The Minimum Wage and the Path towards a High Wage Economy
According to Resident Scholar Oren M. Levin-Waldman, the arguments both in favor of raising
the minimum wage (to restore its real spending power to levels of previous years, to increase the
incentive to work, and, as a matter of fairness, to allow those who work to earn incomes above
the poverty line) and against raising the minimum (displacement effects resulting in lower levels
of employment) both have merit, but ultimately “miss the point” because their focus is too
narrow. They concentrate on how a change in the wage floor would affect one segment of the
labor market (those at the bottom or teenage workers, for example) and not on how it would
affect the market as a whole. Moreover, because findings on the short- and intermediate-term
effects of a change in the minimum wage are inconclusive, discussion should focus on the longterm
effects of raising the minimum wage, which could include raising productivity levels.
The arguments for and against a higher minimum wage boil down to whether the US economy
Associated Programs
- Employment Policy and Labor Markets