Do you support higher minimum wages? Briefly discuss. Solution In recent months, a number of states have again taken the lead on measures to raise the minimum wage. Massachusetts is moving toward a minimum of $10 per hour. Other measures are on the table in New York, Illinois, New Jersey, Connecticut and Missouri. Meanwhile Sen. Tom Harkin, D-Iowa, is pressing for the federal minimum wage to rise to $9.80 per hour by 2014. This is far more sensible policy than symbolic nods to the left through gimmicks such as the so- called Buffett Rule, which might raise new revenues from the mega-wealthy through taxes, but will likely amount to very little because gazillionaires can hire clever accountants to help them get around it. No, we need policies that clearly do something for hard-working people who have been clobbered by a financial crisis they didn\'t create. Here are five reasons why we should cheer for working America getting a raise. 1. Good for Families: According to economist James Galbraith, raising the minimum wage would raise the incomes of 28 million Americans. Women would particularly benefit because they tend to work for lower wages than men. As Galbraith sees it, raising the minimum wage is family friendly policy: “With more family income, some people would choose to retire, go back to school, or have children, making it easier for others who need jobs to find them. Working families would have more time for community life, including politics; Americans would start to reclaim the middle- class political organization that they once had. Because payroll- and income-tax revenues would rise, the federal deficit would come down. Social Security worries would fade.” 2. Good for Economic Recovery: To get the economy back on track, spending power has to be in the hands of those who actually spend in the real economy. That means regular people, not the super-wealthy who tend to hoard wealth or invest in financial products. The minimum wage story is not just a story about income inequality, but rather it’s about an elite that has hijacked the economic system and made it work less productively than before while redistributing more of what is working to themselves. The problem with our economy today is that the growing gap between the real wages and productivity has violated the traditional relationship between real wages and consumption. So if the productivity of each worker is rising strongly, yet that worker’s capacity to purchase (the real wage) is lagging badly behind – how does economic recovery which relies on growth in spending sustain itself? Which is why policy should be more directed toward programs that increase the minimum wage and less of discredited neoliberal “trickle-down” economics. Trickle-down economics is largely counterproductive because it shifts more resources into the hands of those who have less propensity to spend and keep the economy moving. 3. Helps People Get Out of Debt: During the early part of the post-war period, .

1. Do you support higher minimum wages? Briefly discuss.
Solution
In recent months, a number of states have again taken the lead on measures to raise the minimum
wage. Massachusetts is moving toward a minimum of $10 per hour. Other measures are on the
table in New York, Illinois, New Jersey, Connecticut and Missouri. Meanwhile Sen. Tom
Harkin, D-Iowa, is pressing for the federal minimum wage to rise to $9.80 per hour by 2014.
This is far more sensible policy than symbolic nods to the left through gimmicks such as the so-
called Buffett Rule, which might raise new revenues from the mega-wealthy through taxes, but
will likely amount to very little because gazillionaires can hire clever accountants to help them
get around it. No, we need policies that clearly do something for hard-working people who have
been clobbered by a financial crisis they didn't create.
Here are five reasons why we should cheer for working America getting a raise.
1. Good for Families: According to economist James Galbraith, raising the minimum wage
would raise the incomes of 28 million Americans. Women would particularly benefit because
they tend to work for lower wages than men. As Galbraith sees it, raising the minimum wage is
family friendly policy:
“With more family income, some people would choose to retire, go back to school, or have
children, making it easier for others who need jobs to find them. Working families would have
more time for community life, including politics; Americans would start to reclaim the middle-
class political organization that they once had. Because payroll- and income-tax revenues would
rise, the federal deficit would come down. Social Security worries would fade.”
2. Good for Economic Recovery: To get the economy back on track, spending power has to be in
the hands of those who actually spend in the real economy. That means regular people, not the
super-wealthy who tend to hoard wealth or invest in financial products. The minimum wage
story is not just a story about income inequality, but rather it’s about an elite that has hijacked the
economic system and made it work less productively than before while redistributing more of
what is working to themselves.
The problem with our economy today is that the growing gap between the real wages and
productivity has violated the traditional relationship between real wages and consumption. So if
the productivity of each worker is rising strongly, yet that worker’s capacity to purchase (the real

2. wage) is lagging badly behind – how does economic recovery which relies on growth in
spending sustain itself?
Which is why policy should be more directed toward programs that increase the minimum wage
and less of discredited neoliberal “trickle-down” economics. Trickle-down economics is largely
counterproductive because it shifts more resources into the hands of those who have less
propensity to spend and keep the economy moving.
3. Helps People Get Out of Debt: During the early part of the post-war period, particularly the
1950s and 1960s, entrepreneurship was more concerned with building productive capacity and
putting workers to work actually making useful things as opposed to creating financial
Frankenstein products like credit default swaps.
As our economy has become increasingly directed toward Wall Street and the so-called FIRE
(finance, insurance, real estate) sectors, more wealth has migrated to the top 1 percent. On top of
that, real wages have increasingly lagged behind the growth in productivity. It is also clear that
hours worked and persons employed in the “productive” sector have been in decline over the last
few decades.
Prior to the 1970s, when flawed neo-liberal ideas started to gain prominence, the growth of real
wages largely tracked productivity growth, which meant that as the productive capacity of the
system expanded, the capacity of the workers to maintain consumption standards out of wages
also grew in proportion. There were high incomes produced, but these typically came from
success in building things and spreading the gains (somewhat to workers).
Today, high incomes come from the financial sector capturing an increasing share of national
income and using it to shuffle financial assets in the financial markets casino which adds about
zero to productive output.
An increase of a couple of dollars per hour or more in the minimum wage could make huge
improvements in the difficult existence of the working poor, perhaps allowing them to exit the
debt treadmill and stand a better chance of eventually rising into a revitalized middle-class.
Admittedly, corporate profits might suffer a little and some businesses at the lowest end might
disappear. That said, corporate profits as a percentage of national economic output are already at
an all-time record levels. And it's questionable whether such levels of profitability can be
sustained. Firms have lots of unused capacity lying around because people can't afford to buy
products and services. Sluggish sales growth is directly connected to lagging wage rates.

3. At the same time, dependence on food stamps has surged by over 14 million over the same
period. And “financial engineering” has helped to create a significant escalation in debt being
borne by the private sector, particularly consumers. Surely we need a better model than that?
4. Protects Workers From Abuse: A higher minimum wage would also help to mitigate the
abusive, exploitative working practices of a number of employers, who take advantage of the
currently low minimum wage to seek cut-rate help. Such employers often use undocumented
labor, which further undermines America’s working poor.
5. Justice for Working Americans:Most of all, a big jump in the minimum wage would be a
reparation. Because let’s be clear: class warfare has already been undertaken on behalf of the 1
percent. The past 30 years have witnessed a dramatic redistribution of national and personal
income in favor of profits for the rich. At the same time, this period has been associated with a
dramatic decline in the performance of the US economy. To raise the minimum wage would be
literally the minimum we could do for those who have suffered from the economic crisis: the
working population. It would be an act of justice.