Proponents of such a measure say that increasing the minimum would boost the economy. This follows from demand-side economics, which relies upon the consumers having money and wanting to purchase new products. The argument goes: if more money is provided to the poor, they will spend that money and therefore allow for economic growth. Another common argument is that this would reduce dependency on the government. If low-wage workers can afford a higher standard of living, poverty would reduced and welfare spending would also go down, freeing up government money.
Other reasons for increasing the minimum are related to reducing inequality. As inflation has occurred over the years, the minimum wage’s real value has gone down significantly. This means the poor are becoming increasingly poor. With higher wages for the poor, inequality in income would go down. Greater numbers of people would be provided with money to afford housing and essential resources and standard of living would go up.
However, there also exist clear arguments which oppose such a measure. Opponents argue that increasing the minimum would not, in fact, reduce poverty. Numerous studies have found that employers are less likely to hire in an area after the minimum wage has gone up. Instead, they often turn to automation or hiring in other areas. Businesses would not want to spend more money and would therefore want to hire less. Another reason poverty might not decrease is because of inflation. If employers don’t reduce hiring, it would cost more for them to produce goods, so they would then increase costs.
The other major argument against minimum wage is the value of the free market. This relates to the Austrian school of thought, which says that the free market is the best way for promoting growth. One effect of the minimum wage is it reduces the ability of less experienced workers to bargain. For example, younger workers might be willing to work for less to gain work experience which might improve future opportunities. They wouldn’t be able to do that with a minimum wage.
Overall, both the pro and con sides to the minimum wage have logical reasoning. As we move forward and the topic continues to come up, it is important to consider all possible consequences of setting such a measure into law.
https://bebusinessed.com/history/history-of-minimum-wage/
https://minimum-wage.procon.org/
Shawn, I like how you provide strong, convincing arguments for both sides of the debate of whether to increase minimum wage. I also like how you relate the argument against minimum wage to the Austrian School economic approach. I think another important factor to consider is globalization or, more specifically, offshoring. Many jobs are being moved to developing countries because people there are willing to work for less money (often below the minimum wage in the US). An EPI study has found that this process has led to the lowering of wages for non-college educated workers. This might play a factor over the issue of minimum wage because increasing minimum wage may help account for the reduction of wages through offshoring. However, this may also be harmful because many companies or businesses may look even more towards offshoring, which would lead to higher unemployment and harm towards American workers.
ReplyDeletehttps://www.epi.org/press/globalization-lowered-wages-american-workers/
This was a very informative post considering that you took both the pros and cons of increase the minimum wage. This image(http://assets.pewresearch.org/wp-content/uploads/sites/12/2017/01/05105043/FT_17.01.03_minWage_by_state.png) would provide more modern information abot the minimum wage across the US. According to the given image, states that are relatively well off such as California, Massachusetts, Washington, etc. were able to give their citizens a higher wage whereas lower states such as Texas, Mississippi, Alabama, etc are not. This creates another argument that states are only able to provide a higher minimum wage if their states could afford it.
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