Abolish The Minimum Wage

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Wed. April 3, 2013 in Washington, D.C.

The first attempt at establishing a national minimum wage, a part of 1933’s sweeping National Industrial Recovery Act, was struck down by the Supreme Court in 1935. But in 1938, under the Fair Labor Standards Act, President Franklin D. Roosevelt signed into law a minimum hourly wage of 25 cents—$4.07 in today’s dollars. Three-quarters of a century later, we are still debating the merits of this cornerstone of the New Deal. Do we need government to ensure a decent paycheck, or would low-wage workers and the economy be better off without its intervention?

  • dorn90


    James A. Dorn

    Cato Institute Vice President for Academic Affairs, and Editor, Cato Journal

  • roberts90


    Russell Roberts

    Research Fellow, Hoover Institution

  • bernstein90x90


    Jared Bernstein

    Former Chief Economist to Vice President Joe Biden

  • Kornbluh90x90


    Karen Kornbluh

    Former US Ambassador, Organization for Economic Cooperation and Development

    • Moderator Image


      John Donvan

      Author & Correspondent for ABC News

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For The Motion

James A. Dorn

Cato Institute Vice President for Academic Affairs, and Editor, Cato Journal

James A. Dorn is the vice president for academic affairs, editor of the Cato Journal, and director of Cato’s annual monetary conference. His research interests include trade and human rights, economic reform in China, and the future of money. From 1984 to 1990, he served on the White House Commission on Presidential Scholars. He has lectured in Estonia, Germany, Hong Kong, Russia, and Switzerland and has directed international conferences in London, Shanghai, Moscow, and Mexico City. Dorn has been a visiting scholar at the Central European University in Prague and at Fudan University in Shanghai and is currently professor of economics at Towson University in Maryland. He has edited 10 books and his articles have appeared in numerous publications. Dorn holds a Ph.D. in economics from the University of Virginia.

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For The Motion

Russell Roberts

Research Fellow, Hoover Institution

Russ Roberts is a research fellow at Stanford University's Hoover Institution. He is the host of EconTalk, a weekly hour-long award-winning podcast. His rap videos (created with filmmaker John Papola) on the ideas of Keynes and Hayek have been viewed over 6 million times on YouTube and subtitled in eleven languages. Roberts blogs (with Don Boudreaux) at Cafe Hayek. His latest web-based educational project is The Numbers Game where he discusses data and charts in annotated videos. Roberts is the author of three works of fiction that teach economic principles and lessons and numerous journal articles. Roberts was a professor of economics at George Mason University from 2003 to 2012. He has also taught at Washington University in St. Louis, the University of Rochester, Stanford University, and UCLA. His PhD is from the University of Chicago.

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Against The Motion

Jared Bernstein

Former Chief Economist to Vice President Joe Biden

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities. From 2009 to 2011, Bernstein was the chief economist and economic adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Bernstein’s areas of expertise include federal and state economic and fiscal policies, income inequality and mobility, trends in employment and earnings, international comparisons, and the analysis of financial and housing markets. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. He is the author of Crunch: Why Do I Feel So Squeezed? and is an on-air commentator for the cable stations CNBC and MSNBC and hosts jaredbernsteinblog.com.

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Against The Motion

Karen Kornbluh

Former US Ambassador, Organization for Economic Cooperation and Development

Karen Kornbluh recently stepped down as US Ambassador to the Organization for Economic Cooperation and Development where she negotiated international Internet policymaking principles, launched a new OECD gender initiative, and championed the OECD's transition from the "rich man's club" to a global policy network focused on working with developing countries and emerging economic powers. She previously served as policy director for then-Senator Barack Obama, as deputy chief of staff at the US Treasury Department, and in a number of roles at the Federal Communications Commission including assistant chief of the International Division and Director of Legislative and Intergovernmental Affairs. She has been awarded a number of fellowships including a visiting fellowship at the Center for American Progress and a Markle technology fellowship. She founded the Work and Family Program at the New America Foundation for publications including the New York Times, the Washington Post, the Atlantic Monthly, and the Harvard Journal of Law and Technology.

