Good Example Of Creative Writing On Policy Memo: Minimum Wage Laws
The problem in our state is the current minimum pay per hour. Seeing as the national minimum wage is set at $7.25 per hour, this causes problems for many living in our state. The math is quite simple. A worker who does 40 hours a week at minimum wage will only earn around $15,000 before taxes. This will make life quite difficult, especially since the estimated poverty line in America is set at $11,670 for a one person household. Therefore, if a person has to support children on minimum wage, they would be living a life of poverty. This should be unacceptable for any civilized country or state. Therefore, the state legislature and governor should consider how to best raise wages for those that need them.
The history of the minimum wage in America goes back to President Roosevelt and the Great Depression. Needing a way to set a basic amount to live on, Roosevelt put minimum wage laws into effect in 1938. Beginning in 1938, the minimum wage was set at $.25, and has been changed periodically since then. However, the federal minimum wage did not come easily. There were several attempts prior to this when the federal government attempted to raise the minimum wage. In 1933, when the $.25 wage was proposed, the Supreme Court voted it down, claiming it was a violation of the separation of powers and the commerce clause. However, they changed their mind in 1938 and sided with FDR about the issues. The last time the federal minimum wage was raised was in 2009 where it went up from $6.55 per hour to the current $7.25 levels. The problem is the minimum wage has not been adjusted for inflation, which has caused hardship on workers. The following chart explains the history of the minimum wage and how it has worked relative to inflation.
This chart clearly shows how the federal minimum wage has not been properly adjusted for inflation in many years, and has not kept up the way it once did. In terms of today’s dollars, the minimum wage was the highest in 1968, where it was set at the equivalent to $10.69. Since then, the minimum wage has steadily decline and dropped, the biggest of which came between 1981 and 1990. When the current federal minimum wage was put into effect, it was worth the equivalent of $7.89, which is still higher than it is today. Therefore, this table shows how the minimum wage does not properly adjust for inflation. Of course, even at the 1968 peak $10.69 equivalent amount, the total amount a person would take in is around $22,000 before taxes. This still, while not all the much, would be a lot more helpful than the current rate.
Based on the historical context of the minimum wage issue, it seems apparent that the federal government has neglected their duty to care for the citizens, and now it should be a matter that goes to the states to change. Currently 29 states have raised their minimum wage higher than the current federal level. The historical precedence for doing this is there, and the 10th amendment of the constitution grants states the powers to carry out legislation that is not specifically addressed in the constitution. Therefore, as a state, it would be in our best interest to consider an increase in the minimum wage to best help our citizens due to the lack of action by the federal government.
Currently, our minimum wage is set at the minimum federal level. However, given the dynamics of the situation, it would be good for us to consider raising it ourselves rather than waiting for the federal government to intervene. Because of our federal form of government, it should be the job of the states to provide for the general welfare of all the people when the national government does not address an issue. Furthermore, there may soon be fight from the larger cities to make enforce their own minimum wage. Throughout the country many large cities are either threatening, or have already instituted their own minimum wage. Since the federal government is in political gridlock, the Obama administration has encouraged cities to take care of this on their own. Cities like Seattle, Chicago, and Louisville have all approved increases, and now Los Angeles and New York want to do the same. The problem with this action is that lawsuits are being filed by business in those cities to fight these efforts. We can expect to see the same reaction here if cities start doing instituting their own minimum wage. Therefore, the best way to handle this issue would be for the state to set a level, which will be much harder to overturn in the courts, if this action is chosen.
Because of the delicate balance of working with the cities, we should consult with the cities to determine the best rate to set the minimum wage at. We should take their advice to heart and try to come up with the best rate that would serve our citizens. Of course, we will also have to consider businesses and the potential for lawsuits or push back by doing this. We should also meet with the major industries in the state to see if a compromise can be reached or if we should just act without regards to the consequences regarding the businesses. However, it should also be noted that lobbying effort for groups against the minimum are being ramped up at the federal level, and we should take note of this action.
The other interests and stakeholders in the case of raising the minimum wage are lobbyist groups from major businesses which are primarily against this action. If we were to choose to raise the minimum wage, we expect a fight from several major lobbying groups. Currently the National Restaurant Association and the National Retail are vehemently against the current legislation and are lobbying at the federal level to keep a bill from ever reaching the floor of Congress. They are joined by the Employment Policies Institute, which is led by Richard Berman. We can most likely expect them to try to fund the opposing side to the minimum wage because he has done this repeatedly in the past, representing the interests of corporate America. He also publishes materials online that other lobbyist groups, especially the National Restaurant Association, use to try to lobby against the minimum wage legislation. Therefore, any action taken to raise the minimum wage will be met by lobbying efforts from various organizations in this state.
However, this is not to say that there are no groups lobbying for raising the minimum wage. Lobbyist groups such as Citizens for Responsibility and Ethics are actively fighting lobbying efforts led by Berman. They are also joined by the Center for American Progress and the Economic Policy Institute. These groups are funded by labor unions and try to spread material promoting the minimum wage and show how it greatly benefits the country. What we can conclude from these studies is the raising the minimum wage has a large impact on lobbying efforts, and we can expect to see both sides try to influence this issue and this is an economic hot button issue.
The debate over raising the minimum wage is also a very political issue as well. Typically, most Democrats support these measures. President Obama even specifically spoke about this issue in his State of the Union speech. He said, “And to everyone in this Congress who still refuses to raise the minimum wage, I say this: If you truly believe you could work full time and support a family on less than $15,000 a year, go try it.” Because Obama is seen as the leader of the Democratic Party and platform, it is safe to say most Democrats would support this stance. Therefore, we can expect most Democrats in our state legislature to join the cause of supporting raising the minimum wage.
