What is minimum-wage, and how does it affect us?

By Greg Haffner

12/3/2007

Computer Skills for Economic Analysis

3250-226-001

What is minimum-wage, and how does it affect us? Minimum wage was started in 1938, when minimum-wage was first started it only applied to the labor force, men, women, and children, who work in factories. At that time minimum-wage was only .25. Now the minimum-wage in the state of Ohio is $6.85. The National minimum-wage is $5.15. This applies to all 50 states except 5. Is minimum wage a good thing? How does it affect the United States on world market? How does it affect us in our everyday lives?

One of the main reasons why minimum-wage was started was stop poverty, and decreases the amount of homeless, to set a standard of living in the United States. This also is to benefit single mothers in the workforce, however it does not. As minimum-wage increases however so does the amount of homeless. As you increase the amount of minimum-wage, people find their selves out of work, because they're no longer qualified for that position. There insufficient in the economy. From an economic standpoint there will always be homeless. There will always be people who do not make the standard of living.

What is the federal minimum-wage? The federal minimum-wage is the national average for minimum-wage. It was started 1938, at that time it only applied to people in the labor force, also known as blue-collar workers. So what is the federal minimum wage of today? In 1990 the federal minimum wage was $3.35, in 1991 it was $4.25, and today the federal minimum wage this $5.15. As of this year President Bush signed a Bill that was approved by both houses of Congress which will include a three level increase of the federal minimum-wage up to $7.25 over two years.This is higher than the minimum-wage in Ohio standing at $6.85.

Who is affected by minimum wage the most? In the fast food industry servers are paid the national minimum wage plus tips. At fast food restaurants such as McDonald's and Burger King Employees were paid the national minimum wage and in some cases below it. In 1991 April 1s McDonald's franchise cheated minimum wage by using a Youth Subminimum. During training McDonald's paid their employees below minimum-wage sometimes starting at $3.36. This was said during the transitional phase of 1990 and 1991. In 1991 minimum-wage was $4.25 and all employees working for fast food industries were paid no less then national minimum wage. McDonald's transitional period between 1990 and 1991 is listed below.

Table One

Response to the change in the minimum wage by starting wage prior to April 1, 1991
Description / Starting pay at$ 3.80 / Starting pay between $3.80 and $4.25 / Starting pay grater then $4.25
Proportion Using the Youth Subminimum / 0.06 / 0.03 / 0.06
Average Starting Wage Before April 1, 1991 / $3.80 / $3.93 / $4.28
Increasing in Starting Pay from April 1 to December 1991 / $0.46 / $0.37 / $0.20
Proportion Maintaining Wage Hierarchy / 0.16 / 0.33 / NA
Proportion with Spillover to workers Earnings $4.50 per Hr. / 0.09 / 0.29 / 0.60
Proportion Decreasing Amount of First Pay Raise / 0.05 / 0.03 / 0.00
Proportion Increasing Time to First Pay Raise / 0.03 / 0.05 / 0.00
Proportion that cut Fringe Benefits / 0.04 / 0.04 / 0.06
Sample Size / 174.00 / 122.00 / 17.00

Who does minimum-wage help? Minimum wage is based on tax inflation it's designed to help first-time employees, unemployed and low income families. Minimum wage instead of Ohio as of right now is $6.85. It was based on low-income families to support a family of 4. Immediately after the raise of minimum-wage in the state of Ohio the fees for the a Ohio state turnpike when up. This is an example of how the minimum wage is based on tax inflation. If you rise the minimum-wage in the state of Ohio taxes will go up. In the state of Pennsylvania minimum wage is almost double that of Ohio at $7.15, but the value of land, and property, and ownership, is also double.

To me minimum-wage sets the minimum standard of living. This is what your employer must pay by law, because of taxes, both state and federal. As minimum-wage increases so do taxes.