Minimum Wage Increase Essay

Most people would agree that raising the minimum wage sounds like a good idea, but arguments arise concerning if this increase would benefit the economy. Jared Bernstein believes that a minimum wage increase would positively affect the American economy. He argues that the economy is driven by consumer spending and low­income workers are very likely to spend their extra earned money. On the contrary, Douglas Holtz­Eakin strives to make the point that raising the minimum wage would not be beneficial to the economy. He argues that there would be no reduction in poverty because only a small percent of minimum wage workers are in poverty, while most are unemployed. An examination of raising the minimum wage will reveal why it will benefit American society. According to Jared Bernstein raising the minimum wage would help. Bernstine suggests that the American economy is made up of 70 percent consumer spending. He argues that an extra dollar earned by a wealthy person is less likely to be spent than an extra dollar earned by a low­income person. In addition Bernstein points out that this leads to the low­income worker being much more likely to consume their extra dollar of earnings. Similarly one might argue that a minimum wage increase that directly raises the pay of a relatively small share of the workforce by a small amount is unlikely to be a big deal. Raising the minimum wage is a growth strategy and should be used to try to revive our economy. The wage increase would help families struggling on minimum wage salaries. These families would see these new earnings as a chance to spend on new things and will slightly help macroeconomic growth. Helping the economy on the margin while also helping these families make ends meet. One should conclude that raising the minimum wage will help families in need and in terms help the economy.

According to Douglas Holtz­Eakin Raising the federal minimum wage will neither reduce poverty nor boost growth.