Minimum wage is the starting hourly wage an employer pays an employee for work. The latest federal minimum wage is $7.25 an hour (part of the Fair Labor Standards Act). Whereas some states and cities have raised their minimum wage even higher than this.
A 2015 Bureau of Labor Statistics survey discovered that approximately half (48.2 percent) of all workers earning the minimum wage are between 16 and 24 years of age.
With the use of Congressional Budget Office (CBO) methodology, economists of Miami and Trinity University found that just one out of 10 of those affected by a $12 minimum wage are single parents with children. Mostly people who are affected are either second or third-earners in households where the average family income exceeds $50,000 per year.
There are statutory minimum wage regulations in the United States, the purpose of which is to ensure that even the least skilled of employees will earn enough money to survive on.
Till the month of July 2009, the federal minimum wage was set to $7.25 per hour, which results to weekly earnings of just $290 per week (before taxes) for a full time job.
Experts are of the view that boosting the minimum wage will reduce poverty without reducing jobs. But the academic records and evidence shows otherwise: According to a summary held in 2007 by economists of the minimum wage research at the Federal Reserve Board and the University of California-Irvine, around 85% of the best research from the past two decades clearly shows that a higher minimum wage reduces employment.
On razor-thin profit margins, the employer who takes minimum wage labor operates. The increase in labor costs causes these companies to increase rates, restrict work prospects for workers, or eliminate some of the services they offer.
Some researchers say that this fastest growing consequence of a higher wage is the expedited shift to automation, replacing low-wage workers with technology.
In recent years, Redbox and Netflix have replaced Blockbuster, parking attendants exchanged for self-service machines, rapid development in the field of self-service checkouts, and airport ticket agents operating side-by – side alongside self-service check-in booths.
In 2020, kiosks are going to be implemented at all U.S. McDonald’s locations. Other chains, such as Panera and casual-dining brands like Chili’s, have already begun automation replacing tasks performed by employees.
Automation is not a new concept at all. Self-service gas stations came into reality in the mid-70’s.
In a 2012 report, 1.6 million people were reported to earn the federal minimum wage. About 2 million were reported to be earning less than minimum wage, meaning a total of 3.6 million Americans earned at or below the federally mandated $7.25 per hour. Though this sounds like a huge number of people, it actually results to just 4.7 percent of all hourly-paid workers.
As minimum wages are contradictory to the concepts of laissez-faire economics and pure capitalism, they are often criticized and were often attacked in the courts after their initial introduction in the early 20th Century.