Raising the minimum wage is a highly contested issue with multiple perspectives worth discussing. In this post, I will examine the Liberal viewpoint, which is in favor of raising the minimum wage. In my next post, I will do a rhetorical analysis on a Liberal article written by Romanian economists Silvia Marginean and Alina Stefania Chenic. 1* They claim that raising the minimum wage will have little effect on employment rates but fail to address key arguments, which makes their claims much less convincing. The Liberals’ position is comprised of four main points. They believe raising the minimum wage will result in many positive economic effects, is necessary because of inflation, would reduce inequality, and result in many additional benefits.
First, Liberals claim that raising the minimum wage will result in major economic benefits, including increased economic activity and job growth and decreased poverty and welfare spending. According to the Economic Policy Institute, a minimum wage increase from the current rate of $7.25 an hour to $10.10 an hour would inject $22.1 billion net into the economy and create about 85,000 new jobs over a three-year phase-in period. 2* Also, according to economists Hristos Doucouliagos, PhD, T.D. Stanley, PhD, Aland Krueger, PhD, and David Card, PhD, there is, “…little or no evidence of a negative association between minimum wages and employment.” 2* Liberals believe that raising the minimum wage will increase employment rates and economic activity.
They also claim raising the minimum wage will decrease poverty and welfare spending. According to a 2014 Congressional Budget Office report, increasing the minimum wage to $9 an hour would lift 300,000 people out of poverty, and an increase to $10 an hour would lift 900,000 people out of poverty. 2* Also, a 2013 study by the University of Massachusetts estimates that increasing the minimum wage to $10.10 an hour is “projected to reduce the number of non-elderly living in poverty by around 4.6 million, or by 6.8 million when longer term effects are accounted for.” 2*
Liberals also state raising the minimum wage will reduce government welfare costs. They reason that if low-income workers’ income increased, their dependence on, and eligibility for, government benefits would decrease. The Economic Policy Institute estimates that by increasing the minimum wage to $10.10 an hour, more than 1.7 million Americans would no longer be dependent on government assistance programs. They report the increase would shave $7.6 billion off annual government spending on income-support programs. 2*
The Liberals’ second claim is that minimum wage’s purchasing power has significantly decreased since its peak in 1968 due to inflation. To give you some perspective, in 1968 the minimum wage was $1.60 an hour, which is equivalent to $11.16 an hour in January 2016 dollars. This is 53.9% higher than today’s minimum wage of $7.25 an hour. Furthermore, the federal minimum wage lost 8.1% of its purchasing power to inflation between July 2015 and the last increase in the minimum wage in 2009. We can deceive ourselves all we want by saying we can just print more money, but that money comes at the cost of inflation. Liberals claim and experts at the Economic Policy Institute have found that, “…inflation indexing guarantees low-wage workers a wage that keeps pace with the rising cost of goods and services.” Liberals state that raising the minimum wage and indexing it to inflation would allow low-wage workers to adopt a standard of living comparable to the current economy. 2*
This leads me to the Liberals’ third argument. They believe raising the minimum wage would help reduce income, race, and gender inequality. The U.S. has the 4th highest levels of income inequality among Organization for Economic Cooperation and Development member countries. Studies have found that in 2012 the richest 1% of the U.S. population earned 22.83% of the nation’s total pre-tax income. This is the widest gap between the rich and the poor since the 1920s. 2* According to both the Brookings Institution and President Obama’s Council of Economic Advisors, the weakening value of the minimum wage, “is one of the important (reasons)… for inequality at the bottom.” 2* Raising the minimum wage would help people afford food and housing and other everyday essentials.
Liberals also claim raising the minimum wage would help decrease race and gender inequality. Although women represent 47% of U.S. workers, they make up 63% of minimum wage workers. African Americans represent 12% of the U.S. work force, yet they make up 17.7% of those paid minimum wage. 2* Have you sensed a problem yet? Liberals state that increasing the minimum wage is necessary in order to create a fairer income distribution for disadvantaged groups.
The Liberals’ final claim is that raising the minimum wage will bring a host of general benefits including a healthier population, increased school attendance and a decrease of high school drop-outs, and a reduction of crime. According to a 2014 Human Impact Partners study, those earning a higher minimum wage would have enough to eat, be more likely to exercise, less likely to smoke, suffer from fewer emotional and psychological problems, and even prevent 389 premature deaths a year. 2* Edward Ehlinger, MD, Health Commissioner for Minnesota agrees with these findings, stating that raising the Minnesotan minimum wage from $6.15 an hour to $9.50 an hour by mid-2016 was probably, “…the biggest public health achievement… in the four years I’ve been health commissioner.” He also claims that this is a “major public health issue.” 2*
Reducing high school drop-out rates and increasing school attendance is another benefit of raising the minimum wage. A 2014 study found that teens who live in poverty are twice as likely to miss three or more days of school per month compared to those who do not. Therefore, the more people who are raised out of poverty, the more likely kids will be to attend school. Also, paying teens more money will allow them to work less and give them more time to study, lowering the high school drop-out rates. 2* According to a 2014 study conducted at the United States Military Academy at West Point, “…an increase in the minimum wage from $7.25 an hour to $10.10 an hour (39%) … would lead to a 2-4 percentage point decrease in the likelihood that a low-SES (socioeconomic status) teen will drop out.” 2* These are promising statistics.
Finally, Liberals claim that increasing the minimum wage would reduce crime. An April 2016 study by the Executive Office of the President’s Council of Economic Advisors found that, “…higher wages for low-income individuals reduce crime by providing viable and sustainable employment…. Raising the minimum wage to $12 an hour by 2020 would result in a 3 to 5 percent crime decrease (250,000 to 540,000 crimes) and a societal benefit of $8 to $17 billion dollars.” 2* Researchers who studied crime rates and the minimum wage in New York City over a 25-year period support the claim that a higher minimum wage reduces crime. Their research found that, “increases in the real minimum wage are found to significantly reduce robberies and murders… a 10 percent increase in the real minimum wage results in 6.3 to 6.9 percent decrease in murders. 2*
To conclude, Liberals believe the minimum wage should be raised. They claim raising the minimum wage will spur job growth and help reduce poverty and welfare costs. Liberals state that inflation has caused the paper dollar to lose its purchasing power and we must index it to inflation. They also claim that this change must be made in order to reduce income, gender, and race inequality. Finally, they cite several statistics that claim raising the minimum wage will result in healthier and safer communities.