Minimum Wage as a Price Floor: Arguments for Keeping It
This paper examines the minimum wage as a price floor in the U.S. labor market, tracing its origins to the 1938 Fair Labor Standards Act and evaluating arguments for and against its repeal. The author acknowledges that the minimum wage distorts labor markets in the short run by raising business costs and potentially reducing demand for low-wage workers. However, the paper argues that eliminating the floor would produce only modest short-term gains while causing significant long-term harm — discouraging innovation, pushing workers onto welfare, and accelerating a race to the bottom on labor costs. The conclusion is that the minimum wage floor should be maintained.
- Introduction: The Minimum Wage as a Price Floor: History and context of U.S. minimum wage
- Impact on Employer Costs and Labor Demand: How wage floors affect business costs and hiring
- Effects on Workers and Long-Term Equilibrium: Worker outcomes and long-run labor market adjustment
- Consequences of Eliminating the Wage Floor: Economic risks of repealing the minimum wage
- Conclusion: Why the Floor Should Be Maintained: Short-term gains vs. long-term harm of repeal
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What makes this paper effective
- The paper clearly frames the minimum wage as an economic price floor from the outset, grounding the argument in a specific analytical concept rather than purely political terms.
- It acknowledges counterarguments — particularly the short-term job creation case for repeal — before methodically rebutting them, demonstrating intellectual honesty.
- The paper moves logically from short-run to long-run effects, using the structure of time horizon to organize its argument and reach a nuanced conclusion.
Key academic technique demonstrated
The paper demonstrates concession-and-rebuttal argumentation: it grants the strongest opposing point (that eliminating the minimum wage would create more jobs in the short run) before explaining why those gains are overstated and the long-term costs are understated. This technique strengthens the author's credibility and makes the final position more persuasive.
Structure breakdown
The essay opens with historical context, then defines the price-floor concept. It works through employer-side effects, worker-side effects, and long-run equilibrium before turning to a counterfactual analysis of repeal. The conclusion synthesizes the short-run vs. long-run tradeoff and delivers a clear policy recommendation. This five-part funnel structure — context → mechanism → stakeholder effects → counterfactual → recommendation — is a reliable model for policy-analysis essays.
Introduction: The Minimum Wage as a Price Floor
The minimum wage was created in 1938 with the enactment of the Fair Labor Standards Act. The hourly wage was initially set at twenty-five cents per hour. Today, the minimum wage sits at $7.25, up from just $5.15 in 2006. While some have pushed for increases to the minimum wage, others have argued for it to be repealed altogether. Both sides utilize a myriad of arguments — both economic and non-economic — to justify their positions. This paper argues that the minimum wage floor should not be repealed.
No matter what view of the minimum wage is taken, the floor represents a distortion in the price of labor, which for many businesses is one of their key inputs. In light of the near-limitless other market distortions present in the United States — including ones that directly impact the cost of labor, such as the structure of the health care system — it is unreasonable to single out the minimum wage for particular scorn. However, any distortion will have an impact on the way the market functions. Deciding what to do about the minimum wage ultimately boils down to an examination of the benefits and costs of the floor.
Works Cited
Henderson, D. (2006). The negative effects of minimum wage. National Center for Policy Analysis. Retrieved November 5, 2009, from
No author. (2006). Business owners, CEOs say higher minimum wage good for business. National Council of Churches. Retrieved November 5, 2009, from
Krugman, P. (1998). The living wage. Retrieved November 5, 2009, from
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