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Health Policy- Nurs. 505
Policy Analysis Paper
Dr. Phillipsen
04/17/2015
House Bill 0004 was first requested on November 20th 2014 and introduced on January
14th 2015 (General Assembly of Maryland, 2015). The Policy will allow employees to earn a
minimum rate of $10.10/hour beginning July 1st 2015. The effort to increase the minimum wage
is a societal struggle that should not be opposed but must be supported by all. Increasing
minimum rate will benefit low class Marylanders and improve the overall quality of life of
employees who work hard but being underpaid.
Madrick (2012) indicates that there has been low-wage, high employment policy
government in the rich world, and especially in the United States for a generation. The rich keep
getting richer whereas the poor continue to suffer. Bernhardt et al (2013) write that the violations of
minimum wage in American continue to be a disregarded issue despite several decades on scholarship and
economic restructuring in the country. They argue that violations of employment and labor laws exist
across low-wage industries and occupations and affect a wide range of workers.
Grindling & Terrel (2010) find that increases in minimum wages lead to a reduction in poverty
and they cite the case of Honduras as an example of how wage increases can reduce poverty in a country.
Von Scheven & Light (2012) indicate that states can influence the influx of low-wage immigrants by
adjusting their minimum wages. Minimum wage therefore does not have only an economic impact on
communities but it also has a social impact since it determines how some groups settle in certain
communities.
loss(General Assembly of Maryland, 2015). Sen. Allan Kittleman, a Republican also opposes this policy
by implying that this will negatively affect small businesses (General Assembly of Maryland, 2015).
Hayes (2007) identifies the strong opposition that has historically existed in political
circles to efforts to increase the minimum wage. He writes that minimum wage increases were
more achievable when workers organized themselves into potent forces and pushed for fair
wages. He concludes that lawmakers respond better to groups that succeed in mobilizing since
organization represents a significant source of power. Metcalf (1999) also writes about the tendency
of the wage system to drive down the price of labor to the lowest level is influence by forces that control
the labor market to the disadvantage of hard working citizens.
Madrick (2012) writes that there has been low-wage, high employment policy regime in the rich
world, and especially in the United States for a generation. Leicht (2010) argues that the policies that
ignore the economic fundamentals of minimum wage in favor of policies that favor unearned income
while promoting easy credit and debt have done considerable damage to the American economy. The
author makes the case that increasing the minimum wage will help to restore the economy. Kogan (2014)
makes reference to President Barack Obamas call to raise the minimum wage in his State of the Union
address and makes that case that it is time to raise the minimum wage to an acceptable level.
Financial Considerations
The financial impact for implementing the minimum wage policy will be an additional $10.9
million payroll costs in fiscal year 2016 mainly for higher education student employees in Maryland
(General Assembly of Maryland, 2015). There will also be a $5.5 million increase in payroll costs in
fiscal year 2018 (General Assembly of Maryland, 2015). The projected increase in general fund tax
revenue to the State is expected to be minimal and not be sufficient to offset the increased payroll costs
that the minimum wage policy will create.
The financial implication is that the State will have to think through viable options for funding
the Minimum Wage policy bill in such a way that it will not create a financial burden for the State. The
implementation of the minimum wage policy should be done in such a way that the benefit will outweigh
the cost. Betsy and Dunson (1981) warn that some level of unemployment can be created when a
minimum wage is imposed above prevailing levels. These potential challenges that can result from
implementing minimum wage increases must be overcome in order to successfully move forward the
effort to increase the minimum wage.
Clearly the minimum wage bill presents challenges for business owners. In order to compensate
employees fairly at $10.10, employers will have to find additional funds to pay their employees at the
new rate. State employers appear to be better positioned to honor the demands of the minimum wage bill
than provide company employers who have to now operate their businesses at new levels that can make
additional funds available to pay their employees at the higher rate.
Crofton et al (2009) evaluate the effect of minimum wage increases and conclude that higher
levels of real minimum wages have differing effects on high school dropouts among various races. The
researchers used varieties of model specifications and explanatory variables including real income,
unemployment rate, teen pregnancy rates, and educational attainment to measure the effect of minimum
wage increases and found that minimum wage levels affect educational attainment of various groups in
society. Decisions on whether or not to increase the minimum wage should therefore consider the broader
implications that wage levels have on various groups in the community.
headaches for businesses since employers will be forced to move resources around their existing budgets
to make funds available to pay employees at the new minimum wage of $10.10. A recommended solution
is to extend the implementation date of the minimum wage policy to January 1, 2016 to provide
employers with sufficient time to prepare their organizations to comply with the new minimum wage rate
of $10.10.
Conclusion
The new minimum wage of $10.10 is a good idea. It is good for employees and employers. It will
put more money into the pockets of employees who are expected to spend it to stimulate the economy and
make businesses grow which will benefit employers. Even though the new minimum wage has the good
intention of fairly compensating employees, it presents financial challenges for employers since they will
have to find new resources to pay employees at the new rate of $10.10.
A solution to this challenge will be to extend the implementation date of the new minimum wage
bill to January 1, 2016. This will provide employers with sufficient time to prepare and plan their
operations to make then ready to comply with paying employees at the new rate of $10.10. This will
create a win-win situation for both employees and employers since employees will receive higher wages
while employers will have adequate time to plan resources to pay the new higher wages in a way that can
boost their businesses and make the economy grow.
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References
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Employment and Labor Laws in Chicago, Los Angeles and New York. Social Forces,
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Betsy, C. L., & Dunson, B. H. (1981). Federal Minimum Wage Laws and the Employment of
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Wage on Youth Employment and Unemployment. Journal of Human Resources, 18(1), 331.
Crofton, S. O., Anderson, W. L., & Rawe, E. C. (2009). Do Higher Real Minimum Wages Lead
to More High School Dropouts? Evidence from Maryland across Races, 1993
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