For some time, both across the nation and recently in Iowa, the issue of raising the minimum wage has been hotly debated. Although the Iowa General Assembly has failed to act, it looks like Polk County may eventually raise it.

Traditionally the debate has pitted the political left, in favor vs. the political right, opposed. That is actually a misnomer and in fact both groups have adherents in favor of raising it, just for different reasons.

The Liberals (or progressives as some like to be called) see it as fairness, not keeping up with inflation, the government needs to set standards, it helps poor people come out of poverty, business should get with it because it’s the right thing to do, etc.

 

The conservatives in favor argue that raising the minimum would reduce social welfare costs that have been estimated at 250 billion. A raise to $12 per hour for example, has been estimated, to put 150 billion into the pockets of the working poor thereby reducing the reliance on government social welfare programs. In addition there is the high probability that all those additional dollars would flow directly back into the economy. Another advantage is that $12 per hour on a fulltime basis is almost 25,000 per year and a couple would bring in 50,000. With that kind of income they would probably need to pay some taxes thereby increasing government revenue.

One of the arguments used by opponents is that if the minimum wage was increased, less people would have a job because business would need to keep it’s costs in line and could not afford the higher wages, resulting in laying off some workers. That might be true in a situation where one business got an increase in costs but its competitors did not. If the minimum wage were raised throughout the economy, this would not be the case. Businesses current paying employees the minimum would not be at a competitive disadvantage and in fact, the employees could more readily buy it’s employers product as in the case of fast food.

It seems to me given the politics and the economic facts that the arguments pro and con rest on a core issue: that is should some governmental units raise the minimum while others may not? The point of view taken by some is that if the federal or state government does not do it, it is still a matter of fairness for the local minimum wage citizens and should be done locally. In addition if enough local governments raise the rate eventually it will force the federal or state governments to take action. That policy decision will be compared against the impact upon local businesses.
My personal view is that it is preferable for the federal government to do it, secondly state government and finally local governments as a last resort, but given the inflationary loss of what has occurred over the past number of years, fairness trumps all, but the conservative view point of view is the most logical reason to do it. How much should it be? I’ll leave that discussion to the policy makers and those affected by it on both sides.