Since the introduction of minimum wage there has been a lot of debates on whether to abolish it or reinforce it further into the economic activities of the country. This to say that some individuals believe that the abolishment of the minimum wage will ensure that there are more jobs offered to the community even though they pay lower wages. This is believed to hurt the teenage workers and adults particularly those who have minimal skills. Alternatively, there are those that believe the increased minimum wage will present an opportunity for the lower income earners to benefit from an economic growth that no longer benefits from it. This is to say, abolishing the minimum wage will severely hurt the working families particularly low-income parents who are raising children. The following paper looks into the different perspectives presented in this debate and identifying the argument that offers the most appropriate action.
Motion for Abolishing the Minimum Wage
Moral Argument
According to Russell Roberts one of the proponents of the motion believes that there is only one argument that matters in regard to the issue. This is the moral argument whereby, individuals should consider whether or not the policy for minimum wage presents individuals with a favorable environment to offer their labor skills in exchange for fairer wages. Russ Roberts believes that through the action of the government in creating the minimum wage, low income earners are hurt the more. This is evident as through increased wage targets that organizations and businesses should provide, the demand for the low income earners is significantly reduced. The belief in this case is that through the increased minimum wages, the government proposes that the value of labor provided by the low skilled employees has risen and hence they should be significantly rewarded for the same. This is a notion that Russell Roberts completely disagrees with and believes that it merely an artificial increase in the value of the labor.
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The proponent presents evidence of the low skilled workers particularly those between 16-to 24-year-old. It is evident that the population group has little or no experience in the labor market and hence the need for jobs to gain experience. According to Roberts, the unemployment rate within this group stands at 16% but it increases when focusing on minority groups where for African Americans it is at 29%. Therefore, the increase in minimum wage has been seen to present negative consequences for the low income earners seeking to get an employment. The research fellow at Stanford University’s Hoover Institution believes that employers will always react to these incentives of the government where the increased minimum wages will result in reduced demand for employees. The employers will instead look to incorporate machines to replace several workers. This is evident in the manufacturing industry where the low skilled workers would have great opportunities to get jobs. Instead, the minimum wage will result in reduced demand for the workers.
Zombie Economics
James Dorn is the vice president for academic affairs in Cato Institute and has major interests for research in trade and human rights, China’s economic reforms and the future of money. Using his personal research and that of respected fellows he identifies the damaging effects that minimum wage has on the low income earners particularly in terms of employment opportunities. The proponent advocates that the minimum wage policy should be abolished based solely on the law of demand. In this case, when price of a product goes up the demand for the good will significantly reduce. The argument here is presented through the research on the economy of China which has had no minimum wage for the workers since it was introduced in America in 1938. However, the country has been able to achieve significant growth in the economy as evident in the current trends. This is without the use of the minimum wage policy that seems to be crippling the American economy by increasing the unemployment rates.
According to the proponent, the minimum wage policy interferes with the labor market where economic and individual freedom is denied. James Dorn presents numerous cases where the minimum wage has interfered with the freedom of the low income earners. This is seen where a worker at department store in New Hampshire loses her job solely because the minimum wage has increased beyond what the employer can offer. Despite the fact that the worker was comfortable with the previous wage offered, she can no longer go back to work and offer her services at the same rate. As a result, the proponent identifies this as a case of low income earners losing their bargaining power. The policy makes it illegal for her to offer her services lower than the standard set. He identifies that the increased minimum wage may not have employment impact in the short run but in the long run employers will identify ways to cut on costs where skilled man power is substituted for unskilled workers. This also has the effect of slowed growth rate of jobs as presented by the proponent.
Analysis
The proponents in this case have advocated for the motion to abolish the minimum wage policy. Despite presenting strong arguments for the motion, it is seen that the proponents retract from their views when queried on instant implementation. Hereby, it is seen that their beliefs on the policy does not reflect a practical means of achieving the same. This is presented by the Russell Roberts’ response as he indicates that he does not know the effect that abolishing minimum wage might have. He is seen to deviate from the question suggesting that a longer process be applied to ensure that the struggling workers in the country can earn a higher wage through better education that the use of the artificial method. This is a clear indication that should the motion be approved by the federal and state governments, the number of people that would be affected could be unimaginable.
