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Debate over Raising Minimum Wage Rate:

Economists Divided on Wage Bill Motion
Introduction

A minimum wage bill is a complex economic concept that puts the benefits of an employee

at an employee's expense. In this heated debate about whether to increase the minimum wage

rate or not, each side has its argument on the issue. Ideally, this discussion will use three articles

authored by Robert Reich (2015), Reihan Salam (2015), and Mike Konczal & Bryce Covert

(2014). Essentially, the articles provide important insights concerning the debate of increasing

wage rates and the implications it may have on an economy. Although some scholars argue

against increasing wage rate to 15 dollars per hour in the USA, this paper aims to argue that

raising the minimum wage rate to 15 dollars per hour is beneficial in the long run, but it should

be implemented modestly over several years.

The minimum wage rate should be raised in the US due to the long run benefits it has on

the economy. According to Salam (590), findings from various studies studying the impact of

increasing the minimum wage rate show no significant correlation between increasing minimum

wage rate and reducing employment as some scholars’ purport. For example, a study done in

Massachusetts revealed that increasing the minimum wage rate from $7.25 and $9.49 per per

hour had an insignificant impact on employment (Salam 589). In a study conducted by Reich
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(584), findings indicate that employment in the United States has grown on an annual basis

following an increment in the minimum wage rate.

Besides, increasing the minimum wage rate helps solve poverty in society and uplifts the

living standards of the people (Reich 585). Ideally, Reich (585) claims that a higher minimum

wage rate encourages people to be more productive, accelerating economic growth and

employment opportunities. Ideally, Reich (585), an attempt to increase the minimum wage rate

stimulates increases demand for labor. As employment opportunities increases, so does the

income increases amongst households. As a result, higher income levels make people to spend

more leading to the growth of the economy (Reich 585). Additionally, the insights drawn from

Reich (585) imply that increased wages may lead to the establishment of long term relationships

between employers and workers. Besides, employees will not have to over rely on government

aid programs because their spending has increased significantly. As such, Reich (585) advocates

for an increase in the minimum wage rate in the US.

In light of Salam’s (590) views, the minimum wage rate should be done at the state or

national level. One of Salam's arguments when advocating for a higher minimum wage is that it

should be implemented at the national level because if it is implemented at the state level, states

will show partiality in terms of coping with wage increment because they have different

capacities to support a higher minimum wage rate (Salam 589). For instance, Salam (589) points

to the differences between implementing a higher minimum wage in Massachusetts and

Mississippi by highlighting their capacities to handle the wage bill (Salam 589). Notably, while

Mississippi may be affected more by adopting a higher minimum wage bill, Massachusetts may

not be affected (Salam 590). Hence, to ensure all states develop equally, the wage bill should be

implemented at the national level.

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At the helm of the heated debate about whether to pass the minimum wage rate of 15

dollars per hour or not, some economists have taken an opposing side of the issue. One of the

arguments against passing the motion is that increasing the minimum wage rate makes

employers switch off some of the crucial benefits workers enjoy in the workplace (Konczal &

Covert 5). According to Konczal and Covert (5), when bonuses are cut off from the high-income

earners, the burden is passed to the consumers through upward price adjustments. According to

an article by Konczal and Covert (5), increasing the wage rate can directly impact prices no

matter how, and this may affect consumers adversely. In the same vein, price increases will

increase living costs making lives harder and this may create the need to raise the minimum

wage further.

Similarly, opponents of the wage bill argue that increasing the minimum wage rate tends to

put workers with fewer skills at the edge of the fence. Essentially, efficiency is more paramount

when an initiative to increase the minimum wage bill is announced (Salam 5). According to

Salam (591), employers will only consider giving less skilled individuals a chance to work when

they consider such a decision as cheap. Case in point, this implies that many of the recent

University graduates may lack an opportunity to work and gain skills when the minimum wage

rate is increased. It is also likely that organizations may start outsourcing labor to countries with

a lower minimum wage. In light of Salam’s (591) views, this may have a psychological impact

on the affected individuals because their efforts to fight poverty levels may be curtailed

adamantly.

Although the motion to increase the minimum wage rate is highly debated, scholars in the

chosen articles argue that the minimum wage rate should not be increased abruptly. The authors

unanimously agree that the minimum wage rate should be done in bits for several years (Salam,
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2015; Konczal & Covert, 2014; Reich, 2015). Ideally, Salam (589) argues that an abrupt

increment of the minimum wage rate may reduce the number of minimum wage jobs available

because only a few employers will be willing to pay higher federal minimum wages.

Besides, raising the minimum wage rate all at once may kill jobs in the short run. Ideally,

one of the reasons pointed by Konczal and Covert (5) is that employers who are not ready to pay

high wages will turn to capital-intensive production methods where human labor is will be

replaced by machines. Salam (589) also has the same opinion but adds that increasing the wage

rate is dangerous to an economy and urges states to adopt a more modest way while

implementing the minimum wage bill. Additionally, Salam (590) argues that increasing the

minimum wage rate is too risky because it makes poor people's lives harder because they cannot

afford to buy much. Moreover, Konczal and Covert (5) claim that it is not advisable to jump into

the 15 dollars per hour minimum wage bill because states do not have the same capacities of

adopting the wage bill.

Conclusion

The purpose of this discussion was to argue that raising the minimum wage rate to 15

dollars per hour is beneficial in the long run, but it should be implemented across the United

States. Essentially, the discussion has pointed out that increasing the wage rate has beneficial

implications for society. For instance, increasing the wage rate to 15 dollars will play a major

role in fighting poverty and increasing consumers' purchasing power. Besides, increasing the

wage rate to 15 dollars per hour does not significantly impact employment. However, the

research done on this paper suggests that the implementation of the 15 dollars per hour wage bill
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should be done sequentially over several years. It is imperative to argue that it is important to

pursue the minimum wage rate of 15 dollars per hour in the United States.
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Works Cited

Konczal, Mike, & Covert, Bryce. Does the Minimum Wage Kill Jobs? D2L/Brightspace, 2014,

pp.5

Reich, Robert. Why we should raise the minimum wage. Reflections, 2015, pp. 584-585.

Salam, Reihan. The fight Against 15. Reflection, 2015, pp. 588-591.