On the other hand, there are several valid economic arguments in favour of minimum wage. Firstly, having a minimum wage allows workers to spend their higher income within the economy, helping businesses flourish. As the profits for these business increase, this in turn will further benefit the community, as they are able to hire additional employees to keep up with the increase in sales.(Chad Halvorson: 2014) With people getting a higher income from their employer, the workers will feel more comfortable and satisfied with their job, making them less likely to quit. (Chad Halvorson: 2014) This reduction in turnover reduces expenses for the business associated with the hiring and training required for new employees. The minimum wage system also helps to ensure people are more self reliant as they can afford to live off what they earn, hence reducing their dependance on Government support through pensions and other payments. When reviewing the minimum wage each year the government also needs to take into consideration inflation levels to ensure that the real value of the wage levels are maintained. It would also helps stop abuse and the exploitation of employees, who use undocumented labour and take advantage of the fact that they can pay them whatever low rate they want. In contradiction to the main argument is that a minimum wage will lead to job loss, however in Dale Belman 2014 book “What Does the Minimum Wage Do?” it states that “evidence leads us to conclude that moderate increases in the minimum wage are a useful means of raising wages in the lower part of the wage distribution that has little or no effect on employment and hours. This is what one seeks in a policy tool, solid benefits with small costs. That said, current research does not speak to whether the same results would hold for large increases in the minimum wage” (Journalist’s resource: 2016). When determining the increase in minimum wage you need to first find a fine balance that not only gives benefits to employees, but also minimises the impact on business.
In America an economist James Galbraith estimated that a increase in the minimum wage, would result in a raise for 28 million Americans and “with more family income, some people would choose to retire, go back to school, or have children, making it easier for others who need jobs to find them. Working families would have more time for community life, including politics; Americans would start to reclaim the middle-class political organisation that they once had. Because payroll- and income-tax revenues would rise, the federal deficit would come down. Social Security worries would fade.” - James Galbraith (Marshall Auerback:2012) It was also found through a report issued by the nonpartisan Congressional Budget Office in February 2014, where they discovered “the Effects of a Minimum-Wage Increase on Employment and Family Income, that explores two scenarios: Raising the minimum wage to $10.10 or to $9.00. The report concludes that there are distinct trade-offs. Under the $10.10 scenario, there would likely be a reduction of about 500,000 workers across the labor market, as businesses shed jobs, but about 16.5 million low-wage workers would see substantial gains in their earnings in an average week. Under the $9.00 scenario, the labor force would see a reduction of 100,000 jobs, but an estimated 7.6 million low-wage workers would see a boost in their weekly earnings.” (Journalist’s resource: 2016) The rise to the federal minimum wage is even predicted to have a ripple effect through the whole economy, boosting 30 percent of the American workforce wages. The low minimum wage is a wide scale issue, but it is mainly affecting the younger generations and “although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less. Among employed teenagers (ages 16 to 19) paid by the hour, about 11 percent earned the minimum wage or less, compared with about 2 percent of workers age 25 and older.” The increase in income will also help saves lives with a study showing that “a $15 minimum wage could have averted 2,800 to 5,500 premature deaths between 2008 and 2012 in New York City, representing 4 percent to 8 percent of total premature deaths in that period. Most of these avertable deaths would be realised in lower-income communities, in which residents are predominantly people of colour.” Finally, with the growing consumption of fast foods and data used between 1984 to 2006 a test was conducted to see weather “minimum wage was associated with changes in the body mass index (BMI)” (Journalist’s resource: 2016). It was found that “a $1 decrease in the real minimum wage was associated with a 0.06 increase in BMI…(and) real minimum wage decreases can explain 10 percent of the change in BMI since 1970…(concluding) that the declining real minimum wage rates has contributed to the increasing rate of overweight and obesity in the United States.” Because of the similarities between the Australian and American economies these statics above have some relevance to Australia. Although, the Australian citizens may will not experience exactly as specified above, however these trends act as a guide for what could happen in the foreseeable future.