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Declared Winner: Against The Motion

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Voting Breakdown:

75% voted the same way in BOTH pre- and post-debate votes (17% voted FOR twice, 53% voted AGAINST twice, 5% voted UNDECIDED twice). 25% changed their mind (3% voted FOR then changed to AGAINST, 0% voted FOR then changed to UNDECIDED, 4% voted AGAINST then changed to FOR, 2% voted AGAINST then changed to UNDECIDED, 5% voted UNDECIDED then changed to FOR, 11% voted UNDECIDED then changed to AGAINST) | Breakdown Graphic

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    • Comment Link P Singleton Saturday, 12 September 2015 15:31 posted by P Singleton

      Sorry if someone else brought this up but just like this message probably won't be read I didn't read all the comments already posted. Anyway I think the problem is that some companies get away with paying their top executives and CEO's 300 times more that their lowest wage earners. I am for a company being forced to spread it's earnings out more evenly. A small company that doesn't make a great deal of money can pay its employees less but with the assurance that as the company grows so will the wallets of everyone working there. An insanely large company with a multi-billion dollar worth should not be allowed to pay some employees millions a year while others live under the poverty line. I am not saying equal pay, I am saying more fairly distributed pay.

    • Comment Link Eric Monday, 20 July 2015 02:30 posted by Eric

      Actually, the minimum wage has consistently gone down the past several decades with only a few years where it has been up..yet we are experiencing high unemployment, record inequality, and a large amount of debt...the latter of which I attribute to the lowering of taxes to subsidize the lowering wages.

      In other words....for the past several decades we have been re-distributing the wealth from bottom to top, not top to bottom as the right would have us believe....and it has not worked.

    • Comment Link Brian Tuesday, 26 May 2015 18:09 posted by Brian

      The issue they failed to address is that taxpayers can support 1 person at 100% of welfare subsidies or 10 at 10%. I want to see the math that compares those two situations, those without jobs who enter the welfare system completely vs those with jobs who need some welfare benefits at the low end.

      You have to raise minimum wages significantly to get to a living wage. A living wage would leave many people without jobs.

    • Comment Link Tony Saturday, 29 November 2014 22:42 posted by Tony


      The issue is not with paying people more than they are worth. The issue is that the job itself is not worth what we are setting the minimum wage at.

      Yes, everyone should be able to make a wage that allows them to live, however that is a much different statement than every job should allow people to live.

      The value of a job is determined by how much value it adds to the company. No matter how important the person is, if the only thing they are adding to the company is stapling papers, how much is that job actually worth? How much would you pay someone to come your house and staple your papers? 45,000 a year?

      So what happens when you move the minimum wage above what the value of the job actually is to the company? The job goes away. So before, the person was making less than they wanted, well congradulations, now they make nothing.

    • Comment Link len Monday, 15 September 2014 07:04 posted by len

      "economic freedom" the purpose of minimum wage workers is the same as the purpose of any workers, to engage in economically profitable activity facilitated by a boss in exchange for a portion of the profit generated to go to that facilitating boss for his contribution.
      The right's notion that every conceivable job that exists — including slinging hash and drying dishes — to learn to show up on time with a suit and a tie and say "Good morning, Mr. or Madam Boss!" is ludicrous. That's not the purpose from the employee's point of view. He likely already has acquired the basic skills that this job "teaches him", he's prevented from moving on to a better job that contributes more productivity to the division of labour because there are ever fewer respectable blue collar jobs out there which would pay him more. they are outsourced or automated.

