Solved Assignments DEBATES IN ECONOMICS Should the Minimum Wage Be Increased? The minimum wage was created in 1938…


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DEBATES IN ECONOMICSShould the Minimum Wage Be Increased?The minimum wage was created in 1938 by the Fair Labor Standards Act (FLSA), debuting at 25 cents per hour. Even though it has been raised many times since then, it remains the subject of debate. Unions and antipoverty organizations typically spearhead campaigns to increase the minimum wage, saying it will help the nation’s working poor without affecting employment. Business organizations typically oppose a hike in the minimum wage, arguing that it will increase unemployment. Who is right? As you read the selections, ask yourself: Should the minimum wage be increased?PRO A MORAL MINIMUM WAGE . . . 1968 [was] the last year that the minimum wage was above the nation’s poverty line. . . . If the minimum wage were pegged at $9.50, millions . . . would be lifted out of poverty. The largest group of beneficiaries would be children, whose parents would have more money for rent, food, clothing and other basic necessities. Business leaders still trot out economists to claim that raising the minimum wage will destroy jobs and hurt small businesses. But the evidence, based on studies of the effects of past increases in both the federal and state minimum-wage levels, . . . shows otherwise. Because the working poor spend everything they earn, every penny of a minimum-wage increase goes back into the economy, increasing consumer demand and adding at least as many jobs as are lost. Most employers actually gain, absorbing the increase through decreased absenteeism, lower recruiting and training costs, higher productivity and increased worker morale. —Peter Dreier, director of the Urban & Environmental Policy program at Occidental College; and Kelly Candaele, founding member of the Peace Institute at California State University, ChicoCON WAGE HIKE WOULD COST JOBSRaising the federal minimum wage by $1.50 an hour will reduce job opportunities for those who need it most, new entrants to the job market with the least skills or experience. Raising the minimum wage hurts all American consumers and workers, by artificially inflating the cost of entry-level jobs, which is passed on through higher prices and lower real wages. The convenience store industry offers a compelling employment opportunity, with competitive wages, flexible schedules, and career development. Most convenience stores offer wages far above the minimum—in 2001, the average was $9.28 an hour. However, our industry strongly opposes an increase in the federal minimum wage because it will discourage the creation of entry-level jobs and hurt small businesses. With higher costs of health care and other benefits, and lower profit margins, convenience store owners and petroleum marketers cannot sustain an increase in the minimum wage. NACS members want to do what’s best for their own employees without government interference. And NACS members are very concerned about the inevitable result of a higher minimum wage—a ‘ripple effect’ of higher prices throughout the economy. If Congress really wants to help low-income workers, there are much more constructive things that can be done, such as reducing payroll taxes, cutting the capital gains tax, and eliminating unnecessary and burdensome regulations. —Allison Shulman, director, National Association of Convenience Stores, government affairsQuestion 1. Identifying 1. Identifying What arguments do Dreier and Candaele make in support of increasing the minimum wage? 2. Explaining 2. Explaining Why does Shulman believe that raising the minimum wage will hurt convenience stores and other small businesses? 3. Deciding 3. Deciding With which opinion do you agree? Explain your reasoning.

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