CD: To what extent has the debate intensified around the appropriate minimum wage across the United States?

Liburt: Many states and cities within the US have recently increased the mandatory minimum wage within their respective jurisdictions. The nature of the debate has not changed appreciably; the arguments on both sides are well-worn and likely familiar to most. Those in favour of increasing the minimum wage tend to argue that inflation has rendered the current minimum wage insufficient to pay for the necessities of life, and they frequently throw in class warfare rhetoric about disparities in income between the richest and the poorest. Those opposed to increasing the minimum wage tend to argue that increasing it fails to achieve any of the stated goals and actually has several pernicious consequences. They argue that it causes a loss of jobs because employers cannot afford to pay more money to the same number of employees so they terminate some of them, causes employers to hire illegal aliens at lower wages than citizens, and causes a rise in prices because companies pass on the increased cost to the consumer, thus defeating the ostensible goal of improving employees’ buying power because their increased wage goes to pay higher prices. The resurgence of the issue is not surprising in light of poor economic conditions over the past several years. People’s daily experiences are quite at odds with manipulated governmental economic statistics. The real unemployment rate in the US is running around 23 percent – by way of comparison, during the Great Depression of the 1930s, the unemployment rate was said to be 25 percent – and the real inflation rate is 9 percent. These numbers have been fairly consistent for several years.

Jan-Mar 2015 issue

Orrick, Herrington & Sutcliffe LLP