Raising the Federal Minimum Wage

There are a few political debates more contentious than raising the federal minimum
wage. The federal minimum wage has stagnated at $7.25 per hour since 2009, failing to keep
pace with rising inflation and productivity growth. This has pushed millions of Americans into
poverty, requiring some to work two or three jobs with little pay and few benefits simply to make
ends meet. The Raise the Wage Act of 2021 is aiming to gradually increase $7.25 wage to $15
by 2025. Opponents claim that the raise will eliminate jobs and cause goods prices to skyrocket.
The truth is that this raise would have happened a long time ago, and if passed, it will lower
poverty, income inequality, government spending on social programs, and boosting economic
growth among the low-wage American workforce.
A higher wage will help eradicate poverty in America. According to Cooper et al. (11),
this Act will increase the income of 21% of the workforce enabling 3.7 million people to live
above the poverty level. Nearly a quarter of the American workforce will now be able to afford
necessities such as housing, food, health care, college fees, and transportation. Raising the
federal minimum wage will also minimize income inequality, which have disproportionately
impacted Hispanic and Black communities, including women of color. According to Roberts
and Olinsky, a quarter of Hispanic workers and a third of Black workers will profit from the
boost, compared to a fifth of white workers. Cooper et al. confirm that 22.9% of women of color
will benefit as well (6). By reducing the income inequality it will also bridge the wealth gap.

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The increase to $15 per hour will also result in the government spending less taxpayer
money on welfare and subsidy programs designed to assist low-wage people in affording basic
necessities such as healthcare, education, and housing. According to Cooper(22), raising the
minimum wage by a dollar reduces government spending on welfare programs by $3.1 billion
per year. Putting more money in the wallets of American workers fuel economic growth. Their
increased purchasing power will enable them to reinvest back in the economy by buying clothes,
food and rent. According to Cooper and Hall for every extra dollar added to the low wage
worker, $1.20 is pumped to the economy (12).
Opponents claim that enforcing higher wages will force firms to lay off workers to reduce
rising operational costs (Smith). According to C.B.O (2) roughly 1.4 million workers will lose
their jobs. However, studies on states and cities that have raised the minimum wage above $7.25
have revealed that raising the minimum wage has a muted effect on jobs (Cengiz, et al. 1450).
These opponents have also asserted higher labor costs due to increased wages will oblige most
businesses to raise the pricing of consumer goods and services. However, Cooper et al, the Raise
Wage Act, is designed to gradually raise the minimum wage to avoid price inflation while
increasing consumer’s purchasing power.
Conclusion.
Raising the federal minimum wage is long overdue, and its multiple positive outcomes
are undeniable. A $15 per hour wage will increase pay for 32 million Americans and elevate 3.7
million Americans out of poverty. It will further minimize the historically racial and gender
disparities in income and reduce government spending on social programs while also
stimulating the economy. Numerous research confirms that the hike will not affect employment,
contrary to opponents’ claims. In an economic climate in which most Americans have been

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severely impacted by the Covid pandemic, raising the minimum wage to $15 is the least the
government can accord American low-wage workforce after waiting for more than a decade.

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Works Cited

C.B.O. The Budgetary Effects of the Raise the Wage Act of 2021. United State Congressional
Budget Office, 2021. www.cbo.gov/system/files/2021-02/56975-Minimum-Wage.pdf.
Cengiz, Doruk, et al. “The Effect of Minimum Wages on Low-Wage Jobs: Evidence from the
United States Using a Bunching Estimator.” The Quarterly Journal of Economics, vol.
134, no. 3, 2019, pp. 1405-1454, doi.org/10.1093/qje/qjz014.
Cooper, David. Balancing paychecks and public assistance: How higher wages would strengthen
what government can do. Economic Policy Institute, 2016. EPI Briefing Paper.
files.epi.org/2015/balancing-paychecks-and-public-assistance.pdf.
Cooper, David, and Doug Hall. “How raising the federal minimum wage would help working
families and give the economy a boost.” Economic Policy Institute, Economic Policy
Institute, 14 Aug. 2012, files.epi.org/2012/ib341-raising-federal-minimum-wage.pdf.
Accessed 12 May 2022.
Cooper, David, et al. Raising the federal minimum wage to $15 by 2025 would lift the pay of 32
million workers. Economic Policy Institute, 2021. files.epi.org/pdf/221010.pdf.
Roberts, Lily, and Ben Olinsky. “Raising the minimum wage would boost an economic
recovery—and reduce taxpayer subsidization of low-wage work.” Center for American
Progress, 27 Jan. 2021, www.americanprogress.org/article/raising-minimum-wage-
boost-economic-recovery-reduce-taxpayer-subsidization-low-wage-work/.

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Smith, Kelly A. “What You Need To Know About The Minimum Wage Debate.” Forbes
Advisor, 26 Feb. 2021, www.forbes.com/advisor/personal-finance/minimum-wage-