Motion against Abolishing the Minimum Wage
Economic Growth
Jared Bernstein, a senior fellow at the Center for Budget and Policy Priorities and who also served as chief economist to vice president Joe Biden, believes that abolishing the minimum wage is by far an outrageous notion that is unacceptable toward helping the low wage workers. He instead argues that the current trends indicate that the congress is seeking various ways on how the minimum wage should be increased. The policy for minimum wage has been in existence since the 1930s when it was introduced and through the numerous changes that have taken place it has been increased to serve the minimum wage workers. According to the opponent, the American economy has served for a long time the people of the low incomes. However, in the current times where globalization and technological innovation has taken place, the growth of the economy no longer reaches out to the working families. Therefore, through the minimum wage, the problems affecting the minimum wage workers are partially offset and hence provide an opportunity to better their living standards.
According to the proponent, there is significant research evidence that indicates the lacking basis of Russell Roberts’ argument. He believes that common sense it the only needed to identify whether the minimum wage policy affects the poor negatively or positively. Jared Bernstein points out that the policy has been in existence for 75 years and has since been increased 22 times. This is a clear indication that it is an effective means of serving the low income earners to better their lives despite the economic growth not impacting them. The proponent also indicates that out of the 50 states, nineteen of them have raised their minimum wage above that of the federal requirement. In this case, the issue raised by Russell Roberts is discussed where it seems absurd that a policy that is identified as damaging as he presents could not only survive more than seven decades but also extensively expand beyond the federal requirements. This is a clear indication of federal and states’ governments identifying its importance in steering the economic growth to the low income earners. Thousands of researchers have found that it is a significant means of improving their living standards as opposed to the beliefs of Roberts.
Parents and Families
Karen Kornbluh, a former policy director for then-Senator Barrack Obama, identifies the moral argument of the minimum wage in the labor market. According to research, more than a quarter of the children in the US are dependent on the minimum wage or just above it. This accounts for more than 17 million children in the country. As a result, through the stipulations of the minimum wage policy, the federal and state governments identify the wages as effective for the sustenance of these families. She believes that the minimum wage is in fact a morally upright policy. Therefore, through its implementation, workers are able to lead a better lifestyle. She categorically disapproves the notion raised by the Roberts that the policy does not make the world a better place. She believes that the minimum wage is the only factor that enables these families to barely stay afloat in an economy that is as challenging as in the present times. This is despite having to make critical decisions like whether to pay childcare or save up just in case they lose their jobs.
The opponent for the motion presents a case for the implementation of the minimum wage as a means of realizing the American dream. Hereby, the social mobility in the US used to be that children raised in a poor family have the opportunity to make good and improve living standards. However, this has not been the case as the US in behind numerous countries in the Organization of Economic Cooperation and Development data. Through abolishing the minimum wage this will be a step backwards rather than going forward towards the American dream. The issue of inequality is also raised as women are identified as those with the lowest incomes as opposed to men at all ages. These are the same women who are raising children and housing them. Thus reducing their minimum wage standards will only result in increased inequality amongst women. Additionally, through the minimum wage policy, the economy has not been affected as companies continue to earn profits while in some cases jobs have increased. It would be a gamble, as the opponent suggests, for the country to adopt a policy practice as used in Hong Kong where its population is nowhere near that of New York.
Analysis
It is evident through the arguments presented by the opponents of the motion that abolishing the minimum wage does not provide the low income earners an opportunity to cope with the current economic state. The low wage workers are seen not to benefit from the economic growth that has seen corporations and the high end workers earn high profits and even higher salaries respectively. As a result, through the minimum wage the federal and state governments seek to provide an improved standard for these low income earners. James Dorn identifies that the numbers presented by the proponents of the motion are contrary to the evidence provided. As a result, this argument indicates abolishing the minimum wage would be reckless as the proponents are not aware of the number of people it would affect.
Conclusion
The motion of abolishing minimum wage is seen as a critical issue that requires great care in providing an effective proposition. The scholars in the panel have presented the various arguments on each side as they sought to lure the audience to support their differing notions for and against the motion. The proponents of the motion have failed to provide accurate evidence supporting their perspective on the issue as seen in the arguments by Roberts and James Dorn. The opponents have presented a much stronger argument like the moral aspect of the policy. It is seen as having significant impact in economic growth, issue of inequality and low income families. The argument that China does not incorporate minimum wage is seen as false as only Beijing does have a similar policy that is significantly higher than that of the US.
