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The Mass Media

The Mass Media

The Mass Media

Nation should follow Seattle in raising the federal minimum wage

The entire nation should applaud and seek to emulate the example that’s just been set by Seattle in terms of raising the minimum wage. Seattle passed a proposal to raise the minimum wage to more than double the national amount, $15. According to Time, Seattle Mayor Ed Murray announced a plan to raise the minimum wage to $15 per hour over the next three to seven years. It is the first major U.S. city to make a commitment to such a high base wage.

Still, as with all things political, the notion of raising the minimum wage has been met with ardent opposition. Many spout the ill-informed belief that taking such a course of action will ultimately set the economy back whilst making employers less likely to hire more workers.

Raising the minimum wage is a divisive subject. Even as almost all economists, globally and nationally, agree that raising the minimum wage will be much more advantageous than keeping it at its present, dismal rate, some sing a different tune.

Fiscal conservatives will swear on their mothers’ graves that raising the minimum wage is akin to us throwing our economy into the deepest, darkest river. Liberals, of course, see it differently.

The simplest of neoclassical economic theories concerning supply and demand of labor contend that setting the price of labor above the equilibrium level will cause an increase in the supply of labor that will not be matched by demand, thus leading to an excess of labor. In other words, unemployment will rise.

Yet, this theory has certainly not withstood the test of time.

Like The Economist recently pointed out, the publication vocally opposed raising the minimum wage in Britian back in 1999. After monitoring the effects it’s had on the British economy for a few years, the Economist made a sharp u-turn. The International Monetary Fund and the the Organization for Economic Co-operation and Development (OECD) both publicly against raising the minimum wage, also changed their views on it.

The Initiative on Global Markets at the University of Chicago’s Booth School of Business recently questioned a panel of 38 economic experts on the subject. The panel posed the  question of whether raising the minimum wage (indexed to inflation) is worth the risk for low-skilled workers,  close to half of the panelists agreed or strongly agreed that the benefits of raising the minimum wage and indexing it to inflation outweighed the costs, while the other half was split among the other four options.

Econometric studies by UMass Amherst economist Arin Dube, serve to argue that there are little to no adverse effects of small increases in the minimum wage. Dube went further to propose that raising the minimum wage would actually serve to reduce poverty. Dube’s studies argue that raising the minimum wage by ten percent would reduce the number of people below the poverty line by 2.4 percent.

Using this estimate, if the minimum wage is raised to $10.10, as pointed out by the Washington Post, it would reduce the amount of impoverished people by 4.6 million.

Alan Krueger (now chairman of President Obama’s Council of Economic Advisers) and David Card, a Canadian labour economist and Professor of Economics at the University of California, Berkeley used a natural experiment to study an increase in the minimum wage. It suggested that raising the wage did nothing to reduce employment.

If the economists’ community was slightly split on opinions regarding minimum wage, the general public is quite different. According to a December poll by ABC news, 67 percent of Americans are all for increasing the minimum wage.

The minimum wage debate has raged on for long enough, it’s time to come to a resolution. Seattle has set the ball rolling, we should all endeavor to follow suit.