As an election year approaches in the United States in 2016, debates on minimum wage laws are a topic of discussion for some of the running candidates. For example, Bernie Sanders, who is gaining popularity among so many young voters promises to raise the minimum wage to $15 per hour if he wins the election. The importance of minimum wage laws is crucial to discuss on various levels. A large percentage of the population struggling to get by is left behind as minimum wage remains below an amount that is sufficient for living wage of life in 2016. In order to uplift the nation’s economy and overall condition, the importance of understanding and setting a fair minimum wage is detrimental for the American people. The following paper will evaluate whether a minimum wage law should even exist, and if the law remains in place, what should the current minimum wage be set at and how does the amount get determined.
Against Minimum Wage Laws
One of the issues that many economists will argue about minimum wage laws is the risk associated with increasing the minimum wage and the rise in unemployment that will result. People in opposition of minimum wage laws like Thomas Sowell felt that “minimum wages should price low marginal ability workers out of jobs,” which makes the use of minimum wage laws as a system for ensuring social equality a useless tool (Cappelli, & Block, 2012). Other economic scholars also feel that the minimum wage law is doing more harm than good for the citizens and the nation. Daniel Shaviro has suggested that the minimum wage law is actually just a redistributive tool, which reduces efficiency while destroying low wage jobs further hurting those who were supposed to benefit from the law (Rogers, 2014). Instead Shaviro “advocated repealing the minimum wage and instead assisting low-wage workers through negative income taxes or other transfers funded out of general revenues” (Rogers, 2014).
Supporting Minimum Wage Laws
Despite the brief argument against the minimum wage laws, I would have to support the minimum wage laws as one of the ways that government can protect the vulnerable low income workers from the corporate world who may abuse their power to grow richer at the cost of neglecting their labor force. Even if many economists and scholars have reasonable evidence of the challenges that minimum wage laws may deliver for low wage workers through a rise in unemployment, the most reasonable means to limit corporate greed would be to regulate at least a minimum hourly pay that ensures a fair living wage for the blue collar work force. Many alternatives that would financially support low wage earners, such as earned income tax credits are not establishing a sense of self-worth and respect for these workers that may be seen through their ability to earn a living on their own, which honors the time and energy spent on the job. It becomes an issue of increasing morale and incentive to be a productive member of society to work for their living rather than being given ‘hand- outs’ by the government. Perhaps my attitude towards the minimum wage policy falls into the framework of a social egalitarian view.
Setting the Minimum Wage
Assuming the minimum wage law continues to be used as a policy that employers and employees must abide by, the next question to consider is in setting the minimum wage. What is a fair minimum amount to set for lower income, lesser skilled employees to earn on an hourly basis? Needless to say, the debate on how to set a minimum wage amount and who should be involved in making this decision has been and continues to be a point of contention in coming to a fair conclusion on the issue. Some argue that the government should be heavily involved with the help of political economists in this decision, while others feel that it is a decision that should be made between labor unions and other such entities with passive government involvement (Boeri, 2012). According to an article by Boeri (2012), two options exist to address who or how the minimum wage amount can be set- 1) “Minimum wages are set within a collective bargaining procedure at the centralized (national) level, and 2) Government sets unilaterally the minimum wage maximizing a social welfare function which may include some (distributional) concerns about the surplus of employed and unemployed workers.”
Both of the options presented above are possibilities that may help ensure a fair minimum wage. However, from my personal perspective, it seems that the costs of living in various parts of the country are a big factor to consider when establishing a minimum wage policy. It seems that numerous factors should be considered based on location, age, family size, and educational or skill levels thought should be incorporated into a minimum wage policy. Perhaps the minimum wage should not be a single hourly wage amount, but rather a range that falls into amounts based on one’s circumstances. For example, the suburban teenagers’ minimum wage rate should differ from that of the urban single mother, regardless of the skills and job title of the individual. Even that will be different based on where one lives because the teen and single mother living in California will be living under a higher cost of living than the teen and single mother living in Texas.
Determining whether or not a minimum wage law is a fair and realistic practice to continue brings up issues surrounding social equality that have yet to be fully addressed. However, with the limited progress that has been made on this issue, it appears the minimum wage laws are the only best practices option for now and must be utilized with a reformation of determining a minimum wage amount that takes into consideration the realities of individual circumstances to help establish some social equality and fairness in the process.
Boeri, T. (2012, June). Setting the Minimum Wage. Labour Economics, 19(3), 281–290.
Cappelli, P., & Block, W. E. (2012). DEBATE OVER THE MINIMUM WAGE LAW.
Economics, Management and Financial Markets, 7(4), 11-33. Retrieved from http://search.proquest.com/docview/1326326742?accountid=35812
Rogers, B. (2014). Justice at work: Minimum wage laws and social equality. Texas Law Review,
92(6), 1543-1598. Retrieved from http://search.proquest.com/docview/1532141206?accountid=35812