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Responses to 'On the Minimum Wage'

Read the original article here.

 

To the author of the article, 'On the Minimum Wage', Christopher Kitchens-


Firstly, your reference to the Congressional Budget Office's data is incorrect. According to CBO's median estimate, the 2019 report states, "1.3 million other workers would become jobless. There is a two-thirds chance that the change in employment would be between about zero and a decrease of 3.7 million workers." You cite the range as their estimate, which is simply a misrepresentation of this article you name. The CBO estimates that 1.3 million would lose jobs or about 1/3 of your quoted figure. Your statement is just as valid as claiming the CBO report said unemployment would not increase due to a $15 minimum wage.


While I agree, some may experience reduced hours to make up for the higher wages; the CBO report directly contradicts this argument. This report (ref. Table 3, option $15) estimates that the weekly earnings among directly affected workers would increase in every demographic they studied (age, sex, educational attainment, or hours worked per week). This increase in income can also be shown referencing table 4, which shows that any family with a ratio of family income to the poverty threshold between 0-3 would have increased income.


The CBO report highlights that raising the minimum wage would reduce poverty by about 0.9 million and increase income for any individual directly affected. I struggle to see how one can argue the minimum wage would "impoverish" our society using the CBO as any supporting evidence.


Seeking a brighter and better future for all,

Steve McStevenson



The Author's Response:


Thank you for responding to my article, and I concede that I should have done more research into the CBO report before using it in defense of my viewpoint. However, even if the lower-end estimates are correct, 1.3 million lost livelihoods is too high a price to pay. Per this report, raising the minimum wage could result in lost employment for over one million low-skill workers, who need job experience to move up the income ladder. The federal government should not – and cannot - “lift people out of poverty” by pushing a million people further into it.


Further, it makes no economic sense to say that employees who retain employment under a minimum wage increase would not see a reduction in hours worked. If the cost of a good or service, in this case, labor hours, rises, then consumers, in this case, employers, would demand less. Local studies, such as the University of Washington paper, suggest hours worked on average is reduced for low-wage workers when a locality raises their minimum wage.


Like many other economic policies, the second-order effects of increasing the minimum wage are more impactful than the immediate effects. In the long-term, when firms are able to respond to increasing labor costs by making greater investments in physical capital, the effects of a minimum wage become even more marked. As the CBO report states:

Over a longer period, how-ever [sic], more firms would replace low-wage workers with higher-wage workers, machines, and other substitutes.

Thus, CBO expects that the percentage reduction in employment of low-wage workers would generally rise over time for any given increase in the minimum wage.


A higher minimum wage hurts low-wage workers much more than it may appear to help them.

By decreasing the availability of opportunities to build job skills, increasing the minimum wage would reduce the opportunities of low-skill workers to rise up the income ladder.


I have enjoyed conversing with you. I now better understand your views as well as my own.

 

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