of Labor). The federal minimum wage is increase overtime, adjusted for higher living cost due to accumulated inflation. The minimum wage level is currently set at $5.15 per working hour (2001). An increase in minimum wage can help the poor by substantial amount. A 75-cent per hour increase in the minimum wage means an additional $1,500 for a minimum wage earner who works full-time, year round – “as much as the average family spends on groceries in 6 months” (Bureau of Labor Statistics). For a minimum wage worker, this fund injection is greatly helpful.Minimum wage increase is undoubtedly favorable for low waged earners, even if their current wage is well above the minimum wage. A theory known as the “ripple effects” (Welch 26) said that an imposed minimum wage increase all wages, and lowest wages are affected most.There is at least another advantage of imposing higher minimum wage. According to Gregory Mankiw, one of the “ten principles of microeconomics” is “people respond to incentives” (7). Higher wages give stronger incentive to the labors, and as a result, a stronger effort to work. In other words, higher wages can generate higher profit. This opinion sounds too good to be true, but when Henry Ford open his famous car factory, the theory is proofed. With a very generous wage in his time, Ford recorded one of the greatest successes in the history. As popularly believed, minimum wage provides a win-win situation to deprive poverty. If it is so advantageous then we should raise the minimum wage with a substantial ammount. The vast majority of Americans will agree to raise the minimum wage to $5 per hour or more. How many will agree to increase minimum wage to $100 per hour? I am sure that most well educated person will not agree to such an extreme increase. According to the law of supply, a high price level will raise the quantity demanded. With a very few exception, this law prev...
