The minimum wage
The minimum wage bill was initially instituted in 1938 after the great recession and paid at a rate of $0.25 per hour. The wage bill has received tremendous changes with the congress changing for 22 times until 2009. The recent change that had occurred was from $6.55 to $7.25 an hour. The minimum wage should be increased to reduce the income gap between high earners and low-income earners. I believe the minimum wage should be increased for various reasons.
An increase in the wage will lead to an increase in the economic activities of the country, which will lead to economic growth. An increase in earnings for all households will lead to more consumer spending, thus increasing the GDP of the country and also leading to job growth. It will also act as a motivator to the employed nationals hence making them more productive in their lines of duty.
An increase in income for all households will lead to a reduction in poverty levels for all nationals. An economy faced with some remnants of nationals who lack a way of meeting their basic needs has not yet reached better living standards. Those who lack the basic need will engage in crimes and leading to a decrease in the security levels of the country. If an increase in wage bill is implemented, the ability to meet basic needs will increase.
The government can also save through an increase in the minimum wage since they will reduce welfare spending. If the low-income group receive more pay from the minimum wage bill, they will reduce their dependence on the government. Some of the welfare programs in the country include the Supplemental Nutrition Assistance Program and would become redundant with the increase in the minimum wage. The federal estimates that an increase to $10 would lead to 1.7 million dependents seizing support from the welfare groups. This is estimated to save the government 7.6 billion on welfare spending.
The minimum wage among Americans helps their wages to keep up with the inflation rate of its currency. If the wage rate remains constant while inflation continues to rise, their income will lead to a reduction in household purchasing power. The government should implement the inflation indexing that ensures workers will receive a higher income if inflation occurs. The citizens of the country will thus be able to maintain their living standards.
Increasing the minimum wage for the working class will have a ripple effect on the economy. The income in wage will not only increase the wages for those working directly but also for other firms. It will cause an increase in income for all other sectors that are not directly connected to those working. The informal sector that offers support services to those who are working will have a higher income as a result of more spending.
Another reason for the need for an increase in the minimum wage bill is because it is not enough for housing needs. The statistics about the housing expenses states that workers must be paid $15.50 per hour to be able to afford a modest house in the country of one bedroom. More than two rooms would require $38.75 per hour to be paid. Since shelter is one of the basic needs of all human race, the government should increase the wage bill to meet the needs of the people. If it increases, the citizens will also be able to afford other day to day essentials needed in their lives.
Another need for the increase in minimum wage refers to the need to improve health levels of the population. One of the health factors that is associated with lack of enough wage is the increase in mortality rates among newborn. An increase in the wage level would increase their chance of receiving better health care leading to an increase in survival rates. The number of premature deaths would also decrease when the wage bill is increasing. In conclusion, the government should consider increasing the wage rates to have a better economy.