The Minimum Wage – Bad for the Middle Class
The theory behind the minimum wage is simple; to make sure that everyone with a job makes at least enough to get by. It is the right thing to do, right? Everyone needs a livable wage, right? Sure, but only if they earn it, right?
Basic Economics: A product’s price is determined by the market, not the cost to make it. The profit a company makes on the product is determined by the difference between the price the market allows and the cost to make it. A company must make a certain profit on every product or it makes no sense to make it.
Competition increases the supply of products. This lowers the market price. Lower prices squeeze profits. Lowering costs is a requirement to maintain profitability. This applies equally to services.
Labor is a cost: Each product has a finite allowable labor cost to remain profitable. The minimum wage, by definition, is a wage paid to the workers at the very bottom who would be paid less if the market were allowed to operate. The employer is forced by law to overpay these workers.
Artificial Overpayment Hurts the BEST Workers Most: If you artificially force overpayment of the lowest value employees, this money must come from somewhere else. Where?
It must come from the wages and salaries of those who are pulling their weight. It comes from the hard working middle class people.
Your company makes a product. Buyers will pay you $120 per unit for it. At $121 you cannot sell any because they can get a competitor’s model for less. Your overhead accounts for $15. You need to make $5 profit or it is not worth making at all. $120 – $15 – $5 = $100.
So, you have $100 to build your product. $20 goes to component parts, energy usage, etc. $80 is left to pay workers.
Worker A is on time every day, works all day and churns out top notch product. Worker B is on time every day, works pretty hard, and churns out good work, but not as good as Worker A. Who is more valuable to YOUR company? Who would you pay more? Worker A, of course.
You also employ Worker C. He is late rather often, does menial labor and does not aspire to do anything more to help drive the company’s business. He is clearly worth the least, but you need someone to do this work. Unemployment is low for those willing to do this work and he is better than the drug addict you had doing this work last year, so you keep him around.
Worker A’s hard work should be worth $40 and at that wage she drives $43 in value. Worker B’s good work should be worth $30 and at that wage he drives $32 in value. Worker C’s shoddy menial work should be worth $10 and drives $10 in value. $40 + $30 + $10 = $80 and this maximizes everyone’s pay versus the budget dictated by the market and provides the required $5 minimum profit required to continue to make the product in this plant.
Ahh, but there is a minimum wage, so you have to pay Worker C $15; $5 more than he is worth. That means that you can only pay Worker A $37.50 and worker B $27.50, or reduce benefits or outsource the entire process to a foreign country and fire all three workers. You cannot afford to overpay your workforce or the required profit will be lost.
Who paid worker C the extra $5 required by the minimum wage? The government? The company?
NO, Worker A and Worker B pay him or they lose their jobs entirely!
So, to artificially help out the lazy disinterested Worker C, we take money from hard working Workers A and B so that they have a more difficult time feeding their families and paying their mortgages.
Does this make any sense?
How should wages be determined? By each person’s value to the company. That way Worker C is incented by the fine example set by Worker A to improve his lot in life.
But, you argue, the minimum wage is so little. How can it matter that much? Well if you are OK with giving part of your wages to that guy in your place of business who makes minimum wage, and you know who that is, then please share away, but it should be your decision. It should not be forced on the guy next to you.
But isn’t it true that few actually make minimum wage anyway? Certainly, most workers are worth what they are paid plus their contribution to the overpayment of the few that make minimum wage. Is that OK with them? Ask their spouses and children?
But people can barely live on minimum wage. How can you pay them less? People can barely get by working really hard and showing up on time and earning their living. How can you take money from them involuntarily and give it to others who do not care so much?
But, let’s have management make less and use that to pay the minimum wages. Sure, or they can be paid what they are worth and move the whole operation to India and everyone loses his or her job.
Reconsidering the minimum wage is just one step in making the US more competitive in the world markets.
27 Responses to “The Minimum Wage – Bad for the Middle Class”
What a load of crap. There are over a billion people on the planet who make less than $1 a day ! You want America in a race to the bottom with them?
Your example is stunning. If you don't fire worker C you're an idiot. There are plenty of people who are willing to work very hard, and DO. How insulting!
According to the Bureau of Labor Statistics, in 2007 about 2.3% of all hourly-paid employees in the country make minimum wage. I have a hard time believing that this is making a significant impact on employment in the country.
There are a number of issues with your argument.
One, you assume a perfectly competitive labor market which economic literature does not support. Instead, evidence suggests a monopsonistic labor market in which a minimum wage is typically beneficial.
