Analysis of Low Minimum Wage in the US

Topic: Economics
Words: 1688 Pages: 6


The minimum wage is also referred to as the living wage. It is the amount, as stipulated by the United States labor law, that employers pay their employees on an hourly basis. The minimum wage as mandated by the government of the United States is 7.25 U.S. dollars per hour despite it varying from one state to another (Kuroki, 2018). The current federal minimum wage has been in effect since 2009, although there are efforts to increase it to 15 U.S. dollars per hour (Simonovits et al., 2018). Although the federal government has not enacted such laws, some municipalities like the District of Columbia and New York City have adopted a minimum wage law of 15 U.S. dollars per hour. Conversely, the states of Georgia and Wyoming have a minimum wage of 5.15 U.S. dollars, which is below the federal mark (Brantley, 2021). This discrepancy makes it difficult for the nation to attain harmonious progress in employment and wages. This essay analyzes the wage bill structure in the US, establishes the effect of minimum wage on the middle class, and interrogates political influences on wages.

High Cost of Living

There has been a great debate about understanding the impact of the minimum wage among economists on the economy of the United States and other developed countries. Economists claim that reviewing the minimum wage bill will have upside and downsides for the economy. Political, economic, and social factors are the major determinants of the minimum wage. According to president Roosevelt, the minimum wage should be sustainable enough and make it easier for an employee to fulfill his needs (Fishback & Seltzer, 2021). Since the late 1960s, the cost of living in the United States has increased gradually. With inadequate pay, minimum-wage workers with families are not able to acquire necessary commodities and amenities for their day-to-day lives. This is because their pay below the poverty margin as dictated in the U.S. Federal Poverty Guidelines.

Proponents of the Raise the Wage Act argue that increasing the minimum wage in the United States to keep up with the high cost of living will help raise millions of citizens from poverty. The most affected workers include those that work in grocery stores and large retailers, delivery workers, and food preparation and serving related jobs. For these workers, they have to work longer hours or even get second jobs to ensure that they boost the amount of money they earn (Fishback & Seltzer, 2021). On the other hand, big companies and business groups like the National Federation of Independent Businesses (NFIB) are against the idea of increasing the minimum wage, arguing that it will increase the productivity costs hence negatively affecting the economy of the country. An increase in the minimum wage would force companies to hire fewer employees on their current budget, raise the price of their products, and decrease their growth and development plans. Generally, this affects the careers of low-income workers, causing high rates of unemployment and contraction of the economy.

With inflation and changing work environments, the minimum wage in the United States is not a living wage anymore. The adoption of the Raise the Wage Act in some states does not help minimum-wage earners live better lives, since the price of basic commodities keeps rising. To aid alleviate the impacts of the high cost of living, the federal government should cooperate with various states. They must guarantee that the minimum pay is above the paucity line and the job environment is favorable.

Shrinking Middle Class

The gap between the rich and the poor has been growing gradually over the years, with the wealthy acquiring more resources and property at the expense of the underprivileged. In most developing nations, focus is on ensuring their population is out of poverty. In developed nations, the focus is on guaranteeing there is an adequate distribution of wealth among the citizens (Kochhar, 2021). This means having a balanced ratio between high-income earners, middle-income earners, and low-income earners. Economic inequality in the US keeps rising annually, with the percentage of middle-income earners decreasing from 61% to 51% in the years between 1971 and 2019 (Semega et al., 2020). These statistics spell doom for the nation and indicates the massive discrepancy amongst citizens.

Adoption of measures that will help cushion middle-income households and elevate low-income earners to join the middle class can be a positive stimulus to the economy of the United States. Most economies of the world today are sustained by the middle class (Kochhar, 2021). This class comprises individuals who work in private and government offices, earn a median wage of 85,000 U.S. dollars, with daily spending of between 10 and 50 U.S. dollars (Semega et al., 2020). Increasing the minimum wage will ensure that low-income earners and their middle-class counterparts have more money to facilitate their investments and educational advancements. This will increase the consumer potential of the economy with the increase in job creation.

