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The federal government first introduced the minimum wage in the year 1938 at a rate of 0.25 dollars per hour (Kim & Jang, 2019). Since then, the minimum wage in the United States has increased for 22 times. The minimum wage refers to the lowest possible rate to which the employers are required to pay their employees. The most recent increment in the federal minimum wage was in the year 2009 whereby it was raised to 7.25 dollars per hour.

At present, there are 29 states, and the District of Columbia have a higher minimum wage than that of the federal state. By July of the year 2017, 27 cities had passed the laws that aimed at increasing the minimum wage, with some of the states requiring cities adhere to the minimum wage rates as stipulated by the laws of specific states. Whether the minimum wage rate of the various states varies with that of the federal government, the federal government should raise the minimum wage rate setting it at around 10 dollars per hour.

There are many reasons in support of the federal government raising the minimum wage. The minimum wage rate in the United States has not kept up with the inflation, and a majority of the minimum wage workers are impoverished. Increasing the minimum wage to 10 dollars per hour implies that a large number of people with have a higher salary and this has the consequent effects of raising the standards of living among the workers (Dabla-Norris et al. 2015). With a higher wage, the employees will have an increased purchasing ability, and therefore, they will be able to afford the essential and basic needs that are essential for their survival. There is no doubt that the poverty levels will reduce as most of the people live below the poverty line due to the lower salary rates. Increasing the minimum wage rate, therefore, imply that a large number of people who previously lived below the poverty level will have a chance to upgrade, crossing the bridge of poverty. With a large number of people earning a better salary, poverty is alleviated, and the consequent effect, therefore, will lead to an increase of the middle-class people in the country meaning that the country doesn’t have to spend much money on the welfare of the poor.

With an increased minimum wage rate, a large number of people will enter the middle class and therefore, the people will be able to afford the health insurance plans and as well be able to cater for other health plans (Mishel, Bernstein & Schmitt, 2016). Thus, the health of the people in the United States will be improved, having a healthy and energetic workforce that is available to contribute to the growth of the nation’s economy. With a higher minimum wage, the American citizens will be able to afford to buy medications that and as well take care of their relatives who are sick. A higher income means that the patients are able to afford better treatment and that their relatives are able to cater for their welfare without any strains and therefore there is a need for the federal government to increase the minimum wage rate.

Having an increased minimum wage rate to around 10 dollars per hour implies that the government will have increased revenue through taxation (Ehrenberg et al. 2016). An increased minimum wage rate will help more than 27 million workers have a better salary, and this implies that through taxation, the government will be able to pocket more than 35 billion dollars annually. It is therefore of a significant benefit for the government to raise the wage rate as they will the largest beneficially of the increment as a higher amount of revenue will be generated in accordance to the amount of salary. With the increased amount of revenue, the government will be able to increase its development in a country implying that the infrastructure of a country will increase and as well be improved thus raising and promoting business investments in the country.

An increased salary has the overall effect of promoting the purchasing power of a people, and therefore it implies that the demand and supply of essential commodities will be on the rise (Pigou, 2017). With increased demand and supply, the manufacturing and service industries will increase, and this means that the people will set up more business in the nation along with other investors. High investment in the country means that the country will produce more and import less into the country meaning that the gross domestic product of the country will increase. The rise in the gross domestic product will be as a result of the high exports compared to the imports.

An increase in the minimum wage in the United States by the federal government will help in the reduction of the employee turnover in the employment sector (Dube et al. 2016). The main contributor to the high rate of employee turnover is the low wages paid to the employees and therefore to curb such cases, raising the minimum wage will play a significant role in reducing the turnover. A culture of a better salary payment is known to keep employees as they are contented with better payment and therefore aim to give their best for the company increasing the production of the company and as well increasing the profit margins. It will, therefore, be of importance for the government to develop and put laws that will be aimed to increase the minimum wage in the attempt to protect the interests of the employees.

It is with no doubt that there is a need to increase the minimum wage by the federal government of the United States as this will be the basis of an improved economy in the country. With an increased rate in the minimum wage the employee will have in increased income, and this will raise their standards of living being able to purchase the essential commodities and as well living above the poverty line. Besides, the increase will raise the country’s gross domestic product due to higher investments in the country and as well aid the government to collect more revenues through taxes.

References

Dabla-Norris, M. E., Kochhar, M. K., Suphaphiphat, M. N., Ricka, M. F., & Tsounta, E. (2015). Causes and consequences of income inequality: a global perspective. International Monetary Fund.

Dube, A., Lester, T. W., & Reich, M. (2016). Minimum wage shocks, employment flows, and labor market frictions. Journal of Labor Economics, 34(3), 663-704.

Ehrenberg, R. G., & Smith, R. S. (2016). Modern labor economics: Theory and public policy. Routledge.

Kim, H. S., & Jang, S. S. (2019). Minimum wage increase and firm productivity: Evidence from the restaurant industry. Tourism Management, 71, 378-388.

Mishel, L., Bernstein, J., & Schmitt, J. (2016). The state of working America: 1992-93. Routledge.

Pigou, A. (2017). The economics of welfare. Routledge.