Two, you assume that the minimum wage is binding (i.e. people would get paid less if there was no minimum wage) which also isn't entirely true. Having worked two years in a big box retailer, my starting hourly wage was about $1 per hour higher than the state minimum wage. In fact, out of numerous part time jobs I've had in four years of college and two years of grad school the only one that paid minimum wage was the one where I also got tips.
Three, you discount the cost of increased eligibility for social welfare programs due to decreased wages.
Four, you discount decreased economic growth as the result of higher wages. When people earn less they spend less which hurts the economy (as we've seen from the decreased consumer confidence in the current economy). I actually did my M.S. thesis on living wage ordinances and spillover effects on local economic growth. There was a significantly positive relationship between a local living wage ordinance and local economic growth. A living wage is just a higher minimum wage.
Five, you assume that companies are randomly going to keep workers who are lazy, unproductive, and generally not an asset. That makes no sense – especially in the long run. Companies can find new ways of production that are less labor intensive or higher someone different. Or they can decrease output. If the marginal cost of the worker isn't equal to the marginal revenue he contributes then there is no reason to keep him. And higher wages have actually been shown to decrease absenteeism and turnover thus creating a more efficient workforce.
Six, you assume that the jobs getting paid can be outsourced which isn't necessarily true. How is someone overseas going to cut your hair, serve your food or check you at at the store?
The minimum wage is a good way to ensure people aren't being taken advantage of. And I've yet to see any economic literature to suggest that it poses any harm to the economy or the middle class.
The line of argument about minimum wage also doesn't pay attention to the amount of wages that goes to workers, in contrast to the amount of wages/benefits that go to management and also the profit that goes to investors. You dismiss it by claiming that they are “worth” that much, as if it is automatically true on its face. But the income disparity between management and the lowest workers is over 10x greater than it was during the 50s. Also, I think that contrary to common belief, our current situation is largely driven by there being excess capital in the world, when compared to the amount of people that have enough money to actually consume.
A “free market” by itself doesn't mean anything. Even if the market was entirely free it'd still operate under the constraints of social values and mores, and even itself (it collapses when there is inequity). I think that society has done a great disservice in not deciding to “make sure” that people that work have a living wage– even though I don't think government policy is necessarily the best to do this, a lot of it is about having new business ethics — and now we are paying the price.
Sadly, “business ethics” is often oxymoronic. Most companies will not pay more than they have to for what they consider “unskilled labor” just as they will not clean up their messes unless forced. Exxon proved that with the Valdez fiasco by fighting for 25 years not to pay for the mess they indisputably caused. And “the market” obviously didn't hold them accountable either, as they continued to rake in record profits despite their contempt for the environment. I see no realistic way except for government regulation to force corporate responsibility.
I think what you need to get numbers for are the number of workers that are working for within $2 of minimum wage. Not even unskilled labor work for an employer that just pays minimum, yet the minimum wage affects the money that many companies offer(Starbucks, Home Depot, etc…). Minimum wage give the workforce a benchmark to work against when deciding their own relative value and also provides employers with the baseline they add to when trying to hire unskilled yet competent folks for their operations.
Totally free markets rapidly turn into what totally free societies do, the economic equivalent of despotism.
“I see no realistic way except for government regulation to force corporate responsibility.”
Few statements have such a purity of truth to them as that. Please either read up about the industrial revolution or go to work in a 3rd world manufacturing job if you need any evidence. There are NO cases of unregulated market competition resulting in anything but large scale worker abuse. Large companies get away with whatever they can every time. Social values do not figure into it at all.
You miss a key point, at $121 take less profit . Rule in competition. Second point, when all make good money there is more to spent so you can raise the price. Go back to your economics class.
It's much easier to understand if you simply acknowledge that libertarianism and the Austrian School of Economics both are articles of faith that bear no relation to the real world. Slamfu nails it completely. Without government oversight and regulation not one aspect of the treatment of workers in an industrialized nation ever works out for the good of the employee. If every nation was run the way Ned would like to see we would all look like the worst of the Third World economies.
Labor is not a fair market issue of supply and demand. Without minimum wage laws, we would have a race to the bottom, with companies bringing in people from Guatemala and el Salvador who think working for 2$ an hour is a great deal. We are already heading in that direction courtesy of the forces of globalization.
