Max Ahee

1st Block

10/13/19

Minimum Wage Performance Task

Since 1938, Americans have been debating fiercly over minimum wage. Both sides

present their argument: whether to raise the federal standard from $7.25 or to keep it where it is.

Little progress has been made towards a definitive answer. However, I do believe there is a way

for the debate to be settled and for wages to go up without hurting the economy. The system I

propose is to completely abolish the federal minimum wage, and to instead let wages be dictated

by the competition from companies themselves. For example, when people are looking for their

first job, they want to choose the workplace that will offer them the highest pay. If a large

majority of people apply to Company 1 because they offer them $8.00 an hour, then Company 2

will take notice of their own lack of new hires and subsequently raise their own wages higher

than the competition in order to attract potential employees. This sort of process would go back

and forth until the companies arrive at a stalemate, and they must come up with another method

to attract new workers.

But how will this effect supply and demand? First, let's take care of the other arguments.

If minimum wage was forced to increase, companies would find ways around the increase to

keep their current profits. For example, if the new minimum wage became $15.00 an hour, then

companies would cut hours and workers. So although the price of labor has increased, the supply

that can be provided has been decreased from the company taking shortcuts to circumvent the

new wage. Finally, because the price of labor has increased, companies will now higher fewer
employees, once again decreasing overall supply. Demand would soar as production slows

down, and there could very easily be a shortage of products.

So what about the people that live on minimum wage just to get by? The Center for

American Progress reported that the current minimum wage just isn't enough for most people,

"This is largely because the federal minimum wage is currently stuck at $7.25 per hour, a grossly

inadequate sum that has failed to keep pace with the rising cost of living" (Jenkins 1). However,

it has been proven that the majority of workers in America actually get payed above this wage.

According to the Foundation for Economic Education, "Currently, between 97 and 99 percent of

workers (depending on whether one includes tipped workers) earn more than the minimum

wage" (Davies and Harrigan 1). Based on this information, we can see the reality of minimum

wage: the fact that it is almost never used. If it's never used, why even have it in the first place?

In an age where people have more job opportunities and freedom than ever, it is

unrealistic to assume that if the minimum wage was abolished, then companies would

immediately drop wages and increase hours on par with slavery. This would not happen as

companies know that workers would just move to another job with higher wages, moving us

back towards the competition-like system of wages. Overall, the minimum wage should not be

increased or kept the same; it should be gotten rid of so that taxpayers don't have to worry about

shoveling money towards something that most likely doesn't affect them, and companies can

effectively balance their workers with wages and hours that will boost the economy and the

everyday person.
 Works Cited

Davies, Antony, and James R Harrigan . “The Case for Abolishing Minimum Wage Laws."

Antony Davies, James R. Harrigan. FEE Freeman Article, Foundation for Economic

Education, 1 Aug. 2019, fee.org/articles/the-case-for-abolishing-minimum-wage-laws/.

Jenkins, Jack. “Real Family Values: Raising the Federal Minimum Wage.” Center for American

Progress, 10 Dec. 2013,

www.americanprogress.org/issues/religion/reports/2013/12/10/80780/real-family-values-

raising-the-federal-minimum-wage/.

Wilson, Mark. “The Negative Effects of Minimum Wage Laws.” Cato Institute, 20 Mar. 2013,

www.cato.org/publications/policy-analysis/negative-effects-minimum-wage-laws.