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Liberal Economics & the Minimum Wage

Minimum Wage: Major Arguments of Liberal Economics

As Barry Clark indicates in Chapter Nine of Political Economy: A Comparative Approach, the profession of economics, whether classical, liberal, radical, conservative, or modern liberal has long been concerned with the issue of poverty and income inequality. Modern liberal economists have seen the deterioration in the after-inflation value of the minimum wage as having made a substantial contribution to the steep increase in inequality which has taken place in the United States since 1980 (Spriggs & Schmitt, 1996).

The analysis which follows will discuss the minimum wage. First, by briefly summarizing some of the arguments of the modern conservative economists about its validity and applicability, and then by discussing in more detail, the major arguments of liberal economists in support of the minimum wage. Hopefully, such an analysis will provide insight into the contemporary controversy surrounding this issue.

The Modern Conservative Argument Against the Minimum Wage

Many modern conservative economists argue that increasing the minimum wage is at least ineffective and poorly advised. If the object of the minimum wage is to establish a lower limit of pay which will boost or stabilize the incomes of the working poor, then they believe more damage than good will be effected. Their standard interpretation of economic theory treats the labor market like any other: the demand curve for labor slopes down as the supply curve slopes up, and where they cross is the market clearing, or equilibrium wage, at which anyone wanting work gets hired. Taken this assumption, artificially pushing up wages through an increase in the minimum would inevitably leave some people without employment (Wall, 1996, 10).

Conservative economists believe that businesses will respond in a diversity of ways to an increase in the minimum wage depending upon the kind of business. The easiest way...

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Liberal Economics & the Minimum Wage. (1969, December 31). In LotsofEssays.com. Retrieved 19:25, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1691819.html