    • Comment Link len Monday, 15 September 2014 06:50 posted by len

      The minimum wage pays less than workers are worth at the moment, anyone who says it pays more than workers are worth ignores the fact that that would put companies out of business very quickly.
      I already have a seating contempt for the man who earns well over two-handed times what I get before his bonus which I don’t get and who demands ever more for what is, when adjusted for inflation, ever less.
      I am very intelligent but unfortunately at school I was mercilessly bullied and failed utterly by the teachers so my grades bare no reflection of my abilities. I can not afford to retake my exams (you are not allowed to simply sit the exam you are required to do the entire course of up to two years) and it doesn’t matter how good a portfolio or CV I can produce no grades no job.
      if the minimum wage where to drop to the kind of levels proposed then I would have no moral compunction turning to crime it would not bother me at all stealing from a society that has for many years stolen from me. I would take a particular pleasure in targeting the kind of ostensibly polite pompous middle class hags who think it is acceptable to unload their pent up vitriol on defenceless checkout operators who are unable to either run away or stand up for themselves without being formally reprimanded by the management.
      with regards to Scott Solomon's observations of company housing consisting of box cars (I know he is not in favour) consider that it is the parts of the world where such practices are commonplace we see the rise of organisations like Islamic state, IS couldn’t exist without an army of angry young men with nothing to loose and a blind rage against the world which has been cynically and effectively channelled by an organisation with a political end in mind. come to think of it the Russian revolution couldn’t have happened either, and can anyone remember reds under the bed? American communism cut its teeth during the great depression.

    • Comment Link Tony Saturday, 16 August 2014 02:33 posted by Tony

      @Scott Solomon

      Our economy has already proven that what you say won't happen. Our current minimum wage is below what the government considers the poverty level, and will collect taxes from other people in order to help you out if that's all you make. And even with that system, we still have roughly 15% official unemployment + discouraged workers.

      If all of the companies decided to drop their minimum wage to 75 cents an hour, that 9% of our population that has decided that they don't need to even look for a job will just jump to 15%, and our welfare state will just increase, and those jobs will go unfilled, since there is no point working a job at that rate.

      Now if we took away the huge safety net in our welfare state, then sure maybe some companies could get away with dropping the minimum they pay employees since people will need to find a way to survive. But as long as the alternative exists to do nothing for a living, people will choose that living over 75 cents a hour.

    • Comment Link Scott Solomon Thursday, 15 May 2014 06:14 posted by Scott Solomon

      Anecdotally, one scene in a film that always stuck in my mind is from the film 'Syriana'. The foreign oil workers in one of the oil-producing countries were provided company housing basically consisting of corrugated steel boxcars, 12 people living to a box car, with shared water and sanitation facilities for clusters of box car-like housing.

      So given that visual, there is TONS of slack in terms of eliminating the minimum wage since people can survive living in cattle cars (of course, any worker who got fired would have to be kicked out of the cattle car that day since you wouldn't want a guy who'd just been fired living with the people who still work for the company).

      There is the problem of wage stickiness, though, but that could be overcome by groups of workplaces coordinating firing their entire workforces and re-hiring new people at 1/4 the previous wages.

      And (even more good news) I suspect the minimum wage acts in a way somewhat similar to LIBOR -- just as some bonds are priced at a spread to LIBOR, you could view premium wage jobs as a spread over the minimum wage. So if you get rid of the minimum wage, you could really slash the pay of higher paid workers once you got the lowest paid accustomed to making $0.75/hr.

      The money saved by the companies from slashing wages would much much more than pay for armored limos and security details to protect owners from the hoi poloi. This would help the economy a lot because private security firms would get a boost.

    • Comment Link A Riggle Friday, 06 December 2013 19:57 posted by A Riggle

      One of the most important points that was missed is this: People require a certain amount of income to keep themselves and their families fed and off the streets. Those who make minimum wage (and even several dollars more an hour above minimum wage) will inevitably get those needs met in any way possible (food stamps, emergency rooms visits, etc). Society is already subsidizing the cost of living for these individuals with our tax dollars. Paying workers a minimum wage amount to corporate welfare. The minimum wage ITSELF is inexcusable. A LIVING WAGE is what we should be aiming for. Eliminating the minimum wage would be beyond morally reprehensible.

    • Comment Link Beytullah Monday, 17 June 2013 13:05 posted by Beytullah

      Moody Music,Let me be your devil's advocate.I read a book by David Shipler ( The Working Poor ) earlier this year before I came back to Singapore. It is the reason why the topic of minimum wages struck a chord in me. It discusses the working poor in America. The book gives a good portrait of the lives of the working poor in the US. The increase in minimum wage has only alleviated some of the poverty. There's still a long way to go. Let me quote this phrase, Nobody who works hard should be poor in America. In the local context, this should also hold true. Understandably, corporations need to make a profit. However, should that be an excuse for them to exploit the services of others? I think people should be paid for what they are worth. It is heart-wrenching to know that after a 10-hour workday, some individuals still cannot make ends meet. There must be a balance between profits and social responsibility. Think about a major shoes manufacturer that abused child labor in China. Are we to condone the act so that we do not pay a lot more than the current market prices for our shoes? That is why I strongly agree with Mr. Tan's view that there should be a higher minimum wage. It may not be the perfect solution (if there is ever one) but it is definitely good enough.