As it is, those with min wage jobs have to work 2 or three of them and are still constantly struggling economically. Meanwhile we have CEO's who get huge bonuses and golden parachutes that are not tied in to performance. In theory, these people should be doing wonders for their companies in order to get that kind of compensation.
the free market is a joke
That an unfettered free market combined with a law of the jungle approach to wages and working conditions is still seen as desirable by influential elements within this country shows how critically important it is to have an educated and informed electorate… that is if we want to continue having a society that will be able to call itself civilized and doesn't get taken to the cleaners by powerful but conscienceless interests.
I'm more sympathetic to your argument than the other commenters, but I have to also point out a flaw in your argument:
In a perfectly free market, the theoretical ideal wage an employee should be paid is the lowest amount that employee is satisfied with (meaning they will not leave or do sub-par work) . If the wage is too low, they will leave for another employer. If the wage is higher than what the employee would work for, the company is wasting money. If that wage is not less than the value the employee adds to the company, or if the company can employ someone else to do the work for less, there is no point in employing him or her.
So, in your scenario, and assuming a perfectly free market, if the employee that was really worth $10 was require to make $15, that would not result in a decrease in wages on the other employees (because that would theoretically cause them to quit, assuming they were already being paid the minimum they'd be satisfied with). It would result in one of two things:
1) The employee making $10 would be fired and the company would try to find a way to get by with just the other two employees, and could even give them an extra $5 each to do some overtime if necessary.
2) If the other two employees simply aren't enough and the company has to pay the third employee $15, the total labor cost per product is now $85, which means it is no longer profitable for you to make that product so you fire all of your employees and go out of business (or move it to India).
Of course #1 is not good for the poor, and #2 is not good for anyone, so this is still an argument against the minimum wage, but not for the reason you suggest.
But we don't exist in a perfectly free market and sometimes things aren't simple, so honestly I'm not sure what the right answer is in regards to the minimum wage. I think some of the criticisms from other commenters are valid, but others I disagree with. Specifically:
kritt11: globalization is a reality we can't run from (at least using the minimum wage). What difference does it make if a company hires cheap immigrants of if that company moves to another country? Either option is equally attractive to the company, and either way, American workers suffer. Tariffs are one way to possibly insulate us from globalization to some degree, but that's a separate topic. Besides, what's wrong with people from Guatemala and El Salvador? Most of our ancestors moved here seeking opportunity they couldn't find in their own countries. You could argue for stricter immigration controls if we are concerned about being overrun (from what I understand you have to have a skill to immigrate… legally), but again, the minimum wage doesn't seem to be the right way to solve that problem.
As for those arguing for “corporate responsibility”, I would point out that corporations are not charities. I agree with corporate responsibility to the extent that workers should be treated fairly, but if you argue that a worker should be paid more than the value he or she adds to the company, that is not corporate responsibility, that is corporate charity, which companies are more than welcome to participate in but should not be forced to. The company is under no obligation to ensure that each employee is making enough to support his or her lifestyle.
But how do you define “value” added to the company? You can't. You can tell the value of the company, but it's much harder to calculate an individual's contribution.
How much am I worth? Without me, my lab wouldn't have brought in the approximately $2 million in grant money it did, but I was just the last piece of the puzzle. The amount of work I added that was visible on the end product was maybe 5%. Am I worth $100k for that reason, or $2 million because they would have gotten $0 without me? Or maybe just divide by the total number of people. Or do it by years of expertise….but we all have different areas of expertise so that's hard. Other people on the grant were less influential than me for the grant's content, but they have a long track record and that helped get it. Are they worth more or less since my name wasn't even on it? Etc.
At my last job, there was a janitor that everyone got along with and he really brightened the mood. After a visit from him we all worked quantitatively harder. How much “value” did he add?
Value isn't directly calculable, it's dependent on the well….values of the people assigning the value. The values our society assigns aren't the same that all ones would. I think that corporations do have a responsibility to provide for their workers and would like to see more of a social contract reform between worker and corporation. We can get in an argument about what level of “lifestyle” people should live but the fact is that there are tons of jobs where people can't afford even the basic necessities of food, shelter and health care.
Adelinesdad-
I agree that BOTH — importing workers and exporting jobs harm US workers. We should try to cushion them from the effects of globalization so we don't end up treating them like near-slaves as they do in China. This is bound to occur as legal protections are removed. If you stop giving health care benefits then we have more instances of people showing up at emergency rooms with routine problems, or people with minor problems waiting until they are major ones to seek care.
What job do you think is not worth minimum wage? I don't see that you are complaining about CEO's and upper management earning more than they are worth and- that has been a much bigger issue with the Wall St debacle. Where I live a min wage job just pays enough for one person eat if he/she has a free place to live.
