I decided to do my rational argument essay on why minimum wage should be lowered. I had a difficult time coming up with a topic at first but this idea came to me during a lecture in my economics class. I went with it because it's an interesting issue that not a lot of people understand the complexity of.
Here is my intro paragraph so far:
Let’s face it, earning money is on everyone’s mind. Whether it’s for buying basic necessities or free spending, money provides security and freedom to all who own it. To an extent, how much someone makes is a big driving factor in their flexibility, stability, and long-term well-being, so an increase in minimum wage must be a great thing for everyone, right? Be careful what you wish for. Earning more sounds great until you’re earning nothing. Having a high minimum wage doesn’t benefit society but instead detriments it due to increased business costs and decreased employment, suggesting a need for a lower, cost of living adjusted minimum wage instead.
My body paragraphs will most likely go like this. I have studies to back each paragraph:
BP1: Businesses can't afford/aren't willing to pay employees a high minimum wage so in return there will be less of a demand for workers/less jobs open to those who need them. Oversimplified example: A business has $15,000 to pay X amount of employees for one month of work. If the minimum wage is $10/hour, the business has enough money to pay wages for a total of 1,500 hours of labor. If the minimum wage is $15/hour, the business only has enough money to pay wages for a total of 1,000 hours of labor. This rise in wage means either a.) less people will be hired because less work is affordable, b.) the same amount of people will work but for less hours for the same reason as a, or c.) both. Whichever one of these happens, there collectively ends up being no benefit from an increase in minimum wage aside from a higher hourly rate. Workers either lose hours, lose money, or lose their job altogether.
BP1.5: There will always be poverty regardless of how high minimum wage is. People say raising minimum wages will "raise people out of poverty" but studies show it instead increases prices of other goods in the general market. For example, NBC News found that the price of a cup of coffee went up by 10 to 20% in Oakland, California, after a 36% minimum wage hike, while coffee prices in Chicago rose 6.7% after the minimum wage rose to $10. Similar trends are shown with rent and groceries, meaning that those who need those things the most likely still end up having a difficult time affording them. The goal to combat poverty shouldn't be to pay people more money, it should be to pay money to more people. We need to maximize the chances that low-skilled/entry-level workers have for upward mobility and this doesn't come with flat out paying them more, it comes with giving them jobs in the first place and having government assistance fill in the gaps for basic living necessities until they get on their feet. See BP2.
BP2: Lower minimum wage creates a more functional hierarchy for climbing up the job ladder. A junior in high school working for the first time is most likely not worth a $15/hour minimum wage to an employer looking for good candidates. Lowering their wage to $10/hour for example might make them more appealing to employers and give them an easier time to getting into the job market - simple principle of demand. Same goes for college students going for internships. Most companies won't hire people without experience because a.) there are better candidates, and b.) their cost is greater than their benefit. Lowering the minimum wage would allow more people to easily gain work experience earlier on and give those same people the ability to command higher wages as they work for longer and gain more knowledge. Everyone has to start from somewhere and the employer's willingness to pay doesn't tend to meet the potential employees desire to earn when the employee doesn't have much to offer experience-wise.
BP3: A lower minimum wage has been shown to encourage entrepreneurship. Employees costing less means smaller hiring costs for businesses and therefore a higher motivation for more firms to enter the market and hire more employees accordingly. This creates more jobs, more products, and more deals that will in return boost the economy and get those who are looking for employment employed. Many say a low minimum wage results in a bigger divide between high earners and low earners but it actually results in high earners benefitting low earners through providing them more opportunities for work.
Hey Matthew, I really like your blog with good detailed information.Are there any examples of countries or states that have successfully implemented a lower minimum wage? What were the results, and how do they compare to areas with higher minimum wages?
ReplyDeleteGreat question but very difficult to answer because so many things besides minimum wage factor into unemployment, poverty, etc. of countries/states on the big scale. What I'm trying to say is countries/states vary greatly in their other characteristics and these tend to impact unemployment/poverty alongside minimum wage and it can be tricky to figure out what exactly is causing what unless we narrow the scope of the problem down significantly. In my essay I will be using small-scale studies that show 1.) raising minimum wage results in more jobs being outsourced to cheaper countries/automated, 2.) lower minimum wages promote more entrepreneurial/job growth at higher financial flexibility, and 3.) minimum wage hikes result in inflation. A combination of these few things show that the minimum wage being lowered is a good thing for the economy but this isn't necessarily going to be shown in the metrics of countries/states on the big scale because there are so many other causes of unemployment, poverty, etc.
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