One of the most passionate topics in today’s political scene is the Minimum Wage. Folks on both sides of the political aisle have very stong opinions on the topic, and as a result it is difficult if not impossible to find a compromise everyone can get behind. On one hand, progressives argue that the current minimum wage is unfair and exploitative of workers and should be raised. The conservatives suggest that a higher minimum wage would violate free market principles, raise unemployment, and lead to outsourcing and automation.
According to those on the left, every worker deserves to be paid a “living wage”. The current minimum wage, $7.85 an hour federally, is not enough to provide a living for low wage workers and their families. They use companies like Walmart as an example. Although Walmart now pays a $12 per hour minimum wage, it is thought of as a company that pays poverty wages to its employees. Walmart provides information to its employees on how to sign up for government assistance programs, knowing that it doesn’t pay enough to keep people off welfare. Clearly, the fact that nobody can survive on less than $8 per hour, the left suggests that it is time to raise the minimum wage.
In addition, progressives make the argument that because many people will see a pay increase, this will lead to more buying power for a lot of Americans and more profit for businesses. This will in turn lead to businesses being able to provide their workers a higher wage.
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Those on the economic right disagree. They suggest that the relationship between an employee and employer should be kept free from government interference. Because workers are freely choosing to work for their employer at whatever their wage is, they argue, is proof that the business relationship is consensual.
In response to the argument that the current minimum wage is not a living wage, the right would suggest that low wage jobs were not meant to support families and independent workers. They argue that jobs like Walmart, McDonalds, and Subway are meant for young people who still live with their parents and as a way for those with another full time job to earn some extra income.
Furthermore, they would suggest that these entry level jobs in retail and fast food are also meant to be a stepping stone to a better career. Although workers are not supposed to stay working at an entry level job at McDonalds for many years, this if often the case. Instead, one should work at McDonalds at $7.85 an hour for a year or so and then become a manager making $12 per hour and up. Maybe after one has been a manager for enough time, they could make a move to a better paying company.
Another important argument against raising the minimum wage is that it creates unemployment. According to conservative economist Milton Friedman, “It is better for a youngster to be employed at $1 per hour than unemployed at $1.40 per hour.” The basic argument that Friedman is making is that having to pay more incentivizes employers to hire less workers and to give less hours to the employees they already have. Ultimately, it would lead to a decrease in jobs available and a decrease in weekly and monthly pay for those who do have a job.
Conservatives argue that one of the ways in which the minimum wage creates unemployment is by forcing employers to increase outsourcing and automation. It might be cheaper for an employers to pay someone $8 an hour to work the McDonalds cash register than to invest in an automated kiosk, however, once their labor cost goes up to $15 an hour, that calculus might change. At that point, it could be a better financial choice to automate than to pay a worker a wage. In addition, because production costs are lower in other countries, raising the minimum wage here could make it more profitable to outsource labor to other countries. This would of course lead to more unemployment in industries like manufacturing.
Overall, there are several arguments for and against the minimum wage, but the issue really comes down to whether the government has a right or a duty to interfere in private business to ensure workers are being paid fairly. Those on the left suggest that the right to a ‘living wage’ necessitates the government mandating a higher minimum wage while those on the right argue that the government has no business intervening in private business relationships.