Also- when people are paid a living wage we see a decline in crime and the need for government programs like food stamps and rent subsidies. The extra money goes out into the economy as it is unlikely any of it will be saved unless the job is held by a teenager saving for college.
I see nothing wrong with companies acting like good corporate citizens. You are correct that there is no obligation for them to do so, but those that do make our country and the world a much better place to live in. It should be encouraged. I might also add, that when these big companies are in trouble they often seek federal bailouts which come from the taxpayer. If they expect to be bailed out in bad times, shouldn't they act responsibly in good times?
mikkel, you are right that calculating the value of an employee is difficult, but actually companies don't need to calculate it exactly. As I said in my comment, according to a perfectly free market, the ideal wage for an employee is the minimum he would be satisfied with. That is the number that needs to be figured out. And yes, that number is also not easy to figure out, but no one said running a business is easy. The caveat is if the wage is more than the value the employee adds to the company, then there's no point in employing him. So, for example, if my employer thinks that I'm satisfied with $50,000 and pays me accordingly, the only question they have to ask is whether I add at least $50,000 of value to the company. They don't need to calculate my value exactly, they just need to decide whether it exceeds that minimum. Yes, these decisions aren't straight forward and might change based on what the company's values, but that's exactly why business managers (who have their own money and jobs on the line if they make the wrong decision) should be making those decisions and not the government who doesn't always understand that good intentions don't always translate to good results.
In your example, if the janitor truly is causing more productivity, it would be in the interest of the company to keep him around, which means making sure he is paid at least what he is satisfied with since his value added is likely much more than he would be satisified to work for (I realize “satisfied” isn't quite the right word here. Again, what I mean is, “won't leave or do sub-par work to spite the company”). Since the janitor is adding a lot more value than he is being paid, it's probably in the interest of the company to pay him a bit more than he would be satisfied with just to be sure he's getting enough and doesn't leave, since again, calculating the satisfaction of an employee is not an exact science.
kritt11, but there is a limit to how much we can insulate ourselves from globalization. In the past the US had superior ideas, education, natural resources, etc. We used these things to support a superior quality of life. The reality now is that many countries are catching up to the US. That means that companies don't need to depend on the US as much as they did in the past. There are markets elsewhere, both for consumers and also an educated workforce. So as more of the world catches up with the US, why would they stay here and pay our workers more to sustain a higher quality of life when they could easily go elsewhere in the world? My point is this: The quality of life of a society is related to how productive that society is. If we are not more productive than any other nation, it is not sustainable for us to have a higher quality of life than they do. We can try to insulate ourselves from that, but any measure is just temporarily delaying the inevitable. If we want to maintain a superior quality of life, the sustainable way to do it is to find ways to come up with new ideas, better education, etc. so that the US remains more productive as we were in the past.
What jobs aren't worth the minimum wage? Currently, none, because an employer would be foolish (economically speaking at least) to employ anyone doing a job that is not worth the pay they are getting. They would be losing money. So they don't create those kinds of jobs. Instead, its more economical to find a different way to do it, perhaps by building machines or programming computers to do the job or finding a process that can be done with less workers. But if the minimum wage were repealed, we'd see many new types of jobs be created since it would then we more economical to hire low-wage workers than it would be to design and build machines or computers. I can think of countless jobs that don't exist today that would if they could be paid less than the minimum wage. For one, why do you think automatic check-out machines are being used so much these days? Those aren't free, but the stores decide its cheaper to buy and maintain them than pay another couple of cashiers. By the way, since this would increase demand for workers, companies would have to pay more to keep workers, so wages would rise for everyone.
As for your argument about crime, similar arguments about the benefits of higher wages have come up before in this thread. This is missing the point. The point those opposed to the minimum wage are making is that it does not in fact increase wages overall. Those who are not worth the minimum wage are not employed at the minimum wage, they are simply not employed. I agree that higher wages is better for a society, but the argument is that the minimum wage law does not cause that to happen. Intentions doesn't always equal results.
As for your last point, if being a good corporate citizen is defined as paying employees more than the value they add to the company, your business will go out of business which doesn't help anyone. You'd be better of converting to a non-profit charity. Also, very few business get federal bail-outs. Your right that that complicates the issue, but that is far more of an exception than the general rule. For every business that gets a federal bail-out, there are many more that go out of business the old-fashioned way.
