What’s the issue?

In last week’s Democratic debate, all three presidential candidates were asked the same question.  “Complete this sentence: in my first 100 days in office my top three priorities will be – fill in the blank.”  

In response to this question, all three candidates answered that one of their three top priorities will be raising the minimum wage. Just outside the building, hundreds of minimum wage workers marched in support of the pay raise. 

Sounds great, right? More money, less poverty…no?  But the debate on minimum wage gets a lot more complicated than that.  

Why should you care?

Workers under the age of 25 make up about 50 percent of people working for minimum wage. With tuition and the living expenses that come with being a college student, the idea of having a little more cash in your pocket per hour sounds great. 

However, it’s important to consider all the facts and possible effects legislation like this may produce.  

The current push to increase the federal minimum wage to $15 an hour would be a massive increase from the current Michigan minimum wage of $8.50.  

Since the Fair Labor Standards Act was signed in 1938, the minimum wage has been updated many times.  It began at just 25 cents an hour and has since grown to $7.25. It has not been updated since 2009.  

With all three Democratic candidates naming the raise of minimum wage as one of their top three priorities if elected President, it’s important to know the sides of the debate before marking your ballot in November. 

What are the sides?

The Democratic candidates all support a raise in minimum wage of some kind.  At the start of her campaign, frontrunner Hillary Clinton set her sights on $12 an hour though in the last debate she supported the fight for $15. Also in that debate, Bernie Sanders stated we needed to raise the minimum wage to “at least $15 an hour.”

The Democrats see 46.7 million Americans living in poverty and want to do something about it. They argue that too many people are working too hard not to earn enough for a minimum standard of living.  

However, even if the minimum wage was placed at $15 an hour, a person working full time still would only be earning around $31,000 a year. So this strategy may not solve poverty, but Democrats feel it will certainly help.

The Republican candidates, with the exception of John Kasich, seem to disagree whole-heartedly with this idea. They note most primarily that an increase in minimum wage would lead to an increase in unemployment.  

Marco Rubio stated in the fourth Republican primary debate that raising the minimum wage would cause people to be replaced by machines.  

“If you raise the minimum wage, you’re going to make people more expensive than a machine,” Rubio said. “And that means all this automation that’s replacing jobs and people right now is only going to be accelerated.”

This increase in wages scares business owners for a different reason. That wage increase has to come from the profit of the company. Will this hit to their profits cause businesses to go under?

Economic Roundtable counters by saying that this change would benefit businesses “by having more money spent in the local economy” and by reducing employee turnover.  

Oakland University economics professor Kevin Murphy says there just isn’t enough research to show exactly who is right in this debate. 

“If I had been asked this question ten years ago I would have said (it was a bad idea),” Murphy said of the raise in minimum wage.  

However, in the experiences we have had with an increase in minimum wage there hasn’t been enough evidence to show it will colossally affect businesses or the unemployment rate.

Among economists, Murphy says there are two schools of thought. 

“One group says there’ll be relatively small adverse unemployment affects, and the other group says you just can’t spot them (because of lack of data),” Murphy said.  

There’s no textbook answer to solving poverty.  There are just different strategies on how to address it. As for the strategy of increasing minimum wage, Murphy says it would be “an interesting experiment.”