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The Advantages & Disadvantages of Minimum Wage

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Some consider the minimum wage, established by the Fair Labor Standards Act in 1938, as a necessity, while others think it is a detrimental piece of legislation. The minimum wage requires employers to pay all employees at least the specified amount based on the current version of the law, which tends to occasionally raise the amount to adjust to the cost of living. There are advantages and disadvantages to the minimum wage requirement.

Reduced Income Gap

One advantage of the minimum wage is that it helps to close the income gap between the rich and poor. Although there is still a significant difference, the minimum wage at least puts a floor in the gap so it does not grow wider. Narrowing this gap is important to maintaining a population with equal freedoms.

According to, a wide income gap threatens freedoms and democratic values. For those who are worn down from the struggle to survive with little money, the rights to speak out on issues, vote and enjoy life in general become unimportant and do not have meaning.

Prevents Abuse

A minimum wage helps to prevent abuse by employers. Asking workers to work long hours will cost the employer a set amount with a minimum wage in place. Also, the law eliminates the legal bargaining with a desperate employee to get him to work for an unsatisfactory amount.

Adults Keep Jobs

With a minimum wage in place, adults who depend on their paychecks to pay the bills and survive can keep their jobs instead of competing with less experienced workers or teens who would otherwise be willing to work the same jobs for less money, according to Since the minimum wage only lets the agreeable pay rate go so low, the experienced and perhaps more deserving worker will not lose the job simply because someone else will do it cheaper.

Sharing Of Wealth

The minimum wage forces wealthy companies to share more of the money they make with the people who helped them make it. It helps reduce the practice of hoarding all the money for the executives and paying wages to workers that do not meet their basic needs.


Inflation happens because of several contributing factors, but the minimum wage can be one. This disadvantage of the law happens when companies see their payroll rise because of a minimum wage increase, according to This brings the bottom line down and the company begins to try and regain the profits. They may cut jobs or reduce quality, but more commonly they will pass the added expense on to the consumers, causing the products they produce to cost more at the store.

Illegal Hiring Practices

The minimum wage may prevent some businesses from turning a profit because they work on such a tight budget. When this happens, they may turn to the black market for help, according to

Illegal immigrant workers can be found in abundance within the United States, and they will often work for less than minimum wage since they do not deal with payroll deductions to cover taxes and the like. Citizens who are legal residents of the country also take part in this type of “under the table” work on a regular basis.