Let me re-iterate that I have mixed feelings about the minimum wage. I am arguing against it here because the comments seemed one-sided, and several I felt missed the point of the opposing argument. The arguments I am making make the assumption of a perfectly free market. But as I stated before, the real world is complicated, so I think some of the criticisms in the other comments are valid. If the labor market truly is monopolistic (probably debatable) as one commenter said, that the minimum wage might make sense. It's a complicated issue worthy of debate, but unfortunately too often we talk past each other without taking the time to understand the opposing point of view.
Oh, an as for the high pay for company executives, the same principle applies. If the company is paying them more than the minimum they would be satisfied with, or if there are others that would do the work as well that would work for less, then the company is wasting money. But the best people to make that determination is the people running the business and who have their money on the line (the board of directors when it comes to the CEO). And the companies I've looked at, executive pay is a very small fraction of the overall expenses of the company, so contrary to the arguments of some, high executive pay is not the major cause of business failing or asking for bail-outs.
The minimum wage was instituted in the late 1930s (if I'm not mistaken). The US has done quite well in the global marketplace since that time.
So, what's different about the circumstances we face today that make it necessary to abolish the minimum wage?
And if we are truly forced to commit to a race to the bottom, despite living in a world with an apparent abundance of material wealth, then don't we have to conclude that “free” market capitalism has run its course?
Companies can choose many other options besides cutting minimum wage.
I'd rather have fewer jobs that paid decently than many that paid bargain basement wages. Worker protection laws are already weaker in this country than most of the Western world— if you remove more of the protections we will see companies importing Guatemalans to do the work for nothing, while American workers are at their mercy. Companies usually do not choose to do the right thing on their own, and many will insist that this is necessary to stay competitive. As Chris, noted however, min wage laws have worked pretty well up until now.
ChrisWWW, so since we've done pretty well since 1930 (I'm glad we agree on that), we should not change any labor policies that have been in place since then, since clearly each and every one must have contributed to that success. I find that argument ironic considering it is typically a conservative argument, and the minimum wage is typically supported by liberals, one of which just one the presidency based on the “change” mantra.
And I never said there would be race to the bottom. I don't believe current wages would significantly change if the minimum wage were repealed. As I've already explained, no one who is currently employed is paid more than they are worth, otherwise they wouldn't be employed. So, repealing the minimum wage would not cause wages to be reduced. As I said earlier, it would cause new jobs to be created, replacing jobs that are currently performed by machines or are not done because they are not currently profitable.
It's very popular to bash the free market these days, but for those who don't like it, please tell me a system that has worked better in the history of humankind? By your own admission we have done quite well. Do you think we would have been so successful economically if we had been a socialist nation from the beginning? The free market does have flaws (see http://sovereignmind.wordpress.com/2008/10/11/f…). I am not one who believes in the free market as if it's a religion and opposes all regulation. However, I think there is a valid argument that this particular regulation (minimum wage) is counter-productive.
I agree that companies don't always do the right thing so some regulation is necessary. This is especially true in terms of pollution because there is no economic incentive to reduce the pollution caused by a company producing a product. (see http://www.basiceconomics.info/market-failures-…)
But I don't see how the market can't determine fair wages on its own, without regulation. There is an economic incentive not to pay workers less than a fair wage. Otherwise they could find work elsewhere, assuming it's not a monopolistic labor market which someone suggested it was, but didn't offer any support for that. People change jobs all of the time, and that usually don't require relocation particularly for unskilled jobs. Underpaying workers is a great way to have a lot of sub-par workers and turn-over, which is not good for the company's bottom line.
Since it doesn't appear that I'm changing anyone's mind, I'll leave this be for now. I don't think I can say anything more than I've already said, so if think I'm out of my mind then so be it.
However, one last thing: there is a flaw in my argument I was waiting for someone to bring up. If the difference between what an employee with work for and what value he adds to the company is large, there is a problem. For example, if I'm willing to work for $10 an hour, but I add $100 of value to the company I work for, then clearly the labor market favors the employer and I am being taken advantage of. So in that case it might be beneficial to make the company pay me more. However, I don't see how you can make an argument that our current market is like that, because that would mean companies are making huge profit margins (which, on the whole, profit margins aren't that big even for the oil companies and the car companies are operating with a negative profit margin at the moment), and it would also mean the market would be lop-sided and would eventually even out as people keep hiring cheap employees (why not if you can make $90 an hour profit off of them?), thereby increasing their demand which in turn increases their wage.
