Minimum Wage

Sammy Nguyen

Logic and Critical Thinking

Laura Osinski

Final Paper

December 11, 2017

Minimum Wage

        Minimum wage is a difficult number to decide on because it affects different income earning citizens in different way. Minimum wage is the lowest wage that an employer can pay their employees. The current Federal minimum wage is $7.25. An employee who makes $7.25 an hour and works 40 hours a week, will earn about $14,000 per year. The Federal government deemed that the poverty line is anyone who makes less than $17,000 a year (“Federal Minimum”). Therefore, anyone that is paid at a minimum wage lives below the poverty line. As President Obama said in his state of address, "In the wealthiest nation on Earth, no one who works full-time should have to live in poverty”, so Democrats in Congress and the President want to raise the minimum wage to $9 an hour. However, this idea has become a controversial issue for the past few years. On the one hand, the proponents feel strongly that low-income workers need some incentive to earn a sufficient living. Conversely, Steve Chapman, the author of the article “the Push For a Higher Minimum Wages Ignores Economic Reality”, believe that changing the minimum wage does not always help employees, but it may hurt businesses and bring negative effects on the economic growth. In this paper, two sets of arguments from both sides are going to be analyzed and evaluated.

        Paul Krugman, the author of the article “Better Pay Now”, indicates that “hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earning”. When the employees have higher income, they are more likely to afford their daily essentials and improve their standard of living, which reduces the poverty as well as income inequality. “Early this year the Economic Policy Institute estimated that an increase in the national minimum wage to $10.10 from its current $7.25 would benefit 30 million workers.” It can be agreed that higher minimum wage helps create more jobs and grow the economy. Additionally, increasing minimum wage would increase worker productivity and reduce employee turnover. Therefore, Paul Krugman believes that raising minimum wage is a good idea because it helps many Americans and also brings positive impacts on the economy.

        On the other hand, Steve Chapman has a totally different points of view on this issue. He thinks it is better to decrease prices for some products instead of increasing the minimum wage because “the problem is not these workers earn so little; it’s that the things they buy cost so much”. If gas is cheaper, bread and meat have lower cost, and several other products such as clothing or cars are held lower prices, workers who have low income can afford for what they want in their daily life. The author adds that this idea works out for the laws of economics. “When the price of something falls, demand for it rises, but supply does not.”  In other words, outlawing high prices does not harm the national economy. Moreover, as stated in the article, “Dean Baker and John Schmitt of the Center for Economic and Policy Research in Washington insist that when employers are forced to pay higher wages, they reap large benefits, in the form of higher productivity and lower turnover.” This proves that a minimum wage increase will hurt businesses and force companies to close. Another argument that Chapman provides is that rising the minimum wage would force businesses to lay off employees and increase the unemployment level. “If you raise the floor from $7.25 an hour to $9, employees who work output is less than $9 an hour will be let go.” Therefore, when the minimum wage is higher, this will disadvantage low-skilled workers, teenagers, and young adults. If more people become unemployed, the rate of poverty will go up. In total, by using credible evidence, some statistics and logical explanation, Steve Chapman’s arguments about lowering prices fairly overweigh the arguments about rising the minimum wage.