ECON 0858 Increasing the Minimum Wage Discussion

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Xuanming Wang
ECON 0858
10, OCT 2021
Position Statement
Topic: Increasing the Minimum Wage
1. Position Statement Topic: Should the minimum wage be eliminated, left alone, or increased?
If you believe it should be increased, state how much it should be increased and why.
2. My position in this paper is that an elevation in the minimum wage shall be more
advantageous. Currently, the minimum wage stands at $7.25 per hour and it should be increased
to $10 per hour. Notably, the livelihood of many people shall improve (Su, 2020). Furthermore,
the advantages of increasing the minimum wage defeat the disadvantages. Therefore, this paper
shall prove the rationale behind this position statement.
3. Economic arguments supporting my position:
a. Economic activity shall elevate from the increased minimum wage.
i.
A direct economic gain of $22.1 billion shall occur when the minimum wage is increased
to $10 per hour rather than the current $7.25 (Su, 2020). Therefore, the GDP elevates;
thus, consumers in the region shall have a high purchasing power. Illustratively, the
Federal Reserve Bank of Chicago determined that an additional $1.75 in minimum wage
shall lead to an elevated annual household spending of $48 million (Su, 2020).
ii.
The increased economic funds shall allow the Government to spend funds in opening
new job opportunities. Economic Policy Institute holds that the $10 per hour in the
minimum wage shall lead to approximately 85,000 new employment opportunities (Su,
2020).
b. Poverty reduction from the minimum wage increase
i.
Congress Budget Office held that an elevation of the minimum wage to % nine should
result in 300,000 people being lifted from poverty while an elevation to $10.10 shall
result in 900,00 people being saved from poverty (Gindling, 2018). Consequently, the
livelihood of people shall improve.
ii.
Through poverty reduction, welfare spending shall decrease as well. More low-income
earners making additional funds leads to a decrease in dependence on welfare. In 2014,
the Center of American Progress held that increasing the minimum wage to $10.10 would
reduce expenses by $4.6 billion in the Supplemental Nutrition Assistance Program (Su,
2020). These funds could go into spending on other areas that would improve the quality
of life of Americans.
iii.
Minimum wage increase allows people to have the everyday necessities. In 2015, a report
by the Alliance for Justice Society determined that the minimum wage of $7.25 per hour
is less than half of what is needed for an individual adult (Gindling, 2018). Furthermore,
the same report determined that an employee would need to work for 93 hours weekly to
afford necessities or ignore certain aspects such as medical care (Gindling, 2018).
c. Minimum wage reduction would decrease inequality.
i.
The distinction between the poor and rich is excessive; thus, a rise in the minimum wage
decreases this difference, causing a decline in income inequality. The Economic
Cooperation and Development established that the United States has substantial
economic disparities, but Chile and Mexico were higher. Furthermore, a 2012 study
revealed that 1% of America’s riches accumulated 22.83% of the country’s pre-tax
revenue (Su, 2020).
ii.
While discussing race, the U.S. Department of Labor held that the labor workforce
comprises 12% African Americans who take up 17.7% of the minimum wage earners
(Dozier, 2010). Therefore, an increase in minimum wage shall increase racial equality in
terms of income generation.
d. Minimum wage increase leads to higher employee motivation.
i.
Minimum wage increase decreases business turnover due to the job appearing more
attractive, as reported by an academic in 2014 at the London School of Economics
referred to as Dr. Phil (Hirsch, Kaufman, & Zelenska, 2015). The American Sustainable
Business Council and Business for a Fair Minimum Wage surveyed in 2014, and
determine that multiple small businesses owners, 53% of them believed in declined turn
over from increased minimum wage (Hirsch, Kaufman, & Zelenska, 2015).
e. Minimum wage increase allows employees to afford housing in the United States
i.
The National Low Income Housing Coalition determined that an employee must be
capable of earning a minimum of $15.50 per hour to afford to rent a an adequate one
bedroom apartment. To afford a modest two-bedroom, they would need to make at least $
19.35 per hour (Su, 2020).
4). Economic arguments against my position:
a. Businesses shall struggle with the additional expenses hence affecting their profit margin.
i.
