Econ 3910 | Bonus Points FOR raising minimum wage | Phillip W.

Grant,
Stuart Collins, Kristen McClinton, Ade Adetoye
The current federal minimum wage in the U.S. is $7.25. With Los Angeles recently
approving a minimum wage hike to $15, the debate over minimum wage has intensified
across the country, with more cities and states considering similar measures.
We have compiled a list of arguments from the pro-minimum wage hike camp that
explains why raising the minimum wage would be good for everyone.

1. Raising the minimum wage will help the economy recover

A crucial part of bringing back growth to the economy is raising peoples purchasing
power. Simply put, the more money people are able to spend and put back into the
economy, the more the economy grows.
According to the White House, raising the minimum wage would increase the disposable
income of 28 million people, which in turn would boost the bottom line of businesses
across the country.

2. Raising the minimum wage would reduce employment turnover

IKEA President Rob Olson recently announced that the company would be raising its
minimum wage by $1.50. His reason for doing so was to reduce employee turnover so
that it could cut costs for hiring and training while retaining experienced employees.
A study published by the Journal of Organizational Behavior reinforces this idea, as it
found that high performer turnover significantly reduces firms profitability and suggests
that firms need to pay special attention to high-performer turnover to maintain and

Econ 3910 | Bonus Points FOR raising minimum wage | Phillip W. Grant,
Stuart Collins, Kristen McClinton, Ade Adetoye
increase firm performance, reinforcing the need to retain skilled employees by raising
wages.

3. Raising the minimum wage doesn't kill jobs

Opponents of the minimum wage hike cite job reductions as one of the main reasons
why the hike is bad for the economy.

However, many studies such as the 2013 paper by the Center for Economic and Policy
Research have found that the minimum wage has little or no discernable effect on the
employment prospects of low-wage workers.

This combined with the companys savings incurred from low turnover and customers
with more disposable income creates a winning scenario.

4. Raising the minimum wage saves taxpayer money

Right now, a full-time minimum wage worker in the U.S. makes $14,500 a year, 28
million workers and their families are struggling to make ends meet. The resulting
poverty means that millions of people are relying on government benefits, draining
various social programs.

Econ 3910 | Bonus Points FOR raising minimum wage | Phillip W. Grant,
Stuart Collins, Kristen McClinton, Ade Adetoye
The minimum wage hike and the resulting increases in disposable income would mean
that less people would need to rely on government assistance, which would ultimately
save taxpayer money.

5. Raising the minimum wage improves economic security

With all the aforementioned in motion, raising the minimum wage would not only help
the economy grow, but would also give everyone the feeling of economic security and
confidence.
While this sounds like an arbitrary factor, confidence in the economy has a ripple effect
that:

Stimulates spending

Lowers interest rates making it easier for people to access loans and credit

Boosts performance and returns in the financial market

Encourages investment

Finally, it also helps the economy avoid the dreaded deflationary trap that has brought
the Japanese economy to its knees for the last 25 years and threatens much of Europe.
6. Elasticity of Supply and Demand would help determine the total benefits of raising
minimum wage are positive or negative.