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Minimum Wage Debate in the US

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Published: Thu, 07 Sep 2017

Minimum wage has been a subject of sustained and polarizing debate in the realm of U.S. labor economics right from the time the Department of Labor came into existence in 1913 (Neumark, Salas & Wascher, 2014). The debate is older than the official federal minimum wage legislation, which came into force in 1938. Nonetheless, despite the massive attention this subject has elicited over this lengthy period, a consensus concerning the effect of minimum wage on employment is not in the vicinity. Experts have argued plausibly both in favor of and against minimum wage laws. Even so, this paper seeks to add its voice to this debate by arguing that minimum wage laws are necessary because they speed up economic recovery after recessions, safeguard workers from exploitation, and attempt to bridge the income inequality crisis the country is presently witnessing.

Annotated Bibliography

Meer, J., & West, J. (2015). Effects of the minimum wage on employment dynamics. Journal of Human Resources. Retrieved from http://people.tamu.edu/~jmeer/Meer_West_Minimum_Wage.pdf

In this journal article, the authors advance a familiar argument in the field of labor economics. In their view, an increase in minimum wage or the existence of laws that specify a particular minimum wage serves to reduce employment growth over a lengthy period. Apparently, the reason most studies that seek to establish a relationship between minimum wage and employment dynamics fail to do so due to the methods they employ. An example is the use of “state-specific time trends” (p. 1). Thus, the authors utilize state panel administrative employment data to arrive at their finding. Reportedly, the finding is in agreement with a number of other empirical findings.

This journal article does not seem to agree with the position outlined in the thesis statement. However, a source, it will help in the development of the argument by bringing in the perspective of those opposed to minimum wages or their increase. A comprehensive and fully developed argument is one that pays attention to the opposing side’s argument. This article and others that make similar arguments will serve to create this balance.

Neumark, D., Salas, J. I., & Wascher, W. (2014). Revisiting the minimum wage-employment debate: Throwing out the baby with the bathwater? ILR Review, 67(3 suppl), 608-648.

This article revisits the minimum wage employment debate, apparently after a period of the authors’ abstinence from this area of focus for some time. According to the article, the minimum wage debate is age old, but in recent times, emergent literature is increasingly propagating the idea that new research in this area is inaccurate. The reason behind such claims is that the new research employs methods that critics say do not consider spatial heterogeneity. The article explores the research designs more closely and concludes that indeed, there is a cause for concern with these new researches. The research designs they employ are faulty. Through such designs, the studies indicate that minimum wage has not interfered with employment noticeably. In contrast, a link exists between minimum wages and employment rates.

This article achieves its purpose by considering a number of other studies in the minimum wage debate. The studies it examines are those that claim to find no significant relationship between minimum wage and employment and those that criticize such studies. Insofar as the minimum wage debate is concerned, this article is informative due to fact that it gives the debate a historical context that many article fail to capture. It explains when and how the debate started as well as how it has developed over the years. Despite not taking a clear stand on whether minimum is bad or good, it is a great resource for the upcoming paper due to its informative nature.

Orrenius, P. M., & Zavodny, M. (2008). The effect of minimum wages on immigrants’ employment and earnings. ILR Review, 61(4), 544-563.

In this article, the relationship between minimum wage laws are examined with the intent of determining the nature of impact such laws have on minimum wage earners. In contrast to natives, immigrants, who constitute the majority of minimum wage earners, are likely to be impacted more by minimum wage laws. Immigrants are often less educated, possess limited English language skills, and less connected socially. Although no direct indications of adverse effects of minimum wage laws on employment among minimum wage earners were established, there is a possibility that such laws influenced the settlement decisions of some immigrants. Trends seem to indicate that they preferred states in which the minimum wage bar was not high.

In this article, the minimum wage debate is approached from a new perspective, the perspective of the minimum wage earner. Evidence suggests that although many may assume that minimum wage earners would rush to high minimum wage states, they actually tend to prefer low minimum wage states. The rationale behind this kind of disharmony is that when the minimum wage is high, employers tend to seek experience or higher levels of education. Based on what the article was investigating, immigrants will obviously shy away from such states. Thus, since this whole debate is about minimum wage, the article does well to approach it from the perspective of those groups that fall in the category of minimum wage earners. In other words, it is possible to determine how they feel about the whole issue. This unique approach will help diversify the argument.

Pollin, R., & Wicks-Lim, J. (2016). A $15 US minimum wage: How the fast-food industry could adjust without shedding jobs. Journal of Economic Issues, 50(3), 716-744.

In this article, the possibility of adjusting from the current minimum wage to a minimum wage of $15 per hour without reducing the labor force is examined with fast food restaurants in mind. Apparently, fast food restaurants are the leading employers of minimum wage earners and those who earn below minimum wage. Thus, if they can adjust from the current minimum wage of $7.25 to $15 hourly, then any other employer can. This scenario is projected over a 4-year period with a two-step increment. It is achievable through “turnover reductions, trend increases in sales growth, and modest annual price increases over the four-year period” (p. 717). And fast food restaurants will not need to lower their profits to make the adjustment.

The article is also unique in its approach to the debate. It does not preoccupy itself with whether the increase of minimum wage is bad or good. Instead, it seeks to demonstrate through a breakdown of relevant figures that it is possible for fast food restaurants to accommodate a minimum wage of $15 per hour without eating into their profits. The authors make an effort to be quite thorough in their analysis as well as breakdowns. The practical nature in which tackle this issue proves beyond doubt that a higher minimum wage is possible in America and stands in support of the argument of this project. Highly paid employees are prone to working hard and more effectively.

Watanabe, M. (2013). Minimum wage, public investment, economic growth. Theoretical Economics Letters, 3(05), 288.

In this article, the author argues in favor of minimum wage increases citing poverty reduction, and reasonable living as its direct outcomes. Despite there being divergent views on the same, through a “two-period overlapping generation model,” (p. 288) the author endeavors to show that the negativities associated with minimum wage increment can be countered with increased productivity among workers. Moreover, the study establishes that minimum wage increases have a positive on economic growth.

This article also argues in favor of the position that is outlined in the thesis statement. This means it will in the development of a strong argument to show that despite the widespread claims that minimum wage increment has negative effects, there is actually a lot of good it can help achieve. The level of language and engagement with the technical economics in this article demonstrates the author’s expertise in this field. As a consequence, this article gives an authoritative argument backed by facts and adequate examples. This will serve as a very important resource during the actual writing of the final paper.

References

Meer, J., & West, J. (2015). Effects of the minimum wage on employment dynamics. Journal of Human Resources. Retrieved from http://people.tamu.edu/~jmeer/Meer_West_Minimum_Wage.pdf

Neumark, D., Salas, J. I., & Wascher, W. (2014). Revisiting the minimum wage-employment debate: Throwing out the baby with the bathwater? ILR Review, 67(3 suppl), 608-648.

Orrenius, P. M., & Zavodny, M. (2008). The effect of minimum wages on immigrants’ employment and earnings. ILR Review, 61(4), 544-563.

Pollin, R., & Wicks-Lim, J. (2016). A $15 US minimum wage: How the fast-food industry could adjust without shedding jobs. Journal of Economic Issues, 50(3), 716-744.

Watanabe, M. (2013). Minimum wage, public investment, economic growth. Theoretical Economics Letters, 3(05), 288.


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