The Advantages of the Federal Minimum Wage Law

According to the U.S. Minimum Wage Directory, the federal minimum wage currently sits at $7.25 per hour, though individual states may have higher minimum wages, such as Washington with a $9.00 minimum wage. In 1938 the Fair Labor Standards Act, part of president Franklin D. Roosevelt’s New Deal legislation intended to combat the ongoing Great Depression, set the original federal minimum wage at 25 cents per hour, reports the Minimum Wage Directory. The goal was to create a “living wage” for workers to minimize poverty among working citizens while simultaneously not excessive curtailing employment.

The benefits of the federal minimum wage are rooted in the concept of a “living wage.” Prior to this law employers could prey on workers’ desperation to pay unfairly low wages. If unemployment was high enough workers would toil for pennies on the dollar, never rising out of poverty. As a result of continued and unending poverty, workers could be continually abused by employers, forced to work overtime or do anything possible to earn a few more dollars. As long as no employer offered substantially higher wages, all workers would have to labor for mere cents.

A federal minimum wage forces employers to operate with at least a modicum of decency. If an employer wishes to employ a worker he or she must be able to compensate that worker fairly.

There are numerous advantages to having a population of decently-compensated workers. Workers who make enough money to live decently are likely to be more productive and have higher morale. There is likely to be mutual respect and camaraderie between worker and employer, establishing better working relations. Employees will work for the good of their employer. Employers, having invested more money in their employees, will strive to nurture employee skill and development. As a result, productivity grows further.

Well-paid workers are also able to help the economy as consumers. Underpaid workers will likely try desperately to save every penny and minimize consumption, depriving businesses of revenue. Workers who make a “living wage” can buy products and services, putting more money into the economy, proving the old adage “you have to spend money to make money.” A company that pays its workers well will eventually see that money flow back to it.

The federal minimum wage also creates a bond between citizen and government, with workers more likely to feel that the political authorities respect them. Citizens who feel respected are more likely to willingly obey laws and pay taxes, thereby funding the government that works to ensure a smooth-running nation. Additional government revenue can fund poverty-reduction and job-training efforts, as well as allow the government to purchase goods and services from private-sector businesses, further combating poverty.