Small businesses shall be harmed as a due to the a rise in the minimum wage rate. To
meet the profit margin targets, a business shall opt to lay off some employees (Gerritsen
& Jacobs, 2020). According to the CBO’s 2019 report, increasing the minimum wage to
$15 an hour by 2025 would lead in the loss of 1.3 million jobs nationwide (Gerritsen &
Jacobs, 2020). Therefore, businesses may be forced to outsource to get access to cheap
labor.
b. Consumers shall struggle with the additional expenses from the expansion of the business.
i.
A $15 minimum wage would result in a 21 percent rise in daycare expenditures across
the country. Early childcare workers in the United States made an average hourly wage of
$11.65 in 2019 (Su, 2020). As a result, daycare providers’ labor costs would rise by
roughly 33% if the federal Government imposed a $15 minimum wage (Su, 2020).
c. Minimum wage increase shall cause a decrease in the need for higher teenagers and low
skilled employees.
i.
A study from Pew Research Center determined that 16-24 year old in the United
States are the majority in terms of those that make a minimum wage taking up 50.4%
of minimum wage employees, they constitute 13.7% (Dube, Lester & Reich, 2016).
The reality is that businesses shall be less inclined to hire the youth due to minimal
experience.
ii.
Furthermore, businesses shall be less likely to hire lower-skilled employees due to the
concept of value for money upon the minimum wage rise. The reality is that
companies shall prefer spending their money on more skilled employees. Infact, Dr.
Dorn James of the Cato Institute held that a surge of 10% shall cause a 1-3% decline
in the recruitment of employees with lesser skills, particularly for extended term
contracts (Dube, Lester & Reich, 2016).
d. Businesses shall increase or search for how they could rely on technology rather than
employees to remove the need for paying the high minimum wage.
i.
An illustration is that the Washington Post held that the minimum wage increase
should push the restaurant industry to include significant technology in rendering
services. The article held that the restaurant industry has approximately 2.4 million
staffers, 3.3 million waiters, and food organizers such as cooks and chefs were 3
million (Dube, Lester & Reich, 2016).
e. High school dropouts and crime rates shall increase significantly upon an increase of the
minimum wage.
i.
Students who manage to get employment with the increased minimum wage shall
decide not to continue their education. In 2009, the American Journal of Economics
and Sociology determined that an increase in the minimum wage by 25 cents is
connected with a 0.55% elevation in the student dropout rate among the Hispanic
community (Warren & Hamrock, 2010).
ii.
Minimum wage increase shall lead to an elevation in the crime rate. Economists from
Boston College conducted a study in 2013 that determined that the minimum wage
rise would elevate violence, drug trafficking, and stealing (Agan & Makowsky,
2018).
6. Conclusion: In conclusion, there benefits that shall accrue from increasing the minimum wage
far outweigh the disadvantages. Moreover, utilitarianism pertains to the concept that the moral or
ethical act causes the most happiness among the majority. Therefore, the ethical principle of
utilitarianism agrees with this position on the basis that the advantages cause the most happiness
amongst a significant number of people hence the moral stand to take.
References
Agan, A. Y., & Makowsky, M. D. (2018). The minimum wage, eitc, and criminal recidivism (No.
w25116). National Bureau of Economic Research. Retrieved from:
https://www.nber.org/papers/w25116
Credibility in this article is based on the fact that the report is less than five years old.
Furthermore, the relevance is based on the fact that the paper discusses the impact of minimum
wage increase on the crime rate.
Dozier, R. (2010). Accumulating disadvantage: The growth in the Black–White wage gap among
women. Journal of African American Studies, 14(3), 279-301. Retrieved from:
https://link.springer.com/article/10.1007/s12111-010-9122-5
The relevance of the article is that is discusses the economic inequality between white and black
women. The article holds that the white women had higher gains than the black women,
Furthermore, the article denotes that a raise in minimum wage reduces the income gap.
Dube, A., Lester, T. W., & Reich, M. (2016). Minimum wage shocks, employment flows, and
labor market frictions. Journal of Labor Economics, 34(3), 663-704. Retrieved from:
https://www.journals.uchicago.edu/doi/abs/10.1086/685449
The credibility of the article is based on the fact that it is peer reviewed. Furthermore, article
discusses the economic impact of decreasing he minimum wage in the case of employees in the
case of reliance of technology and low skilled employees not being hired.
