The Dispute Over the Minimum Wage

The Dispute Over the Minimum Wage

The case for an increase in the federal minimum wage has long been persuasive. The wage floor of $3.35 an hour has not been raised for eight
years; adjusted for inflation, its purchasing power has fallen to its lowest level since 1955. As the wage floor has deteriorated, the number of people who work but live in poverty has risen, and there has been growing evidence of stagnating or declining standards of living among many of the near poor and the middle class.

Two arguments—one old and one new—have been raised in opposition to the minimum-wage increase. The old argument is, that by artificially raising the cost of labor, a minimum-wage increase would price many workers out of jobs. The new argument is that in lieu of a minimum-wage increase, adjustments in the tax code could target assistance to low-wage workers without job losses. Let us see if these arguments are valid.

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