What are the positions on a minimum wage?

A higher minimum wage would improve economic activity by adding consumers

Question: What are the positions on a minimum wage?
Position1 of 5›: The minimum wage is too low
Argument‹2 of 3›: A higher minimum wage would improve economic activity by adding consumers

Minimum wage has been an issue for years. People who get paid minimum wage don't get to contribute much to the economy. If people can't spend money on anything, the economy can't be poured into. Therefore, a higher minimum wage would boost GDP.

The argument

In 2013, Senator Tom Harkin (D-Iowa) and Representative George Miller (D-California) introduced the Fair Minimum Wage Act. The bill would have seen the federal minimum wage increase from $7.25 per hour, to $10.10 per hour over the course of three incremental $0.95 increases. The staging matters to the economic case as much as the destination, since it spreads the adjustment across several years rather than imposing it at once. Had the bill come into effect, the small wage increase would have injected an additional $35 billion into workers pockets, resulting in a growth in GDP to the tune of $22 billion. The relationship between those two figures is the argument in miniature: money moved to low earners does not simply sit as income, it is spent, and what is spent becomes revenue for the businesses receiving it, which is why a transfer registers as growth at all. Its critics argue that because companies trim non-minimum wage earners' salaries to pay low earners a minimum wage, this growth in economic activity would not materialize. The objection is that nothing new enters the economy — the same payroll is merely redistributed within it, leaving total demand unchanged. However, they fail to accommodate the fact that low-income workers are those most likely to spend additional income. This is what defeats the objection on its own terms. Even granting that the money comes from elsewhere in the payroll, it is moving from people who would have saved some part of it to people who will spend nearly all of it, so the share of that payroll converted into actual purchases rises. Therefore, a minimum wage doesn't merely reallocate spending, it increases it — which is why, on this argument, the minimum wage is too low.

Context

In the United States, the federal minimum wage sits at just $7.25 an hour. Even a modest increase would provide a substantial boost to GDP.

Premises

[P1]Raising the federal minimum wage, as proposed in the 2013 Fair Minimum Wage Act, would have put an additional $35 billion into workers' pockets and grown GDP by an estimated $22 billion. [P2] Low-income workers are the most likely to spend extra income, so a higher minimum wage increases overall spending rather than merely reallocating it. [C] Therefore, a higher minimum wage would improve economic activity by adding consumers, indicating the current minimum wage is too low.

Counter-arguments

A higher minimum wage might put money into low-income workers pockets, but it would come at the expense of non-minimum wage earners. If companies are forced to pay the lowest earners a higher wage, they will seek to trim non-minimum wage earners salaries to keep their wage bills in check. Therefore, the implementation of a minimum wage doesn’t increase economic activity, it just reallocates existing economic activity. Higher earners, whose wages didn’t increase (or may have decreased) will spend less, offsetting any economic benefits from increased spending among low-income earners.

Rejecting the premises

[Rejecting P1] A higher minimum wage wouldn't generate higher spending.