The ability of the middle class to afford affluent lifestyles will promote economic growth and raise the poverty margin in the United States. Increased consumer spending will ensure that there is increased investment in the U.S. economy and decreased debt, causing economic expansion (Kochhar, 2022). Moreover, a functional middle class ensures that there are innovative individuals who will find solutions to the common problems that affect the citizens. This ensures that there is a better utilization of national resources, decreased insecurity, and better service provisions.

Political Influence on Minimum Wage

Franklin Delano Roosevelt, the then United States president, argued that the minimum wage should be an amount that can sustain a decent living. This was in 1933, five years before the minimum wage bill was assented to law (Simonovits et al., 2018). Since the inception of the minimum wage in the United States, it has been a political issue (Simonovits et al., 2018). Since its inception, the minimum wage has been a political issue that has traversed several political generations with no or minimal positive changes. Barack Obama during his presidency wanted to increase the minimum wage from the current amount to 10.10 U.S. dollars for all state workers (Waddan, 2019). This move to increase the hourly wage was declined by Congress although it motivated some states to implement laws to increase the hourly pay of employees.

The increment in the wage bill does not measure up to the high cost of living in the country today. The Congress and the legislative bodies of each state play a great role in the affairs of the workers in the U.S. For instance, in the 21 states where the minimum wage is at par with that of the federal government, their political leaders block any increment and workers only receive a pay rise during election incentives. The chances of increase of the bottom remuneration by either state or lawmaking acts in these 21 states are minimal. This is because they have passed regulations that stop any efforts devoted to growing the salaries at the state level. Drastic measures are required to prevent the collapse of the middle and low class Americans into poverty.

The 21 states with the federal minimum hourly rate are mostly Republic states, including Wyoming. These states are predominantly red states with a history of voting overwhelmingly for the Republican Party. Despite changes occurring at the congress level to enact changes to the minimum wages, these states remain adamant (Desilver, 2021). This is due to the presence of specific state laws that restrict changes to the wage bill, causing difficulties for the municipalities to make such adjustments. The uniformity of inaction by all the 21 states indicates the impact of politics on the economic welfare of the American citizens. This discovery is a clarion call on the need for better laws within the congress which are not limited by detrimental state laws’ inaction.

Although great strides have been made in some states to increase the minimum wage, there are a lot of hardworking Americans who are mistreated by their employers due to bad governance at the federal and state level. Appointment of leaders who understand the plight of workers to the federal and state governments is a crucial move. It will ensure that there are reforms in the labor sector which will cushion low-income and middle-income workers from the harsh economic hardships. The political class in the United States runs big companies that employ many people. By ensuring that the minimum wage is not reviewed, they exploit their workers for cheap labor and mint billions in return. This ill-representation is the root cause of the exploitation of workers.

The debate about increasing the minimum wage in most states of the United States keeps raging although it is largely worker-driven. This year, most states have put in place measures that will cushion low-income earners and help them live a better life (Simonovits et al., 2018). There are plans in more than twenty-one states and cities to increase the minimum wage to 15 U.S. dollars, with other states putting in plans to have a continuous increment in the minimum wage by the year 2025 (Jacobs et al., 2021). This was promising and inspires members of the US labor force to continue aspiring to better their country.


In conclusion, it has been a decade since Congress raised the minimum wage in the United States to 7.25 U.S. dollars. Some states use it to make most of their workers stuck at the poverty line. To ensure economic equity, the government through a legislative process should review the minimum wage law and ensure that employees are paid adequately to keep up with the rising cost of living. Moreover, the government should ensure that there exists a viable business environment for low-income and middle-income households by giving grants and tax incentives, hence helping the middle class grow. If the Raise the Wage Act of 2017 is ever enacted, more than 41 million workers across the United States will benefit from the increment, getting them out of poverty. This will not only benefit their households but also spur economic growth across the nation, making the US economy stronger and more competitive.


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