Gindling, T. H. (2018). Does increasing the minimum wage reduce poverty in developing
countries?. IZA World of Labor. Retrieved from: https://wol.iza.org/articles/doesincreasing-the-minimum-wage-reduce-poverty-in-developing-countries/long
The article is credible given that it was published less than 5 years ago. Additionally, the article
discusses impact of minimum wage in the context of poverty reduction. Additionally, the article
is peer reviewed hence a credible source.
Gerritsen, A., & Jacobs, B. (2020). Is a minimum wage an appropriate instrument for
redistribution?. Economica, 87(347), 611-637.
https://onlinelibrary.wiley.com/doi/full/10.1111/ecca.12323
The relevance of the article based on that fact that it discusses the impact of minimum wage
increase in the case of a sharp rise in involuntary unemployment. The article relied on statistical
data in conducting the analysis. Additionally, the article is recent hence showing relevance.
Hirsch, B. T., Kaufman, B. E., & Zelenska, T. (2015). Minimum wage channels of
adjustment. Industrial Relations: A Journal of Economy and Society, 54(2), 199-239.
Retrieved from: https://onlinelibrary.wiley.com/doi/full/10.1111/irel.12091
This reference is suitable being that it looks into the payrolls within the context of restaurants in
the case of an increased minimum wage, Therefore, the study looked at the impact of the raise in
terms of performance standards, wage compression and turnover.
Su, A. P. J. (2020). Information advantage and minimum wage. Information Economics and
Policy, 50, 100851. Retrieved from:
https://www.sciencedirect.com/science/article/abs/pii/S0167624518301914
This reference is adequate because it provides a statistical data on the benefits of increasing the
minimum wage, Furthermore, the article is a peer reviewed source hence more accurate in usage
for this paper.
Warren, J. R., & Hamrock, C. (2010). The effect of minimum wage rates on high school
completion. Social Forces, 88(3), 1379-1392. Retrieved from:
https://academic.oup.com/sf/article-abstract/88/3/1379/1936440
The credibility of the article is that it is peer reviewed hence suitable for this paper. Moreover,
the credibility is based on the fact that the article discusses the fact that an increase in minimum
wage leads to higher drop-out rate.
ECON 0858 (The American Economy) Fall 2021
Position Statements (two Position Statements are required: The first is due Monday, October
18th, and the second is due Monday, November 15th)
Your Position Statements are to be NO MORE THAN A THREE TO FOUR PAGE DETAILED
OUTLINE on the topics you select. I suggest using the Library link on Canvas for some help and
guidance in putting together your Position Statements.
In your Position Statement outlines you need to include: (1) your topic, (2) your position on the
topic, (3) economic arguments against your position, (4) economic arguments supporting your
position, (5) a brief concluding paragraph, and (6) at least three appropriate citations NOT including
the textbooks. ALSO, YOU MUST INCLUDE 2 TO 3 SENTENCES EXPLAINING WHY YOU
BELIEVE EACH OF YOUR CITATIONS (MINIMUM OF 3 OF YOUR CITATIONS) TO BE
CREDIBLE. FOR ADDITIONAL GUIDANCE READ “EVALUATING INFORMATION
SOURCES” PROVIDED AS A SEPARATE DOCUMENT IN THIS MODULE. Steps (3) and (4)
must be done in outline form using complete sentences.
You are to submit on Canvas an electronic copy of your Position Statements either before or on the
dates they are due (BE SURE TO SAVE A COPY IN CASE OF ANY POSSIBLE PROBLEMS).
Points will be deducted if the Position Statements are handed in late.
Your grade in part will be a function of the economic arguments you present both against and for
your position and your economic reasoning in support of your position. For more detail, check the
rubric which is on Canvas. Your tone should be that of an economic policy maker (e.g., the chair of
the Council of Economic Advisors, or the President of a branch of the Federal Reserve System), or
an expert economic consultant witness testifying for a client. THE POINT IS THAT YOU
SHOULD NOT GET INVOLVED IN EMOTIONAL ARGUMENTS THAT ARE NOT BASED
ON ECONOMIC REASONING.
