Economic Impact

Minimum wage means minimum sum of money that workers get per hour for their work. It is set by the government in order to protect unskilled and inexperienced workers from self will of employers and provide them with normal conditions of living for this wage. At first time federal minimum wage was adopted in the Fair Labor Standards Act and it was only 25 cents per hour in 1938. For more than 70 years the minimum wage has been increased dramatically and it is 7.25 dollars per hour now (Labor Force Statistics from the Current Population Survey, 2011). In spite of the fact that minimum wage is aimed to help families escape poverty, the policy of increase of minimum wage does more harm than good for low-income families. Thesis: Increase of minimum wage leads to growth of high school drop rates, growth of automatic service, increase of the level of unemployment, and prevents teenagers and young people to improve their skills and get more experience.According to statistics, in 2010 there were 4,361,000 people who got minimum wage per hour. Mostly, minimum wage workers are young people or teenagers (Visualizing the Characteristics of Minimum Wage Earners in 2010, 2011). Thus, 23% of minimum wage workers are 16-19 year old (994,000) and 26% of minimum wage workers are 20-24 year old (1, 141,000) (Visualizing the Characteristics of Minimum Wage Earners in 2010, 2011). In contrast, only 6% of people who are over 60 works for minimum wage (7.25dollars per hour). As a result, increase of minimum wage affects teenagers and young people. First of all, increase of minimum wage leads to higher high school dropout rates. The problem is that many teenagers prefer working to studying as they can express their individuality and highlight their independence. Studying is more boring process and it demands more efforts. However, most teens preferred studying to working, when minimum wage was only $206 per 40- hour week ($5.15 per hour) (Morris Coats, 1999). In contrast, if minimum wage is 40% increased, teens will get additional $84 per week ($7,25 per hour) (Labor Force Statistics from the Current Population Survey, 2011). Such work conditions will attract more students into the workforce.Then, increase of minimum wage leads to growth of unemployment rate. It is better for employers to hire several full-time experienced workers than pay high minimum wage per hour to many people without experience. According to investigations, 10 percent increase in the minimum wage leads to 0.19 percent increase in the unemployment rate (Michael J. Hicks, September 4, 2008, p.4). It seems very low dependence but in practice 160,000 did not get job after increase of minimum wage in 2008 (Michael J. Hicks, September 4, 2008, p.4). As a result, teens and young people have no opportunity to improve their skills and apply their knowledge in practice. Even work in fast foods and other services help teens to learn to listen to orders, be responsible and punctual, work under pressure, and communicate successfully with other people.Moreover, a …