The Wall Street Journal. Classroom Edition Debating Current Issues: Minimum Wage

In the U.S., the federal minimum wage is $5.15 an hour. In this debate from The Wall Street Journal Classroom Edition, Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute for Public Policy Research, and Jeff Chapman, a policy analyst with the Economic Policy Institute, argue whether the minimum wage should be raised—or abolished.

YES Should the Minimum Wage Be Raised?

The minimum wage is a simple, fair policy with broad public support that protects workers from exploitation and increases the ability of working families to make ends meet. Despite the effectiveness of the minimum wage, the federal government has failed to raise the minimum wage regularly to account for the rising cost of living.

A strong minimum wage provides income to families who need it the most. More than one-third of families with workers who would benefit from an increase in the minimum wage rely solely on the earnings of those workers. The result of the declining value of the minimum wage has been stagnating or even falling wages.

A class in beginning economics teaches that market forces set wages and prices very efficiently. But low-wage workers don't have the option of not working if employers aren't willing to pay enough to match the market equilibrium. They have to work to survive, while employers have considerable leeway in setting wages, especially for low-wage workers. Thus, without a high enough minimum, employers will often set wages below the actual value of the work and in violation of basic fairness.

Some have claimed that the minimum wage is unfair because it prevents some willing laborers from working for less than the minimum wage. In fact, the minimum wage only prevents low-wage employers from exploiting the fact that many workers do not have the market power required to negotiate a fair wage.

Another frequent claim by opponents of the minimum wage is that it will cause workers to lose their jobs, because it increases the employer's costs. But since employers are often paying a wage that is less than the labor is worth to them, the minimum wage does not cause employers to lay off workers. For instance, if an hour's labor is worth $8 to the employer, but he can get a worker to work for $3, that worker will still be employed if the minimum wage was set at $6.

Years of research has shown that the minimum wage does exactly what it is intended to do. It corrects an imbalance of power and raises the living standards of working families.

According to proponents of a minimum wage hike, people with few job skills would benefit most from an increase.

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