Many people I know have been discussing the notion of raising minimum wage and whether they agree/support or disagree/don’t support such a notion. A friend shared an image of President Obama on the left on Facebook and I thought I respond. I do not claim ownership of the image (which was posted by the “ATTN” group and I use with fair use), nor did I check to verify the quote’s accuracy. However, I thought it was worth responding to, as a general type of argument for raising minimum wage, so I typed up a bit of a response here.
Although minimum wage is surely not a living wage, the issue is also surely more complex than this. First, when minimum wage is increased, the number of jobs available goes down. That is because wages are the most easily controlled expense for companies. Therefore, if the price of individual employees goes up, the number of employees companies are willing to keep goes down. I’m not making this up. I’ve seen it happen, economists know it happens, it is just the way it is. If wages increase, the number of employed decrease. (Here, as often the case in economics, assuming “everything else being equal.”)[See, for example, this bit from Thomas Sowell, a famous economist, who cites survey data which shows 90% of economists agree on this.]
Second, the question is whether positions offering minimum wage are even intended for those who wish to “work full-time and support a family.” Frankly, the vast majority of those positions which do offer minimum wage are entry level positions, often with possibility of promotion. These positions are very often used as just that–college students just trying to make some money to burn on music or nights out with friends.
The objection is then raised: “But there are people who are trying to live on full time minimum wage with a family!” Well yes, that’s why I said this is such a complex issue, but to just blanket the whole thing by saying “Let’s just raise minimum wage, if you don’t like it, go try it yourself!” is obfuscation at best.
Third, too often this issue is used to try to set up a dichotomy of those who care for the “working person” and those who don’t. Hence, over-simplification to try to make it into a cut-and-dried issue. But again, companies are (unfortunately? necessarily?) out to make money. It doesn’t just generate itself in order to pay people more. Thus, one could just as easily over-simplify the “other side’s” status and say “Like your job? Don’t raise minimum wage.”
Obviously this would not be a helpful stance and it clearly ignores a number of truly relevant and important points that those who are for raising minimum wage are raising. That’s the problem with pithy statements.
I’m not saying any of this to be unsympathetic, but I do think the realities of economics are too often ignored in these conversations. Should we work to try to end economic inequality? Of course. But in doing so we should not overly simplify the issues, because when we do, no real solutions are offered, and those solutions which are offered cannot take into account the complexity of the issue (because we’ve ignored it).
Sorry for the wall of text, but I wanted to explain some of the issues I see from the “other side.” As for my own position, I’m about in the middle because I think it is far more complex than people on either side are presenting it.
I’d love to know what you think! Let me know in the comments.
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