My point was not that the minimum wage necessarily contributed to our success, but that it certainly was not a crippling burden. Given what seem to be clear cut benefits to having a minimum wage, I think those that wish to abolish the minimum wage have to do a better job proving it would be worth it.
There are plenty of people that are employed that make more than they are worth in pure economic terms, and vice versa. Nepotism is a fact of life, and in a depressed labor market (like ours), there are plenty of people who are underemployed.
The machine vs. man point raises some interesting questions. Personally, I think if a machine can do the job of a man just as well for approximately or less than the cost, then it's waste of the man's time to do that work. The man may have made money, but we're all at a loss because his time could have been used more productively elsewhere. Perhaps not creating widgets but generating art or ideas that uplift us all.
Again, my point is not that we should have avoided capitalism, it's just that if capitalism is no longer capable of generating proper living conditions for a majority of people, then we've outgrown it.
We suffer the excesses of capitalism, like greed, because of the greater good it generates for society. Perhaps we are reaching a point where the negatives outweigh the benefits.
I just think its a bad time to weaken already weak worker protections. I've had a few of those jobs, and never felt like the company didn't expect enough for the money.
I just see it as another way to exploit the low wage workforce -many of whom already have to work 2-3 jobs to get by. Meanwhile, CEO's and senior management get treated like little gods- regardless of performance. I think a hybrid of capitalism with a touch of socialism works best.
I do think US companies have sagged in their willingness to be forward thinking and innovative. Even with the most pro industry administration since Hoover– many are still tanking. Worker safety, benefits and the environment are suffering while pay packages for CEO's seem ever more inflated and unrelated to performance.
Do we want to go back to the Dickensian society of the mid 19th century?
And minimum wage workers put the money back into the economy instead of relying solely on government entitlements.
“But I don't see how the market can't determine fair wages on its own, without regulation. “
There are a number of problems. The invisible hand only works under a number of rather unlikely assumptions – such as perfect information and no transaction barriers. As well as perfect competition. None of those criteria are met. For example, companies don't know how productive a worker will be until after they hire him (and have already invested resources in them). Similarly, workers can't know the working conditions of a job until after they have accepted and quitting has costs associated with it. Nor is their necessarily other jobs available.
A free market also typically doesn't take into account social benefits. Not having people on welfare because they earn enough to survive, decreasing income inequality, etc all have positive outcomes for society and the economy overall but aren't factored into decisions at an individual firm level. That is when it is the role of government to step in.
“A free market also typically doesn't take into account social benefits. Not having people on welfare because they earn enough to survive, decreasing income inequality, etc all have positive outcomes for society and the economy overall but aren't factored into decisions at an individual firm level. That is when it is the role of government to step in.”
Excellent observation, Jcavhs- this was in the back of my mind– but I couldn't express it as well.
jcavhs and kritt11, I just want to point out that my argument is not against the intentions of the law. I absolutely agree that higher wages are beneficial for society, and if the government can do something to cause that to happen, I'm all for it. But when we evaluate a policy, we have to consider whether it has the intended effect, and whether there are unintended consequences. The argument against the minimum wage law is largely based on the argument that the law does not in fact significantly increase wages and also causes unemployment. So your arguments for why higher wages are beneficial to society (which I entirely agree with) are irrelevant.
I'm fine if you don't agree with the theory. And I myself have pointed out there there are some problems with it due to the complexity of the real world (some of which jcavhs pointed out) . However, it's frustrating to me that your counter-arguments seem to indicate that you aren't really understanding the argument I am making. I apologize if my argument has not been focused from the beginning to avoid the confusion. Let me be clear now: I support government policy that helps poor and middle class workers find jobs and, as long as those policies actually work.
“The argument against the minimum wage law is largely based on the argument that the law does not in fact significantly increase wages and also causes unemployment.” That argument is flawed. In the law doesn't increase wages then it shouldn't increase unemployment since employment is inversely related to wages. If everything is the same and wages stay constant unemployment should also stay constant.
“I support government policy that helps poor and middle class workers find jobs and increase their wages, as long as those policies actually work.”
Actually most of the literature I've read says that they do. Granted, I've focused more on living wage ordinances rather than minimum wage laws but most studies I've found say that wages typically do increase and that decreases in employment are minimal. The main problem with any wage floor is that they aren't indexed to anything, which means their real purchasing power decreases every year due to inflation. That's one of the main reasons they stop being binding wage floors but no matter what they prevent a 'race to the bottom' and they prevent desperate people from being taken advantage of.