The company can also allow a position to go unfilled for a time to increase its leverage; the unskilled worker would starve trying to stall for a higher wage. This again invalidates the argument that the free market can set wages effectively -- it cannot given the imbalance of bargaining power between workers and businesses. The minimum wage serves a specific economic role of balancing the bargaining power between workers and businesses.
One must also take into consideration the effect that the minimum wage has on the overall economy, and what would change if the minimum wage was abolished. By providing workers with a guaranteed living wage, the minimum wage ensures that they are able to purchase goods and services. Without a living wage, they would not purchase to the same level. If the minimum wage was abolished, companies would not lower the prices to reflect lower costs; rather, they would pocket the difference. Thus, the economy would lose consumer purchasing power and it would not be offset with lower prices. Whatever case there might be for not establishing a minimum wage in the first place, clearly once it is in place it should be maintained to avoid such negative economic consequences.
There are arguments on both sides of the minimum wage debate. However, for both social and economic reasons, the minimum wage should be maintained. The case for abolishing the minimum wage rests on economic orthodoxy that simply does not withstand real world scrutiny. Socially, America is a better country when its children have the opportunity to focus on education, rather than...
Additionally, knowing that one's work is rewarded enough to feed one's family enhances the social order and feelings of well-being. Beyond the social arguments, the economic case for the minimum wage is just as strong. The minimum wage serves to balance the bargaining power between corporations and workers, and to avoid having American workers get into competitions for lower wages with Third World countries, competitions Americans simply cannot win with the higher cost of living in our country. Abolishing the minimum wage would have direct negative consequences for the economy as well, with an erosion of consumer buying power and little corresponding deflation or business investment to counterbalance that erosion. Undertaking a policy that harms American workers, lowers the GDP, and places the U.S. into direct competition with nations whose markets operate according to different standards is not recommended. Instead, to promote a stronger U.S. economy both today and in the future, and to ensure a socially-just country for all Americans, the minimum wage should not be abolished.
References
Greene, B. (2013). What if there were no minimum wage? CNN. Retrieved March 5, 2013 from http://edition.cnn.com/2013/02/24/opinion/greene-minimum-wage
Romer, C. (2013). The business of the minimum wage. New York Times. Retrieved March 5, 2013 from http://www.nytimes.com/2013/03/03/business/the-minimum-wage-employment-and-income-distribution.html?pagewanted=all
