There has been an argument about minimum wage, which was brought about by two different studies. The white House’s Council of Economic Advisors proposed for an increase of minimum wage by 40%, that is, from $7.25 to $10.10 per hour, which also indicated that no job losses would be realized. On the other hand, the Congressional Budget Office (CBO) also came up with a different proposal that indicated the minimum wage raise would upshot the unemployment rate to 500,000 less jobs.
These strong initiatives by both parties resulted in a deep argument with each side conspicuously defending its position. The debate took a political shape where the Democrats defended the White House position while the Conservatives supported the CBO opinion. According to the debate, it is clear that raising minimum wage is a poor strategy to combat poverty.
The CBO report will not be effective in combating poverty since it will only affect 900,000 people in poverty, which does not capture the real figures in the report that is at 16.5 million. Therefore, the report implies that few individuals of minimum wages are in poverty, and increasing the wages will not benefit many. The result of this is that many beneficiaries of the plan are not the real people that the US president is using to sell his agenda.
The White House report is not a clear depiction of what is happening on the ground despite offering a solution to the problem. The numbers they are using are ambiguous. They purport that their proposal will be able to raise 2 million households in the best way possible from poverty. The main underlying factor about poor families in the United States is that there are no full time workers among them. Most of those who work among the poor families only spend approximately 7% of their time to work. The main idea is that poverty levels have not been in any way encouraged by a low minimum wage or because the amount paid per hour is low. Poverty has risen because most individuals are not working. What people need is jobs and not increasing the minimum wages per hour.
According to the CBO, only 900,000 households will be lifted from poverty. This is a very small number that will only affect about 1% of the poverty population. Additionally, the cost of implementing it is far beyond imagination. Statistically, it involves around $100 billion annually to rescue 900,000 people from poverty, thereby affecting business owners and customers who will have to fund the low income workers. This will be an expensive plan given its intention is to effect hard working individuals in order to lift low income wage workers.
This direction should be well distinct and its purpose clearly stated. The program will be very effective if its main intention will be to redistribute income among different class of people in the US. However, the program is poorly placed if it is intended to address the poverty levels because the strategies do not apply as remedies to reduce poverty.
College Graduates and Less Educated in the Job Market
Several individuals with different education levels have been caught up at the same job labour market. As a result, there has been a high rate of unemployment, and reduced labour market participation thereby making those with high education to earn a low wage. According to the United States Bureau of Labor Statistics data, unemployment rates among fresh graduates of ages 25 to 32 increased from 4.3% to 10.6 % in 2013 from 2017. On the other hand, degree holders in the same age category unemployment rate rose from 1.5 % to 3.7 % in the same time.
According to Richard Vedder, the high rate of unemployed individuals with college graduates drastically affects those with lower education. College degree holders will take opportunities meant for lower educated individuals, thereby making them hard to compete with them like bartenders or taxi drivers. According to the Federal Reserve Bank of New York, college graduates are forced to take up low income jobs since they do not find proper jobs fitting their level.
College graduates therefore end up taking job opportunities that make them to at least have a job regardless of their qualifications. This causes those with less education to be irrelevant in the job market since they will be less recognized.
Other cases in the job market are also not affected by the level of education or the course learnt. Some organizations look for individuals who have the passion and knowledge than individuals who use papers to identify themselves. Not everyone who has high college qualifications has an upper hand in the labour market than those less.
The number of college degree holders has radically increased than the availability of the matched opportunities. As a result, they have resorted to taking up any chance that comes along their way. This has affected the less educated by minimizing their chances of getting employed. This has affected both the college graduates and the less educated as the relevance of education qualification to a particular job has been overridden.