IMPORTANT:
• BE SURE YOUR PAPER IS IN DETAILED OUTLINE FORM (CHECK THE EXAMPLES)
• THIS IS AN ECONOMICS ISSUES CLASS. USE ECONOMICS TO SUPPORT YOUR
POINTS.
• USE REAL DATA (PROPERLY CITED) TO SUPPORT YOUR ARGUMENT.
• USE MULTIPLE RELIABLE SOURCES OTHER THAN THE TEXTBOOK.
• BE SURE TO SUPPORT AT LEAST THREE OF YOUR CITED PUBLICATIONS.
Possible topics that you may select for your Position Statements are listed in another document on
Canvas.
The American Economy (ECON 0858)
Position Statement Rubric and Framework
Category
Length of
Statement/Formatting
1
2
Not of sufficient
length, long winded,
poor format, NOT IN
OUTLINE FORM
Points
3
Sufficient length
without being longwinded or redundant,
in outline form,
proper margins and
font.
Several grammatical,
spelling, or
punctuation errors.
choice of diction is at
a minimum level
Spelling, Grammar,
and Diction
Too many errors for a
University level
assignment
Economic Foundation
Statement has nothing
to do with economics
Economics plays only
a supporting role in
the statement
Understanding of
Course Material
Displays no personal
knowledge of the
material, complete
disconnect with
course material
Research
Reflects no additional
research, no
justification as to
credibility of sources
No data to support
any argument
Displays minimal
personal knowledge
of the material,
displays some
connection with
course material
Limited research,
improper citation
Use of Data
Highest possible score: 30 points
1.5 line spacing
Suggested margins: 1”
Suggested font: Times New Roman
Some data
incorporated into the
statement
4
5
Well organized, easy
to follow, in outline
form, proper margins
and font.
Little or no
grammatical, spelling,
or punctuation errors,
diction is acceptable
for a University level
assignment
The foundation of the
research is sufficient
for a position
statement, issues are
communicated in a
clear and logical
manner
Strong evidence of
personal knowledge,
strong connection
between research and
course material
Displays research
from credible sources,
proper citation
Ample data from
credible sources cited
properly
Position Statement Framework
(1) Position Statement Topic: Example: Eliminating the minimum wage
(2) My position is that the minimum wage should be eliminated (brief paragraph)
(3) Economic arguments against my position:
a. This is a complete sentence.
i) This is a complete sentence.
ii) This is a complete sentence
b. This is another complete sentence.
c. This is another complete sentence.
d. This is another complete sentence.
e. This is another complete sentence.
(4) Economic arguments supporting my position:
a.
b.
c.
d.
e.
This is a complete sentence.
This is another complete sentence.
This is another complete sentence.
This is another complete sentence.
This is another complete sentence.
(5) Brief concluding paragraph summarizing why you believe your position is the correct one.
(6) At least three properly cited articles NOT including the textbook, with two or three
sentences explaining why you believe each of your citations to be credible.
Position Statement #2 (Due Monday, November 15th)
•
•
•
•
•
•
•
•
•
•
•
•
•
Does the size of the student debt present an economic problem to the U.S. economy? Yes or No
Should the U.S. have nationalized health care? Yes or No. If you answer “yes”, how should it be
structured?
Should Obamacare be repealed? Yes or No. If you answer “yes”, what should replace it?
Should the U.S. Government be the “single buyer” of drugs to offset the market power of the large
pharmaceutical companies? Yes or No
Should the U.S. Government do more to control the prices of pharmaceutical drugs? Yes or No
Should U.S. farm subsidies be reduced or eliminated? Yes or No
Should the U.S. subsidize the development of alternative energy technologies? Yes or No
Should the U.S. eliminate food tariffs and subsidies that have harmful effects on underdeveloped
countries? Yes or No
Do U.S. trade tariffs help the U.S. economically? Yes or No
Is Fair Trade policy superior to Free Trade policy? Yes or No
(If you choose this, be sure to define what you mean by fair trade.)
Is Amazon good for the American economy? Yes or No
Should the U.S be more aggressive in antitrust actions against large companies? Yes or No
Does the size of the national debt present an economic problem to the U.S.? Yes or No

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