Question

Do you believe the US should raise the minimum wage? Why or why not. You must use at least two different examples to support your argument. (10 points)

Answer 1

Yes — I believe the U.S. should raise the federal minimum wage, provided it is done gradually and thoughtfully (with regional variation and complementary policies). A higher minimum wage can reduce poverty and inequality and improve worker stability, and the empirical evidence shows the costs in employment are often smaller than critics predict if increases are phased in and tailored.

Two examples that support this view:

1) New Jersey / Pennsylvania fast-food study (Card & Krueger, 1994)
- What happened: When New Jersey raised its minimum wage, researchers compared fast-food employment in New Jersey to nearby Pennsylvania, which did not increase wages.
- What it shows: The study found no evidence of reduced employment in New Jersey restaurants after the increase. This result challenged the simple prediction that higher minimum wages always cause job losses and helped start a large literature showing many minimum-wage increases have little or no negative effect on employment at the margin.
- Why it supports raising the wage: It suggests that wage increases can be absorbed (through slight price increases, reduced turnover, higher productivity, or reallocation of employer budgets) without large job losses in many sectors.

2) Federal estimates and real-world implementations (CBO and city/state increases, e.g., Seattle/Germany)
- CBO (2019 estimate): Raising the federal minimum to $15 by 2025 would increase wages for millions and lift roughly 1.3 million people out of poverty, though it estimated there could also be a reduction in employment for about 1.3 million workers. That trade-off highlights both the potential benefits for low-income households and the legitimate risks if a blunt, one-size-fits-all approach is used nationwide.
- City/state examples (Seattle, Germany’s 2015 national minimum): Implementations of higher minimum wages have produced clear wage gains for low-paid workers and reductions in turnover, which benefit both workers and some employers. Findings on employment effects are mixed — some studies of Seattle show reductions in hours for low-wage workers, others show little employment impact — but overall the negative employment effects tend to be smaller than early theoretical models predicted.
- Why these support a raise (with caveats): The CBO estimate shows meaningful poverty reduction is achievable. City/state and country examples show real workers see higher pay and reduced churn. Together they indicate a raise can improve living standards, but also that policy design (gradual phase-in, regional adjustments, tax credits for small businesses, stronger EITC) matters to minimize job losses.

Conclusion and policy recommendations
- Raise the federal minimum wage, but phase it in over several years and allow regional or sectoral flexibility so wages reflect local cost-of-living differences.
- Pair increases with targeted supports: expand the Earned Income Tax Credit (EITC) or tax relief for small businesses, fund job-training and transition programs, and monitor effects so adjustments can be made.
- This combined approach captures the clear benefits to low-wage workers while reducing the downside risks highlighted by some empirical estimates.

In short: the balance of evidence and values (reducing poverty and inequality while limiting unintended harms) argues for a carefully designed increase in the minimum wage rather than maintaining the status quo.