Pro-con: Should Congress raise minimum wage?

There are numerous ways to address the issue of economic inequality – an issue that has gained traction as the Occupy movement has spread beyond Wall Street. I believe we can do something to raise the wages of our lowest-paid workers right now. I recently saw a chart that demonstrates what’s been going on in the economy: The rich are getting richer, and the rest of us are getting poorer. It showed that the ratio of CEO pay to worker pay was 42-to-1 in 1980 – with the average CEO making $1.6 million. That ratio climbed to 107-to-1 in 1990 – with the average CEO making $3.3 million. By 2010 that ratio had soared to 325-to-1 – with the average CEO making $10.8 million. In 1968, the federal minimum wage stood at $1.60 an hour. If workers were earning the same amount in today’s dollars, adjusting for inflation, they would be paid more than $10 per hour, not the current $7.25 per hour. During that same time, median household income has risen roughly 14 percent while the value of the minimum wage has fallen by 30 percent. The solution is obvious: Congress should restore the minimum wage to its historic purchasing power by raising it to $10 per hour. It would enable low-wage employees to be rewarded for their hard work. It also would help boost the economy by getting income into the hands of those most likely to spend it, thereby creating additional demand that businesses sorely need during this shaky economic recovery. – Don Kusler, Americans for Democratic Action

When economic times are tough, it’s tempting to want to push for an increase in the minimum wage. Supporters see it as giving the deserving poor a badly needed raise. If we only mandate that employers raise the pay floor for their employees, those who earn the least will see a nice pay bump. And if there were no unintended consequences from government-mandated minimum wages, perhaps it would be a fine idea. But there are harmful knock-on effects that hurt some of the economy’s most vulnerable participants: young workers and those with few skills. Minimum-wage laws do not help reduce the number of families living at the poverty line. In fact, the minimum wage may harm low-income families by reducing the number of jobs available for which they are qualified. Given that difficult labor-market picture, it’s a mistake to enact any regulations that make it harder for employers to hire. – Nick Schulz, American Enterprise Institute