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It sounds like good news for the low-income workers and their families whenever the government increases the minimum wage. The United States Congress adopted the Fair Labor Standards Act in 1938. Congress created the minimum wage toward the end of the Depression era to ensure a "minimum standard of living necessary for health, efficiency, and general well-being for workers" (Wages). The Fair Labor Standard Act establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $5.15 an hour.
Minimum wage is an example of government intervention. The government has put a minimum on the dollar amount that employers can pay their employees. Unfortunately, when we implement solutions like raising the minimum wage, it is too late to actually fix the problem, so in most cases it has effects that we cannot foresee as it is a reaction instead of a prevention method. However, upon closer analytical examination, it can be seen that raising the minimum wage has a perverse effect and examining the minimum wage law itself can show a dynamic effect when raising the wage floors.
On the surface minimum wage laws seem like the best prescription to treat poverty and improve living standards of the working poor. Advocates first defense of the minimum wage floor and its increase is that the firm can pass the costs occurred by the wage hike to its customers. Another defense is that advacates deny claims of links between the minimum wage and the impacts upon employment, and suggest th ...