The Impact of Minimum Wage Legislation on the Working Class Poor

This thesis will focus on the study of the working class poor minimum wage and the impact it has had on their income. The study begins with the historical background of the minimum wage from early colonial times until the changes of the minimum wage law of 1993. It analyses the reasoning of creation of minimum wage legislation and the economic principles of the period. Chief Justice Hughes said in in West Coast Hotel Co v. Parrish 300 U.S. 399: The exploitation of a class of workers who are in an unequal position with respect to bargaining power and are thus relatively defenseless against the denial of a living wage is not only detrimental to their health and well-being but casts a direct burden for their support upon the community. What these workers lose in wages the taxpayers are called upon to pay. The bare cost of living must be met. {Interim Report 111) The purpose of this study is to investigate the important studies of minimum wage to determine if a living wage has been provided for the working class poor and the impact that minimum wage has had on poverty and income distribution. This study will analyze and attempt to determine the impact to workers such as disemployment and unemployment and the effect of other programs related to the low wage earners such as government transfers. As this study indicates, the value of minimum wage to the low wage worker is the provision of a living wage. Previous studies did not adequately indicate impact of disemployment or unemployment have on minimum wage. The data from the literature review indicates that any impact of disemployment occurred only to teens aged 16-19. A change in distribution of income does not occur in any great significance as a function of raising the minimum wage. Prior studies indicated that minimum wage workers are across all deciles of income and that the low wage worker can be found in all categories. Distribution of income does not reflect minimum wage increases to those workers who are below the poverty line because of government transfers. The author reasons that minimum wage is a necessary ideal because of potential unfair labor practices that can occur without it, that the author thinks that there is a moral obligation of any nation to care for its working class poor. However, the data indicates that there may be more efficient ways in which to distribute income to the working class poor. Data appears to indicate that family size and education attainment are critical to solving poverty of low wage workers