You should add more background information when it's about something country-specific, not everyone is American
Good topic though!
Raising the minimum wage is not economically advantageous. Assuming that the economy is close to the equilibrium, raising the minimum wage will cause a shift and unbalance the economy. The economy will now have to either raise prices (inflation) or cut costs (layoffs) to get back to the equilibrium.
Really for it to be beneficial, the government should try to raise real income instead of nominal income. That would be the best thing that they can do to be socially responsible.
Raising the minimum wage is very good politically, because it gets the lower class people to support the politician. It helps them get voters, but a lot of them don't understand economics well.
Realistically most people make much more than minimum wage so the majority of people are not helped by this. However the negative repercussions are felt by many more people. (If Average Joe Supermarket pay its employes minimum wage, then when minimum wage goes up, they probably raise prices. In effect middle and upper class people have less money to go around spending on other essentials.) I could argue that it can be socially irresponsible to raise the minimum wage.
I disagree with you.
First of all, assuming that the economy is close to the equilibrium is a massive assumption to make. Economics is not my preferred field so I don't know enough about it to fully argue this but I highly doubt that the equilibrium has been reached in the US. You're going to have to cite some reliable sources to show that, if it is at all possible for a country's economy to ever reach an equilibrium. (which I don't think it is)
Secondly, the government can't exactly simple change the real income so changing the nominal income is the closest thing. It's maybe not ideal but it's simply the only way.
I do agree that this issue is probably abused by politicians to gain popularity, and it's true that a lot of people, especially the lower end of the wage spectrum, don't really understand economics. However, the people who do in fact understand economics better than anyone are actually in favour of raising the minimum wage, but more about that later. I'll also address your point about layoffs later.
Finally, the fact that most people won't be affected by this is not a valid argument. It's also not true. Raising the minimum wage to $10 would impact over 15 million workers. That's over 10% of the working force. That's huge!
Regardless, decisions shouldn't be made based on the fact of how many people it will affect, they should be based on their merit. The legalization of gay marriage (yay) doesn't affect most people, yet it's a good thing it was done.
Great points Scorecard, and I too love this topic...
I have fully formatted cases with jargon and carded evidence that I could pull out, but I'm sure no one wants to read through all of that, so here's the summary.
I'd actually always encourage people to cite sources, it's a good habit. Especially in this kind of setting
I will be taking the stance that raining the minimum wage, or instituting a living wage mandate, is economically responsible but not morally correct.
First, raising the minimum wage has a minimal effect on jobs. This is supported my many studies and if you are looking for them or disagree with this assertion, I will be more than happy to document dump. There are many reasons why this is so: increased productivity, more circulation of money, etc.
Additionally, it actually helps the businesses many claim it hurts. This is because of the aforementioned boost in productivity due to an increase of pride in one's job and many other factors. Additionally, the people who are working minimum wage jobs are likely to be spending that money which is good for business.
Finally, this is good for the economy because it will improve circulation of money. Again, people who work minimum wage jobs likely will be the same people who need the money, whereas those with more money are more likely to save it. It is common knowledge that circulation of money is good for the economy, so by giving money to those who spend it, the government is helping the economy.
Now on to why it is morally wrong...this may be a bit harder to understand, but stick with me and I think it will be understandable.
First, we must value human autonomy above anything else. This is because one's personhood and one's ability to make decisions are a prerequisite to almost anything else. A life without autonomy is a life not worth living, so we must value autonomy before anything here.
Now that this has been established, I will get into why it harms autonomy. A living wage mandate or raising the minimum wage is morally bad because it is coercive. Coercion is bad because it limits personal autonomy, and autonomy must be valued before anything else. These laws are coercive for many reasons: they tell the employer how much they must pay the employee, they tell a minimum wage worker how much their labor is worth, they assume the gov't knows what an individual needs to survive, etc.
To conclude, it is economically beneficial to raise the minimum wage/institute a minimum wage, but it is not morally correct.
I agree with all your point on it being economically beneficial, but I fail to see how it is morally wrong. Honestly I don't even see how morality comes into play at all. I cannot comprehend how you list all of these positives and then dismiss the entire idea based on some weird morality argument.
I don't understand your coercion argument at all. We're talking about the law here. That's coercive by definition. It's as coercive as any other law, in fact, it's no more coercive than the current minimum wage. Do you want to live in a country without a minimum wage? I'm sure all the people in China, Taiwan and Africa agree with you. Believe me, it's a good thing your employer is told how much they should pay you because I can assure you that there is someone who is willing to do your job for less money.
Now for my own points;
Yes the minimum wage should be raised as the current $7.25/h national minimum simply doesn't cut it. A human cannot feasibly live from that. However I do think that $15/h is too high. I'd side with the
7 Nobel Laureates in Economics who argue that it should be raised to $10.10 by 2016.
It would have no discernible effects on Employment
The current system is terrible as it does not take inflation in account at all, so the purchasing power has been going down significantly and will be as long as the minimum wage remains unchanged.
I suggest a system like we have in The Netherlands, where the minimum wage increases with inflation every 6 months. (yearly would be fine)
When working people don't earn enough to sustain themselves, who do they turn to? The government. Who pays for welfare and benefits? You do. The taxpayers do. Increasing the minimum wage will mean less people have to rely on these benefits meaning taxes could be lowered, or that allocated money could be used on other services. (did someone say NASA?)