The Republican response, however, will be much different and varied. While at the federal level there is little to no support to introduce legislation, the state level is quite different. There have been several typically Republican states that have increased their minimum wage. States like Arizona, Arkansas, Montana, South Dakota, and Florida are all conservative leaning states that have a high minimum wage than the federal levels. The reasons for this are usually that citizens in these states support measures and can vote for the issue on the ballot, but there are also some Republicans who are for these measures. Therefore, it will be hard to predict the Republican response to this issue. For some, the issue is really just a division of powers issue, and they just do not want the federal government to impose a regulation. However, others may still just side with businesses who say this bad for the economy. It is likely that we would face some Republican opposition to raising the minimum wage.
There are three plausible options that the state legislature can proceed to do in light of the current political and economic culture:
1) The first option would be to do nothing. Keep the state standing with the federal government and do whatever they do in terms of the minimum wage. We will strive to help out those who are struggling by letting the free market correct itself and not risking potential job loss with minimum wage increases. Therefore the minimum wage will be left at $7.25 an hour and other tax breaks or credits can be used to help those in need.
There is research out there that supports this course of action. For example, a study by the CATO institute has concluded there are a number of negative effects of raising the minimum wage. It found that in 1938, the first minimum wage increase led to a significant job loss at first. A 2006 study found that around two-thirds of a population in will be negatively affected by raising the minimum wage. This effect is primarily felt by low-skilled workers. When New York state increased their minimum wage from $5.15 to $6.75 per hour, this study by the CATO institute found that there was a 21.8 percent reduction in the employment of these lesser skilled individuals. Furthermore, a 2012 study by the same institute found that only about 15 percent of poor workers benefited from the increase in the federal minimum wage. However, the biggest negative impact the study found was on high school aged workers. The CATO Institute found that teenagers were directly affected each time the minimum wage was raised. It appears that companies start hiring fewer workers, and the high school aged students are the ones left out. Companies could also start using more automation if the minimum wage is increased. The following graph shows what this 2012 CATO institute study found.
This graph is trying to show how each time the minimum wage was increased, employment by teenagers went down. This apparently occurred in 2006 and 2008. While the impact on adults appears negligible, it is clear that the last two times the federal minimum wage was increased, teenagers were negatively affected. It seems reasonable to conclude that the same thing would happen on a state level, as the same principles are in play.
2) The second option would be to raise to minimum wage to the levels suggested by the President, that being $10.10 per hour and keep adjusting the minimum wage for inflation every 2-3 years. The primary reason for this would be to avoid the problems the federal minimum wage has had in terms of its declining purchasing power. As noted earlier in this document, the minimum is not worth nearly as much as it once was, so seeing as the federal level has not risen, it would seem in the best interests of our state’s workers to help them out. The minimum wage, while supposedly intended to be for beginning workers or those of high school age, affects many more people than that. According to a pew research study, 25 percent of the workers on minimum wage are in high school. That means that 75 percent are not, and probably are very dependent on these wages as their only living income. In fact, 36 percent of those on the minimum wage use it as their full time income. Therefore, something has to be done for these people as $15,000 is simply not enough to live comfortably on.
There is also the question of whether or not raising the minimum wage actually increase jobs. While the report by the CATO institute found it had negative impacts, there are also studies that show this to be false. According the Associated Press, 13 states that recently increased their minimum wage at the beginning of the year, saw a .85 percent growth from January to June. This directly contradicts the other report by the CATO institute. Furthermore the average for the other states that did not do this was a growth of .61 percent. Therefore there appears to be a correlation between raising the minimum wage and job growth at the state level.
Finally, there is the reason of public support and appealing to humanity to raise the minimum wage. A 2013 gallop poll showed the following results:
According to gallop polling, approximately 71 percent of Americans support raising the minimum wage. When this appears on referendum on the ballots, most states usually end up passing the increase. Public support is on the side of the $10.10 increase, as even 50 percent of registered Republicans are in favor of this. Therefore, politically this is a winning situation. However, the issue goes deeper than this. If we wish to be a state that advocates community and the need for a communal value of work, then doing this is also the moral thing to do. Raising the state’s minimum wage would be an attempt to show the government cares about economic inequality and is striving to do what is in the best interests for the people, not big business.
3) The third option would be for a hybrid system. The state should raise the minimum wage for all adults to $10.10, but not for high school age people. The reason for this would be to help those who are directly dependent upon the minimum wage as full time income. Most everyone agrees in the country that $15,000 is not enough to successfully live on. However, we do not want to risk having teens out of work, and they would be strongly impacted by the minimum wage increase. Many of the industries people working under the minimum wage or those who employ teens. The following chart proves this:
Food preparation and sales are the most industries using the minimum wage, and these are the industries hiring the most teens. Therefore, we would keep those 18 and under at the current $7.25 rate.
The best option for the state would be to implement the hybrid system. Two separate wages for two groups of people. As documented heavily throughout the memo, the statistics show a decrease in purchasing power for the minimum wage, and as a full time income, it is very hard to live on. Those who do some need some assistance in the form of raising the minimum wage. Therefore, we should raise the minimum wage to $10.10 for those 18 and older. However, there is also research that shows teenagers would be hurt by this. In not raising their minimum wage, and keeping at current federal levels of $7.25 per hour, we would be softening the blow both to them, and the companies that hire teenagers. This would also reduce political pressure and lobbying efforts in the state legislature. Effectively, this serves as a compromise, so this would stand a chance at getting bipartisan support within the state legislatures. Republicans do see the need to help people living off of $7.25 full time, but would not want to risk alienating business. This would be a good compromise. This system is not unprecedented, as some European countries have implemented this system. We could attempt to be revolutionary and set a new standard here in America.
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