Congress enacted the federal minimum wage in 1938, during the Great Depression. The Congress had two objectives; keep workers out of poverty and increase consumer spending for economic recovery. Today we are discussing whether we should raise the minimum wage again. Raising the minimum wage is useful for several reasons. First, the current minimum wage has failed to keep pace with inflation. Second, a higher income level reduces employee turnover and increases efficiency, and ultimately, raising the minimum wage does not reduce employment. Even with high unemployment rates, the minimum wage is good for the economy. Today, as of July 24, 2009, “the federal minimum wage” is $7.25 an hour. It has failed to keep up with inflation. The real value of the minimum wage increased steadily from 1938 until it peaked in 1968. Thereafter, it suffered severe erosion as Congress failed to adjust for inflation over time. The minimum wage of $1.60 an hour in 1968 would be $10.47 today if adjusted for inflation. This means that the purchasing power of the minimum wage has decreased significantly over time. The current minimum wage is no longer sufficient to protect workers from poverty. A person earning minimum wage and working full time (40 hours per week, 52 weeks/year) only earns about $12,000 per year. That's nearly $7,000 below the poverty line for a family of three ($19,090) under federal poverty guidelines. As a result, the gap between poor and high-income families continues to widen, and taxpayers must pay more for public assistance such as food stamps and Medicaid. Raising the minimum wage can increase the annual income of low-income families and reduce public assistance expenditure by g...... middle of paper ......litical Science, London, UK. Minimum wages and employment: A case study of the fast food industry in New Jersey and Pennsylvania; David Card and Alan B. Krueger, The American Economic Review, vol. 84, no. 4 (September 1994), pp. 772-793 The effect of the minimum wage on the fast food industry; Lawrence F. Katz and Alan B. Krueger, Labor and Industrial Relations Review, vol. 46, no. 1 (October 1992), pp. 6-21 Minimum Wage Effects Across State Lines: Estimates Using Contiguous Counties; Arindrajit Dube, T. William Lester and Michael Reich, Review of Economics and Statistics (2010) 92:4, 945-964Do minimum wages really reduce youth employment?; ALLEGRETTO, S.A., DUBE, A. and REICH, M. (2011), Accounting for Heterogeneity and Selectivity in State Panel Data. Industrial Relations: A Journal of Business and Society, 50: 205–240. doi: 10.1111/j.1468-232X.2011.00634.x