Should We Raise the Federal Minimum Wage?
Here's something unusual about this week: the experts genuinely don't agree, and not because they have different values — because the evidence itself is messy. Economic theory predicts that raising the wage floor costs jobs. The most famous study on it found that it didn't. Later reviews mostly side with the theory, but weakly. You'll also find out who actually earns the minimum wage, and it's probably not who you're picturing.
Reading List
Read and watch these before Tuesday. The last one isn't a reading at all — it's a tool. Pick a minimum wage, and it shows you how many families would rise above the poverty line and how many jobs are projected to disappear.
Required
- What the US Gets Wrong About Minimum Wage — Vox (video)
- What You Should Know About the Minimum Wage Debate — Forbes
- Four Reasons Not to Raise the Minimum Wage — Cato Institute
- How Increasing the Federal Minimum Wage Could Affect Employment and Family Income — Congressional Budget Office (activity)
If You Want More
- How a $15 Federal Minimum Wage Might Affect the Economy — WSJ (video)
- Even a Divided America Agrees on Raising the Minimum Wage — Brookings
- The original Card and Krueger study — the famous one. Its author later won a Nobel Prize partly for this work.
One-Week Plan
Here's the shape of the week. Your guide will set the exact timing for your section.
Who Actually Earns It?
Write first: should the minimum wage go up? And then — who are you picturing when you answer? Hold on to that, because you'll check it in a few minutes.
The first chart has two lines. One shows the minimum wage in dollars, going up over time. The other shows it adjusted for inflation, going down. Same wage, opposite stories. Make sure you can explain why before moving on — that one idea will come up in every economics chart you ever see.
Then the history, which is stranger than you'd expect. The first US minimum wage law, in Massachusetts in 1912, applied only to women and children. In 1923 the Supreme Court struck minimum wage laws down entirely. The federal minimum wage we have now only dates from 1938.
And then the part that changes minds. Of the 1.1 million Americans earning at or below the federal minimum, most earn below it — and over half of minimum-wage workers are in food preparation and serving. The age and part-time numbers are worth looking at closely too, especially if you assumed this was mostly teenagers with weekend jobs.
$2.13 an Hour
That's the federal minimum cash wage for a tipped worker. Employers are allowed to pay it as long as wages plus tips add up to $7.25 an hour. Fifteen states still use that $2.13 figure.
Two problems with that arrangement: tipped workers spend plenty of time on work that generates no tips — cleaning, restocking, paperwork — and tips swing wildly week to week, so there's no steady income. The Department of Labor now says employers must pay the full $7.25 if a worker spends more than 20% of the week, or more than thirty minutes straight, on non-tipped work.
Then the economics. The standard prediction is that a wage floor above the market rate reduces employment, because businesses cut staff rather than absorb the cost. Here's the deck's example: a business pays 60 workers $10 an hour. If the minimum went to $15 and the business kept its total wage budget the same, it could employ 40.
Write your prediction down before Wednesday. Does that actually happen in the real world? You'll find out tomorrow, and it's more fun if you've committed.
What the Studies Found
Two economists, Card and Krueger, compared employment in New Jersey and Pennsylvania after New Jersey raised its minimum wage. They found no drop in employment. That result was so surprising it reshaped how economists study the question.
But it doesn't end there. Some later research agrees with them. Other reviews find that most studies do show negative effects on employment — though the effects are statistically significant in fewer of them, and economists argue about how to read the sizes. Businesses also respond in unpredictable ways, so studies of one place may not predict another.
So the honest summary is: theory says one thing, the most famous study says another, and the overall evidence leans slightly toward theory but not decisively. Sitting with that is uncomfortable and it's the actual state of knowledge.
Other effects worth weighing: employers might cut hours or benefits instead of jobs, or raise prices. On the other side, higher pay means more spending in the economy, less burnout, and lower turnover — and one study even found it linked to higher voter turnout.
Before you leave, find a resource to bring on Thursday.
Workers, Owners, and How You'd Decide
You'll watch two things back to back: people who work for minimum wage describing what that's like, and business owners describing what a raise would mean for them. Both are worth taking seriously.
Then move from "yes or no" to the questions that actually get decided:
- Who should set it? Twenty-nine states and DC already pay more than the federal minimum, and eight raise it automatically with the cost of living. Should cities be able to set their own?
- Should it differ by age or type of work?
- Should it rise automatically with inflation? (Think back to Monday's first chart.)
- Should it be a living wage — enough to actually live on?
- Should there be a minimum wage at all?
Score Your Own Week
What went well, what to improve, what you learned, and whether anything you believed changed. Then the participation matrix. Be honest with yourself.