agencies/whd/minimum-wage/state#:~:text=Employers%20subject%20to%20the%20Fair,wage%20of%20%247.25%20per%20hour. 

Lippo, Caralynn. “How Much the US Minimum Wage - and What It Can Get You - Has Changed since the Year You Were Born.” Business Insider, Business Insider, 30 July 2020, www.businessinsider.com/how-much-us-minimum-wage-and-its-value-has-changed-over-time. 

Iacurci, Greg. “Many Americans, Especially Families, Can't Live on a $15 Minimum Wage.” CNBC, CNBC, 22 Feb. 2021, www.cnbc.com/2021/02/21/15-minimum-wage-wont-cover-living-costs-for-many-americans.html. 

Kiger, Patrick J. “Minimum Wage in America: A Timeline.” History.com, A&E Television Networks, 18 Oct. 2019, www.history.com/news/minimum-wage-america-timeline. 

Cato.org, www.cato.org/blog/negative-effects-minimum-wage. 

“Employee Productivity: The Data Behind How We Waste Time: Knit People Small Business Blog.” Knit People, www.knitpeople.com/blog/employee-productivity-what-are-your-employees-wasting-their-time-on-everyday. 

SusiePoppick. “These Are the Top Workplace Productivity Killers.” CNBC, CNBC, 9 June 2016, www.cnbc.com/2016/06/09/top-distractions-at-work-and-how-to-increase-productivity.html

Bruttel, Oliver. “The Effects of the New Statutory Minimum Wage in Germany: a First Assessment of the Evidence.” Journal for Labour Market Research, Springer Berlin Heidelberg, 17 June 2019, labourmarketresearch.springeropen.com/articles/10.1186/s12651-019-0258-z.

Kurt, Daniel. “What Exactly Is a Socialist Economy?” Investopedia, Investopedia, 19 May 2021, www.investopedia.com/articles/investing/082014/what-exactly-socialist-economy.asp. 

Nomad Research TeamNomad Capitalist retains a network of freelance researchers around the world to supplement our ongoing research efforts. Julia. “Six Countries with No Minimum Wage.” Nomad Capitalist, 24 Dec. 2019, nomadcapitalist.com/2019/03/24/countries-no-minimum-wage/. 

Bloomenthal, Andrew. “Can a Family Survive on the U.S. Minimum Wage?” Investopedia, Investopedia, 20 June 2021, www.investopedia.com/articles/personal-finance/022615/can-family-survive-us-minimum-wage.asp.