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Liberal View of the Minimum Wage

Can free market principles be applied to the labor market? Specifically, does the imposition of a minimum wage introduce artificial subsidies into the labor market which increase inefficiency and result in layoffs? The debate over the minimum wage and its effect on workers raged throughout the second half of the twentieth century, and continues. Labor believes that the minimum wage is set too low, while business maintains that any increase places an unfair burden on companies that will be forced to lay off the workers the minimum wage is designed to protect. This research examines the liberal view of the minimum wage, the conservative critique of that view, and the evidence in support of both.

Minimum Wage Theory from the Perspective of Modern Liberalism

The minimum wage was first put into effect in the United States in 1938 during Franklin Roosevelt's administration and during the Great Depression. The 1930s were a period marked by liberalism (collectively called the New Deal), and a commitment by government to help raise individuals and families out of poverty. At the time the minimum wage was introduced, it set the price (wage) at 25 cents per hour for most workers. It should be noted, however, that the beginning of the twentieth century saw not only the imposition of a minimum wage, but also the elimination of child labor, imposition of the 40-hour work week, and numerous safety regulations put into force. At that time, business was generally perceived to behave in a manner identified first by Adam Smith, which is that business would conspire to drive down wages and related employment costs to the lowest possible point (Mazur 1995).

Those who support a minimum wage are generally liberals in that they support government intervention in the market system rather than allowing the "invisible hand" of the market to determine wages. According to this view, the market is not capable of setting wages because employers hav...

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Liberal View of the Minimum Wage. (1969, December 31). In LotsofEssays.com. Retrieved 15:04, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1695419.html