The Case for Raising the Minimum Wage
The effect of raising the minimum wage on workers and small businesses is a topic of seemingly endless debate. With the recent Democratic proposal to raise the minimum wage from $7.25 per hour to $10.10 per hour by 2016, arguments on both sides are becoming louder than ever.
On Sunday, The New York Times made a detailed case in favor of such an increase. A summary of the editorial board's view is outlined below.
An increase would not hurt businesses.
Drawing on research and a recent letter from economists to President Obama, the Times argued that minimum wage increases do not harm businesses, stressing that employers don't immediately respond by cutting jobs or putting a freeze on hiring. The editorial also argued that increasing wages does not result in higher prices; rather, it puts more money in the hands of consumers, which boosts spending and the economy.
It would help a lot of people.
According to the Times, if the minimum wage were increased, 27.8 million people would earn more money. The average age of this group is 35, more than one-fourth are parents, most work full-time, and on average they earn half of their families' total income. The editorial says that research shows the Democratic proposal would reduce the number of people living in poverty by 4.6 million. It is important to note, however, that another New York Times article outlines the strong ties between organizations that conduct research on the issue (on both sides) and lobbyists who stand to gain from passing or blocking legislation.
There is no alternative.
According to the Times, other options to a wage increase such as food stamps, Medicaid, and the earned-income tax credit can actually drive wages down because some employers factor government assistance into their wage scales. The newspaper says that this is particularly true with the earned-income tax credit, a taxpayer provided subsidy aimed at bringing families out of poverty.
The Wall Street Journal argues another side.
The proposed wage increase has many critics, and the debate has multiple sides. Over the weekend, Robert G. Strayton, a former executive vice president at public relations firm Hill & Knowlton, made the case in The Wall Street Journal for a $5 minimum wage, saying it would result in an immediate increase in employment.
What do you think about the proposal to raise the minimum wage? Let us know in the comments below.