What are the positions on a minimum wage?

Stagnant minimum wages have fueled inequality

Question: What are the positions on a minimum wage?
Position1 of 5›: The minimum wage is too low
Argument‹3 of 3: Stagnant minimum wages have fueled inequality

Many economies' minimum wages have been relatively stagnant since the middle of the twentieth century. This has led to rampant inequality.

The argument

The argument turns on a divergence between two things that were once expected to move together. Despite productivity increases and reduced production costs, the minimum wage in many economies has stagnated or even declined. When output per hour rises, the value created by an hour of work rises with it; if the lowest wage does not follow, the additional value has gone somewhere else. The scale of the divergence is the argument's central evidence. In the US, if the minimum wage had kept pace with increases in productivity, by 2013 it would have stood at $18.30 an hour. Instead it stood at $7.25. The gap is not static, either, because a nominal figure that does not move loses ground continuously: as inflation increases, the same minimum wage has less purchasing power, so minimum wage workers become relatively poorer every year without any formal cut ever being announced. Meanwhile the gains have a destination. As production efficiency increases, company owners receive more profits, and those profits are funnelled to shareholders and owners while workers experience stagnant wages. That is what converts a wage question into an inequality question: if bottom earners remain where they are while top earners receive more and more, the distance between them widens automatically, with no change in anyone's effort or conduct required to produce the result. The consequence, on this argument, is not merely a widening ratio but a floor set below subsistence. Income inequality fuelled by minimum wage stagnation forces millions globally to live in poverty while higher class citizens get richer — the same economic growth registering as hardship at one end of the distribution and accumulation at the other. The remedy follows from the diagnosis. If the mechanism is a floor that failed to rise with productivity, then raising the minimum wage will increase a person's earnings and decrease inequality directly, at the point where the divergence began.

Context

Over the past five decades, the cost of production has fallen dramatically. Productivity has more than doubled. Many products can be produced today for half the price they were in the middle of the twentieth century.

Premises

[P1]Despite rising productivity, the minimum wage has stagnated—had US wages kept pace with productivity it would have been $18.30 by 2013 instead of $7.25—so its purchasing power falls each year with inflation. [P2] As efficiency gains flow to owners and shareholders while bottom earners stay flat, the gap between rich and poor widens and millions are pushed into poverty. [C] Because stagnant minimum wages have fuelled inequality, the minimum wage is too low.

Counter-arguments

Raising the minimum wage actually increases inequality. When the minimum wage is raised, companies cannot afford to hire as many workers, so they lay off some. This leads to a rise in unemployment, and the ones becoming unemployed are those with the lowest income. This widens the income inequality gap because the wealthy stay in their position but the poor have an increased chance of becoming joblessness.

Rejecting the premises

[Rejecting P3] If the minimum wage was raised, companies would not be able to afford as many employees as before, so more people will become unemployed.

Framing

High levels of inequality are detrimental to society.