Economist help us understand the inner workings of our economy better. They readily discern productive efficiency from wasteful spending. The best economists become public figures because they possess an exclusive knowledge on the economic health of our society. Due to the nature of their work, economists are significant, influential figures in shaping government policy. What do leading economist say about raising the minimum wage and creating a living wage?
A Recap of Living Wage Blog Highlights:
· * People who earn a minimum wage cannot make a basic living.
· * Henry Ford knew that workers ultimately create demand.
· * Human potential
can be stunted by poverty.
· * Tax laws significantly favor the wealthy.
· * Low wages can be viewed as a form of corporate welfare
· * A modest wage increase can actually benefit a local economy
Who is Right?
A National Economic Law Project study
released in July 2012 states that 66 percent of low paid workers are employed
by corporations with over 100 employees. The 50 largest employers of low paid
workers have mostly recovered from the Great Recession. Top executive compensation averaged $9.4 million at these firms. They have returned $174.8 billion to shareholders in dividends and buybacks in the five years preceding 2013.
A U.S. Chamber of Commerce blog articulates a generalized argument against raising the minimum wage for basically four reasons:
1. A minimum wage increase doesn't really do much
to address income inequality
2. A minimum
wage hike hurts small business and takes away valuable job skills training for
those who need it most, the marginally employed and teenagers.
3.
It is unfair to tax one segment, namely businesses, for a
societal deficiency that more appropriately should be shouldered by the entire
society.
4. Taxing business who hire unskilled workers is
hurting the very entities willing to hire those individuals.
The Economist’s Insight
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| Alan Greenspan Courtesy of Wikimedia Commons |
Alan Greenspan was chairman of the Federal Reserve from 1987 to 2006. Greenspan
believes that raising the minimum wage would
be detrimental to the work prospects of teenagers. Teenagers need to learn job skills
and suffer if they cannot get jobs. To him, raising the minimum wage could in be short sighted. Higher pay would come at the expense of job availability. This lack of job availability would be more pronounced during recessionary times because businesses would be unable to afford these
unskilled workers.
 |
| Christina D. Romer Courtesy of Wikimedia Commons |
Christina D. Romer is an economist and professor at University of California, Berkeley. She stepped down as Chair of the President’s
Council of Economic Advisers, a post she held from January 2009 till September
2010. In a compelling article in the New
York Times dated March 2, 2013, she stated that while raising the minimum wage
would help low paid workers, there could be job losses. “And in the end, a job ultimately may be the
most valuable thing for a family struggling to escape poverty, “ Romer said. She instead suggested that using the Earned Income Credit (EIC) “would provide more support for the working poor
and would be pro-business at the same time.”
 |
| Paul Krugman Courtesy of Wikimedia Comons |
Paul Krugman is a Nobel Prize winning economist
and New York Times writer. He is a professor of Economics at Princeton University. He thinks raising the
minimum wage is a smart move given the current political climate in Washington. “A
minimum wage increase would not require U.S. Government spending,” Krugman
writes in a New York Times article dated February 17, 2013. “This would be a plus for a Congress that does not want to spend money.
We should raise the minimum wage now.”
 |
| Martin Feldstein Courtesy of USA.gov |
Martin Feldstein is a professor of Economics at Harvard University. In an article printed on December 12, 2013, in the Wall Street Journal, Mr. Feldstein states
that raising the minimum wage is a crude tool for alleviating poverty. For him
a better solution would be a combination or raising job opportunities while
simultaneously raising income. He favors the earned income credit as a way to
accomplish this goal.
In a Perfect World
 |
| Joseph Stiglitz Courtesy of Wikimedia Commons |
Joseph Stiglitz is a Nobel Prize winning professor of economics at Columbia University. His latest book is The Price of Inequality. In 2011 Time
magazine listed him among the 100 most influential people in the world. Stiglitz questions Congress's political will to act effectively to address not only the minimum wage issue but the larger question of income inequality.
He zeros in and cites government dysfunction due to political corruption as the real problem. “While there may be underlying economic forces at play,” he writes, “politics have shaped the market, and shaped it in ways that advantage the top at the expense of the rest.” He believes that concentration of political power in the hands of the rich is damaging our economy as the affluent seek to protect their wealth by institutionalizing their own advantage.
He zeros in and cites government dysfunction due to political corruption as the real problem. “While there may be underlying economic forces at play,” he writes, “politics have shaped the market, and shaped it in ways that advantage the top at the expense of the rest.” He believes that concentration of political power in the hands of the rich is damaging our economy as the affluent seek to protect their wealth by institutionalizing their own advantage.
In a perfect world, some combination of a minimum wage increase would
happen but not so excessively as to diminish job prospects. Jobs, even low
paying ones, play an essential role in the development of valuable job skills. This alone
makes them essential.
Ideally, functional government would address the problem of its citizen to meet a minimum standard of living without demonizing those people as freeloaders as Mitt Romney stated at private political fundraising dinner in the 2012 presidential race..
The earned income credit is a well-targeted tool that can bring low-wage workers to a base income that could complement a modest minimum-wage increase without diminishing job prospects. Yet if Stiglitz is right, we may no longer have a Congress that is acting for the good of all its citizens but rather a privileged few.
Ideally, functional government would address the problem of its citizen to meet a minimum standard of living without demonizing those people as freeloaders as Mitt Romney stated at private political fundraising dinner in the 2012 presidential race..
The earned income credit is a well-targeted tool that can bring low-wage workers to a base income that could complement a modest minimum-wage increase without diminishing job prospects. Yet if Stiglitz is right, we may no longer have a Congress that is acting for the good of all its citizens but rather a privileged few.
