(30 POINTS) For more than a century, lawmakers have been passing minimum wage laws. Minimum wage is the lowest amount per hour t
hat bosses can pay their employees. Many people do not like the idea of minimum wages and have warned of their hidden costs. The argument continues from Washington to London to Berlin: Does a minimum wage lead to better lives or fewer jobs?
Does it lead to more people becoming wealthier, or fewer? Can you safely ignore the downside of higher labor costs as if there's no law of supply and demand, which would tie wages to the supply of and demand for workers? The answer, after decades of sifting through data by economists, is a surprising maybe. Economists study the creation, use and movement of money.
The Situation
Twenty-eight countries report minimum wage data to the Organisation for Economic Co-operation and Development (OECD). OECD is focused on improving the financial and social well-being of people around the world. The U.S. rate, $7.25 an hour, is 10th highest in real dollars, which eliminate the effects of inflation, or rising prices. The U.S. minimum wage is behind the U.K.'s minimum wage of about $10, and Australia's of about $12.
More telling: When the minimum wage is measured as a share of average wages, the U.S. ranks 25th, at 37 percent. It is tied with Mexico and ahead of only the Czech Republic. High-wage Germany adopted its first minimum wage, about $9, in 2014. Swiss voters rejected a proposal in 2014 to establish the world's highest minimum wage, $25 an hour. The details are different. The argument is the same: Do wage floors, or minimum wages, help or hurt the economy?
In his 2013 State of the Union address, President Barack Obama challenged Congress to boost the federal minimum wage to $10.10 per hour. Washington Republicans did not take to the idea kindly. A year later Obama set a $10.10 minimum wage for people doing business with the federal government. He also called on mayors and governors to "give America a raise." Voters in four states did. By the start of 2016, 29 states and more than a dozen U.S. cities had minimum wages higher than the federal rate.
In March, California's governor and state lawmakers reached a deal to increase the state's minimum wage to $15 an hour by 2022. New York then enacted similar legislation. It required an increase to $15 by 2019 in New York City and 2022 in the suburbs. The minimum wage for the rest of the state must rise to $12.50 by 2021.
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