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Tracy Adams
Dr. Waller
BUSA 1210.03
November 20, 2014
The Minimum Wage Debate: Yes or No?
The minimum wage debate; it is something that has been argued for years in politics and
between the people of our country. What is this debate? Its the argument of whether the
government should raise the minimum wage from $7.25 to $9.00 per hour. Obama is the one
who proposed this in 2013, but the principal of the argument has been around since the late 90s.
During his proposal, Obama states that no one who works full time should have to live in
poverty, basing his proposal around helping those who live in poverty in our nation. A large
amount of the people present in this debate are against this policy, but there are those who still
seem to argue for the proposal and that raising the minimum wage will positively affect an
economy.
Back in the early 1990s, 1992 to be exact, David Card and Alan Krueger took a look at
the effect of an increase in New Jerseys minimum wage, specifically in the fast-food industry.
What they noticed was that employment actually increased. After their claim was published, a
paper by David Neumark and William Wascher came out stating they had found that a rise in the
minimum wage had actually decreased employment. After examining their findings, Card and
Krueger restated their claims. They stated that a higher minimum wage didnt increase
employment, that it probably had no effect. Neumark and Wascher also began to emphasize a
conviction that the employment did not go up, contrary to what they had first claimed that the
employment actually fell.

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After both of these ideas had circulated around the minds of economists for a bit of time,
a new idea had come about; an idea by Thomas Michl, suggesting that both of the earlier
accusations were correct. Michl suggests that the increase in the minimum wage didnt increase
or decrease employment, but that it reduced the hours of those employed. There is a possibility
that his idea is in fact true, given that most workers in the fast-food business are part-time
employees.
Those who argue against raising the minimum wage generally base their argument
around the fact that it will decrease employment, or cause unemployment. One of the major
voices in this argument is House Speaker John Boehner. In his response to the Presidents
proposal, he states When you raise the price of employment, guess what happens? You get less
of it. This is going off the grounds that a higher price causes a decrease in demand, basic
supply-demand rules. Michael Saltsman, another major voice, agrees with what Boehner states.
Over 85 percent of [economic] studies in peer reviewed journals say job loss occurs after an
increase in minimum wages, he said. Economists are not divided on this issue. He goes on to
talk about how no matter what the size of an increase in the minimum wage, the effects on
employers will be prevalent. Not only that, but those seeking jobs will end up losing out because
the demand for workers is lower, meaning those with fewer qualifications will not be able to get
a chance at a certain job.
Then there are those who argue for raising the minimum wage. Their argument is based
around the fact that an economic theory may not always be true. Douglas Hall is one who
argues this, stating saying something a lot doesnt make it true. Another reason certain people
are for an increase in the minimum wage is that Douglass Hall advocates that it could be a way
of stimulating economic growth. Lower income people are more likely to spend the extra money

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they earn. He states, If you give $100 to a person who makes minimum wage they are probably
going to spend it immediately and locally, this causing economic growth. Comparing that to if
you handed the same $100 to someone of more wealth, they may just let it sit in their wallet for a
period of time. Hall seems to have calculated that if the minimum wage were to go from its
current of $7.25 to $9.00 by 2015, it would create $18 billion and result in 100,000 jobs being
created.
Now that you have a general basis as to what each side of the arguments reasoning is, its
time that you hear my side of the story. From what I have read and know from previous studies
in economics, I believe that the minimum wage should actually be decreased slightly, to lets say
$6.90 to $7.00. Doing so may, in the short-run, decrease the amount of people looking for jobs,
but it will allow employers to give their employees longer hours and increase their opportunities
of employment. If the employer doesnt have to pay as much for their labor, they will increase
the amount of labor and thus the rate of unemployment will decrease in the long run because
more people will notice the increase in the need or want for jobs by employers.
While I can argue all day that minimum wage should actually be decreased, I can also see
where those who argue for it to be increased are coming from. Even though employment is
decreased due to the drop in demand for workers, the amount of money those who still have jobs
or get hired in the future is increased. That extra money in their pockets will more than likely be
spent within the week of being paid, thus increasing the flow of money in the economy.
Both sides of this argument are interesting, providing their own facts. Everyone seems
to be able to provide their own statistics of whether the rate of employment increases or
decreases. From what I have read and studied, it seems that the argument against the increased

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minimum wage is what is going to win in the long run. Ultimately, however, this argument will
be left up to those who create and pass the laws that we have to follow.

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Works Cited
10, March. "The Minimum-wage Debate." Los Angeles Times. Los Angeles Times, 10 Mar. 2013. Web.
19 Nov. 2014. <http://articles.latimes.com/2013/mar/10/opinion/la-oe-hassett-the-case-againstthe-minimum-wage-20130310>.
"Debating the Minimum Wage." The Economist. The Economist Newspaper, 03 Feb. 2001. Web. 19
Nov. 2014. <http://www.economist.com/node/494922>.
"The Great Minimum Wage Debate." DeseretNews.com. N.p., n.d. Web. 19 Nov. 2014.
<http://www.deseretnews.com/article/865573603/The-great-minimum-wage-debate-howObamas-proposal-to-increase-the-minimum-wage-will-impact-the.html?pg=all>.