Minimum Wage Inflation
Inflation plays a vital role in the area of minimum wage for the overall value of the economy in a specific country. In the United States there are over 13 million people who work for minimum wage and they struggle to provide their families with what they need to survive. The latest minimum wage increase came in July of 2007 with another for each of the next two years.
Analysts are basing these three minimum wage increases on the level of inflation that has taken place. These are the first inflation related minimum wage increases in the United States over the last decade. It is important to realize that minimum wage is not directly increased in relation to inflation. As a result the minimum wage that is currently in place will continue to lose value even with the power of the Federal government as a driving force behind it.
The biggest problem with a Federal minimum wage is that the cost of living is very different in various parts of the region. A family may be able to get by with both parents working a minimum wage job in Arizona but this will not be the case in California where everything is more expensive. To help compensate for such issues many states already offer a minimum wage requirement that is higher than that set by the Federal government.
Minimum wage inflation continue to get heat from those lobbying for welfare reform. They believe that if the minimum wage is consistently increased to keep up with inflation fewer families will find themselves in a position of needing to rely on public assistance programs. Economically though there are plenty of statistics that show continued minimum wage increases can cause more people to be on welfare though.
This is because so many small businesses have to shut down as they can’t keep up with the increases in minimum wage. The cycle of minimum wage inflation continues and there doesn’t seem to be any right or wrong answer as to how to help one sector of the population without negatively affecting another. One argument is that the Federal Earned Income Tax Credit benefits are more helpful that any minimum wage inflation increases because they help those that need it without having a negative impact on others who are working.
Analysts are basing these three minimum wage increases on the level of inflation that has taken place. These are the first inflation related minimum wage increases in the United States over the last decade. It is important to realize that minimum wage is not directly increased in relation to inflation. As a result the minimum wage that is currently in place will continue to lose value even with the power of the Federal government as a driving force behind it.
The biggest problem with a Federal minimum wage is that the cost of living is very different in various parts of the region. A family may be able to get by with both parents working a minimum wage job in Arizona but this will not be the case in California where everything is more expensive. To help compensate for such issues many states already offer a minimum wage requirement that is higher than that set by the Federal government.
Minimum wage inflation continue to get heat from those lobbying for welfare reform. They believe that if the minimum wage is consistently increased to keep up with inflation fewer families will find themselves in a position of needing to rely on public assistance programs. Economically though there are plenty of statistics that show continued minimum wage increases can cause more people to be on welfare though.
This is because so many small businesses have to shut down as they can’t keep up with the increases in minimum wage. The cycle of minimum wage inflation continues and there doesn’t seem to be any right or wrong answer as to how to help one sector of the population without negatively affecting another. One argument is that the Federal Earned Income Tax Credit benefits are more helpful that any minimum wage inflation increases because they help those that need it without having a negative impact on others who are working.
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