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Policy Brief Essay
Policy Brief Essay
Policy Brief Essay
Ariana Villa
This policy brief explores the impact of proposed federal minimum wage increases,
highlighting the complexities and potential implications for American workers and the economy.
It presents a comprehensive evaluation of policies, emphasizing the need for a incremental wage
quality of life. Higher-income levels come with greater access to healthier food, stable housing,
reliable healthcare, and more. Thus, a minimum wage is fundamental in ensuring that employees
not only receive fair compensation for their work but also have the opportunity to meet basic
needs by providing a non-negotiable base income. The concept of a wage standard exists
globally as a way for government systems to establish a minimum level of economic security for
workers. However, in the United States, the federal minimum wage has endured considerable
disparities in its evolution compared to the growth of the nation. Unlike its historical trend of
aligning with economic progress, the federal minimum wage in the U.S. has remained relatively
stagnant recently and falls behind the expanding productivity levels. The disconnect between
wages and productivity is not unique to the U.S., which reflects a broader global concern
regarding fair wage growth. Yet, within the context of the United States, this inconsistency holds
citizens can manage a rapidly changing economic environment. The imbalance between wages
and the rising cost of living poses a significant challenge for Americans and their financial
stability. Additionally, the issue extends beyond individual hardships as it also perpetuates
income inequality. To address this critical issue, an attainable policy recommendation arises: a
gradual increase in the federal minimum wage by a substantial amount. This adjustment looks to
rectify the current imbalance, therefore offering fairer compensation that is reflective of workers’
The minimum wage holds a substantial and impactful history within the United States.
Originating in New Zealand during the 19th century, its American roots began in 1938 through
the Fair Labor Standards Act (FLSA). As described by the Economic Policy Institute, wages
were initially set at $0.25 per and aimed to establish a base salary for mainly women and
children as a response to the Great Depression. They continue by noting how “the Roosevelt
administration sought to revive the economy and help the nation recover by instituting
industrywide “fair competition” codes intended to set wages and prices, create jobs, and permit
collective bargaining.” (Payne-Patterson & Maye, 2023). Implementing such policies evoked
many discrepancies within the American public and thus underwent numerous revisions and
Throughout its history, the federal minimum wage has undergone periodic increases and
adjustments to reflect changing economic conditions. For instance, in 1968, the minimum wage
reached its peak relative to the average wage and cost of living at $1.60 per hour when adjusted
for inflation to today’s value, that $1.60 would equate to around $12.50. Since then, the value of
the minimum wage has significantly decreased due to insufficient adjustments to keep pace with
rising inflation. Today, the federal minimum wage stands at $7.25 per hour, an amount that has
While the federal minimum wage establishes a standard across the nation, individual
states retain the authority to set their minimum wage rates. Currently, there is nearly a split
between states regarding which wage standard is used. The federal minimum wage is relied upon
in 21 states, accounting for about 40% of all salary and wage workers in the United States. On
the other hand, 29 states use a higher basis ranging from $8.65 and going up to $17 (Pew
Research Center). Furthermore, numerous cities and counties have implemented local wage
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policies that even surpass state orders. For instance, Emeryville, CA has the highest minimum
wage in the country at $18.67 – a figure that exceeds the national standard by over 2.5 times.
This exemplifies the substantial variations in minimum wage regulations in the U.S.
The widespread support for an increased federal minimum wage among diverse groups of
Americans reflects a collective desire for a more consistent wage standard in the nation. A
survey conducted by the Pew Research Center revealed that two-thirds of Americans support
raising the minimum wage to $15 an hour, with 41% strongly supporting such an increase
(Desilver, 2021). This consensus spans diverse demographics; while majorities of liberals,
women, and Black individuals advocate for this raise, the overall consensus remains notably
high. This overwhelming public support emphasizes the widespread call for improved minimum
wage policy.
