Minimum Wage Laws Harm the Poor

the obviousFirst of all let us state the obvious. If A poor person who works for the minimum wage has a salary increase, then his/her wealth will be increased. So the idea that minimum wage laws harm the poor is counter intuitive. unemploymentMy opponent argues that an increase of the minimum wage leads to more unemployment (among the poor). This is a result of the market economy. If the price of labor increases, the demand will decrease (fewer jobs) and the demand will increase (more people seeking jobs). In particular, some poor people may loose their job and their income may decrease. The question one should ask are:1. How big is the increase in unemployment for poor families?2. What is the economic impact of the increased unemployment for poor families?3. Does possibly negative economic impact of increased unemployment outweigh the positive economic impact of increased salaries for poor families?1. How big is the increase in unemployment for poor families? Among leading economist, only 34% think that it would be noticeable harder for low-skilled workers to find employment if the minimum wage were increased (32% disagree, 24% uncertain). Whether there is a significant increase in unemployment is not clear and there is no consensus on this among economic experts. (My source is a survey among the IGM Panel of economic experts [1]. The panel has both 'liberal" and "conservative" economists. )Also unemployment among poor people does not necessarily reflect a lack of 2. What is the economic impact of the increased unemployment for poor families? Poor people who lose a job will have less income. However, they probably will qualify for more government assistance. The difference between minimum wage, and welfare is often not that large. In fact, in 35 states, welfare pays MORE than the minimum wage. [2] So for poor families, loosing a job will only have a small economic impact. 3. Does possibly negative economic impact of increased unemployment outweigh the positive economic impact of increased salaries for poor families? In a survey among economic experts, the following question was asked: "The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy. "In the survey 47% agree/strongly agree and only 11% agree/strongly disagree. rebuttalsPRO: "Economists are divided over the extent to which increases in minimum wage affect unemployment. . Many left-leaning economists argue that the effect is very small. "Actually, some prominent conservatives favor an increase of the minimum wage. [3] Not because it would be better for the poor people (because of course they could not care less. ), but because it would save the government money. Basically, there are many workers that earn the minimum wage, whose income is supplement by the government to have enough to make a living. If the minimum wage would be increased, the government would have to supplement less money. For such a worker, the increase will have no effect ((s)he does not care where the money comes from, government of business). However, if the government saves money, it could allocate the savings to increase benefits for poor people. (Of course, the conservative proponents of the minimum wage increase rather would see tax-cuts. .. )PRO: "Many teenage workers come from middle and upper class households; this example only serves to illustrate how low skilled workers such as teenagers and poor people are negatively affected by minimum wage laws. "PRO: "This means that when hiring a new employee, the employer will be presented with the choice between a teenager (with little work experience) and an adult (who will almost certainly have more work experience). Very few sane employers will chose the lower skilled teenager over the higher skilled adult. "These statements actually support my case. An increase in minimum wage will move jobs from snotty teenagers (generally not poor) to more experienced poor adults. This means more income for poor families. summaryAn increase of the minimum wage will result in:1. More income for people with minimum wage2. Possibly an increase in unemployment, but those poor people who do loose job will only have a small negative impact because they qualify for more government assistance.3. Overall, the increase in income will outweigh any negative economic impacts because of increase of unemployment. [1] . http://www.igmchicago.org...[2] . http://www.forbes.com...[3] . http://www.huffingtonpost.com...