The Effects of Repealing the Federal Minimum Wage Law

Republicans in the US Congress want to repeal the minimum wage law. If they succeed at this effort many states would eliminate their minimum wage laws. But is it really a good idea? Will it achieve the intended results? This is the focus of this article.

The minimum wage was part of the Fair Labor Standards Act designed to protect the workers from substandard wages. Here is a link to the Fair Labor Standards Act:

http://www.dol.gov/whd/flsa/

Here is a handy reference guide:

http://www.dol.gov/whd/regs/compliance/hrg.htm

Those in favor of repealing the minimum wage law state that repealing it will increase the number of jobs.

It will cause a lot of lay offs as employers seek to replace their workers with new workers at lower wages. This turnover would result in a temporary increase in unemployment and unemployment compensation. The new workers would want more hours. Most businesses I've worked for prefer giving more hours to current workers. They prefer not to hire more workers. The workers who cannot work more hours would look for a second job.

Those workers who cannot work for more hours at their current job and cannot find another job will end up applying for food stamps and financial assistance. Without it, they will not be able to provide for their families nor pay their rent/mortgage. They will spend less because they don't have the money. This will be bad for the retail business, the restaurant business and the entertainment business.

High school graduates from poor homes would find it more difficult to pay for their own education. Unless they earn scholarships, the opportunities to improve would disappear. Their earnings would barely pay for their room at home. Most parents expect the working young adult to contribute money to the family budget.

Furthermore, there will be repercussions up and down the wage scale. People with wages above the minimum wage will not be insulated against the effects. Businesses are always looking for ways to decrease their costs and increase their profits.

Eliminating the minimum wage law will not increase jobs. It will increase the number of people below the poverty level. It will increase the number of homeless people. It will not make companies more competitive in the global market. If the answer was that simple, companies would have taken steps to lower salaries and wages many decades ago. And we would have very low unemployment rate.

For my opinion about how to increase the number of jobs in the US, click on the following link:

http://www.associatedcontent.com/article/8187415/creating_jobs_in_the_us_the_challenges.html?cat=9