Minimum Wage
You are to conduct the research necessary and present the salient facts surrounding the controversy of raising the minimum wage in the United States (currently $7.25) to a level of $15. Although many states have minimum wages higher than this, make the simplifying assumption that all states have the same $7.25 minimum wage. You should present arguments (and citations) reflecting both support for and criticism of this proposal. Your survey of information for this project should consider, at the minimum, the following areas:
a) The effect of such a rise on overall unemployment in the US as well as unemployment in specific industries and among specific groups of American workers (to include immigrant labor, unskilled labor, and those with minimal educational levels);
b) The relative elasticities of demand and supply for labor among the above markets and the impact of such elastic (or inelastic) demand on the likely outcomes of such a policy. Thus, is the demand for minimum wage workers in the fast food industry elastic or inelastic over the wage range of $7.25 – $ 15; how does that affect the likely employment/unemployment of such workers if this wage increase is implemented?
c) The likely response among employers (include multiple industries and employers of different sizes) if they must implement such a policy;
d) The psychological effect of such a policy on workers and employers;
e) The macro-economic effect of such a policy for the country at large as well as any micro-economic effects on particular industries;
f) Any other parameters you deem worthy of consideration (think broadly here, but focus on the most important impacts – e.g., the impact on high-school dropout rates; the impact on non-minimum wage jobs; the effect on prices in labor-intensive and non-labor-intensive industries. Be wide-ranging in your considerations, but focus on those that you view as most important. Explain why you chose these parameters as worthy of consideration.
You are to present your findings in the following order:
1) Clearly state the issue and briefly describe the most important factors to be examined in this decision. Explain why you are focused on these particular factors – why do you think they are the most important things to consider? (~ ½ page)
2) Present your evidence supporting both sides of the issue and provide the citations necessary so that your reader can return to your source material to verify your findings. (~ ½ – 1 page)
3) Identify the assumptions made in the arguments made on both sides of the issue – for example, why might someone argue that the demand for entry-level fast-food workers is inelastic? Do you identify any biases in your evidence? ((1/2 page)
4) Given all the above, what is your position on raising the minimum wage to $15 nationwide? Do not limit yourself to saying, ‘I support/don’t support this policy proposal.’ Rather, explain and defend your position, adding any caveats or other considerations to your answer. This is also a chance to be creative – do you have a proposal of your own that addresses some (or alal) concerns of both sides? (~1/2 page)
5) Assuming you were asked about this proposal by a friend, how would you respond? Limit this response to about 4-5 short statements. (~1/2 page)