Efforts to implement federal minimum wage increases over the past decade have
encountered significant hurdles, resulting in proposed policies that have not successfully been
enacted legislation. In 2013, President Obama pushed to raise federal base wages from $7.25 to
$9 an hour, a move intended to address income inequality and boost the earnings of
approximately 15 million low-wage workers. Although the suggested $9 hourly rate would be
the highest federal minimum wage in over three decades, it would still fall below peak levels
witnessed in the 1960s and 1970s when adjusted for inflation. Furthermore, analyses conducted
by the White House suggested that the simple increase of $1.75 could potentially counterbalance
between 10 to 20 percent of the increase in income inequality observed since 1980 (Lowrey,
2021). This slight increase had the potential to offer workers a more sustainable income source in
a relatively short amount of time. However, potential drawbacks surfaced amid concerns over the
policy’s impact on employment levels and economic growth. Critics worried that an increase
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might lead to job losses in industries that are reliant on lower-wage workers. Additionally, there
were apprehensions regarding the potential economic strains on smaller businesses unable to
keep up with increased labor expenses. Although President Obama’s $9 an hour minimum wage
proposal wasn’t a drastic shift from the existing standard, its passage would have significantly
President Biden’s ambitious proposal to slowly raise the federal minimum wage to $15 an
hour by 2025 has ignited substantial discussion and raised concerns over its potential economic
impacts and social benefits. Biden’s plan entails incremenetal hikes, beginning with a raise to
$9.50 directly following its implementation. If successfully completed, advocates argue that the
elevation can work to lessen racial disparities in earnings. Yet, an estimate by the Congressional
Budget Office found that “raising the minimum wage to $15 by 2025 would increase pay for 17
million people and pull 900,000 out of poverty, it would also end 1.4 million jobs.” (Wiseman,
2021). Similar to Obama’s proposed plan, this proposal has also fueled debates over the possible
adverse effects on employment levels. Although Biden had initially intended to include such
minimum wage increases in his $1.9 trillion COVID-19 relief package, he later suggested that it
would be better off as re-introduced in a separate bill. Amidst the continuous debate, the future
The Raise the Wage Act of 2023, presented by both the House of Representatives and the
Senate proposes a notable shift in federal minimum wage policy. This act seeks a progressive
increase to $17 an hour by 2028. This comprehensive policy goes beyond just increasing wages,
as it also aims to phase out “subminimum wages for tipped workers, workers with disabilities,
and youth workers, so that all workers covered by the Fair Labor Standards Act (FLSA) would
be at the same wage level.” (Zipperer, 2023). This proposal would significantly impact over
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27,858,000 workers, or about 19% of the workforce. This would look like an additional $86
billion annually into the wages of low-earning workers, otherwise seen as a $3,100 average
increase per worker in their annual earnings. A potential downside to this policy is through the
abrupt increase in labor costs, which could lead to negative reprocussions, such as reduced
hiring, cutbacks in working hours, or in severe cases, business closures. While acknowledging
that most policies advocating for an increased minimum wage will have similar drawbacks, the
Raise the Wage Act 2023 stands out for proposing the most significant leap in federal minimum
wage history.
Considering the array of proposed minimum wage policies, the recommended course of
action is the Raise the Wage Act of 2023. The Act’s mission to incrementally increase the federal
minimum wage to $17 by 2028, along with eradicating subminimum wages, presents a practical
strategy. This gradual climb strikes a balance between addressing income disparities and
ensuring a manageable adaptation period for businesses. To further facilitate smooth a transition
period, targeted measures like providing tax incentives or grants to small businesses, introducing
the workforce could help to ease the implementation process. However, the potential hurdles
from certain business sectors, economic adaptation challenges, and political resistance prove to
threaten the successful adaptation of the Act. Conclusively, while the Raise the Wage Act of
2023 offers a promising framework for addressing income inequality through gradual wage
increases, navigating the path towards its enactment will require careful consideration of
References
Baker, D. (2020, January 21). This is What Minimum Wage Would Be If It Kept Pace with
https://cepr.net/this-is-what-minimum-wage-would-be-if-it-kept-pace-with-productivity/
Payne-Patterson, J., & Maye, A. A. (2023, August 31). A history of the federal minimum wage.
https://www.epi.org/blog/a-history-of-the-federal-minimum-wage-85-years-later-the-mini
mum-wage-is-far-from-equitable/
Desilver, D. (2021, March 12). When it comes to raising the minimum wage, most of the action is
https://www.pewresearch.org/short-reads/2021/03/12/when-it-comes-to-raising-the-mini
mum-wage-most-of-the-action-is-in-cities-and-states-not-congress/
Davis, L., & Hartig, H. (2019, July 30). Two-thirds of Americans favor raising federal minimum
https://www.pewresearch.org/short-reads/2019/07/30/two-thirds-of-americans-favor-raisi
ng-federal-minimum-wage-to-15-an-hour/
Lowrey, A. (2013, February 13). Raising Minimum Wage Would Ease Income Gap but Carries
https://www.nytimes.com/2013/02/13/us/politics/obama-pushes-for-increase-in-federal-m
inimum-wage.html
Wiseman, P. (2021, February 17). How economists see Biden’s $15 wage proposal. PBS News
Hour.
https://www.pbs.org/newshour/health/how-economists-see-bidens-15-wage-proposal
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Zipperer, B. (n.d.). The impact of the Raise the Wage Act of 2023. Economic Policy Institute.
https://www.epi.org/publication/rtwa-2023-impact-fact-sheet/#:~:text=What%20does%20
the%20Raise%20the,%2417%20an%20hour%20by%202028.