    • Comment Link Denis Drew Tuesday, 28 May 2013 18:34 posted by Denis Drew

      The "black hole theory" of the minimum wage:
      Physicists theorize that inside a black hole the laws of physics breakdown. When the minimum wage falls far enough below what the market would bear the laws of supply and demand breakdown. Doubling today's federal minimum wage should lead to a disproportionate explosion of demand for the goods of minimum to median wage paying employers.

      If we cut today's minimum to median wages in half that wouldn't help McDonald's or Wal-Mart, would it? This wage cut must already have taken place when we would need to triple today's minimum wage to catch up with doubled productivity since 1968 (almost quadruple the early 2007 minimum wage -- the median wage stagnated as productivity doubled too).

      Doubling today's minimum wage to $15 an hour would add 50% to Wal-Mart's wages but only 5% to Wal-Mart's prices – 100% to McDonald's wages but 33% to McDonald's prices. $15 an hour being today's median wage, half the workforce would get raises percentage multiples of pass through price increases.

      This win-win effect could not go on forever. At $30,000 a year consumers would buy a lot more fast food and retail items than they will at $15,000 a year – hugely pent-up demand. Going from a $30,000 year minimum wage to $40,000 would raise prices (3% at Wal-Mart; 11% at McDonald's) but not add much to demand – though some people would have more money to spend -- a wash? Somewhere in between is the edge of the black hole.

    • Comment Link Devin Sunday, 12 May 2013 10:46 posted by Devin

      News flash Robert: Not only can you not raise a family of 4 on MW, you can't even take care of YOURSELF! I am so sick or hearing people who make significantly more than those who earn the MW offer their thoughts on why we should get rid of it. All of the arguments against it are academic. All of the arguments for it are based in REALITY, not in some economist's mind. I have an idea. With the gap between rich and poor bigger than any time since the 1920's, lets take more from those who can most afford it, not those who can least afford it!! That seems obvious to me.

    • Comment Link Robert Sunday, 05 May 2013 11:36 posted by Robert

      Summary of arguments against MW:
      1 It tends to raise prices
      2 It tends to create unemployment
      3 It encourages immigration of illegal workers
      4 It encourages emigration of jobs
      5 It encourages kids to drop out of school early
      6 It leads employers to provide less training
      Summary of arguments for MW:
      1 You cannot raise a family of four on MW

      It is true that one cannot raise a family of four on MW, but if someone is on MW, should s/he have a family of four, or 6 or 8 for the rest of us to raise?

      Even economists don't get too upset over these arguments because they know that when the wage gets too high, labor will be replaced by capital, i.e. workers will be replaced by machines - elevator operators, service station attendants, waiters (to some extent) There are numerous examples of this, the latest one being replacing checkout clerks with self-checkout. rbm

    • Comment Link chris Friday, 03 May 2013 13:51 posted by chris

      I like to look at the minimum wage as a limit like other limits the government makes on environment and safety. Will we let people take jobs below the safety standards - just to have a job? It would be "their choice" and "freedom".

      The question is will we allow business to take advantage of people at ANY level that person will agree to? So if you are down on your luck they can pay you almost nothing?

      I think "civil society" dictates certain minimums of safety and reasonable pay - which allows a certain level of safety in survival AND has been proven IF people are payed too low an income we allow businesses to employ people and have those people supported by the state and federal government through other programs as we see with low paid workers at Walmart and such.

    • Comment Link Adam Goul Wednesday, 01 May 2013 18:35 posted by Adam Goul

      The laws of physics are deterministic, people are not.

    • Comment Link igormelios Sunday, 28 April 2013 18:10 posted by igormelios

      An interesting statement was made that 19 states have minimum wages above the federal minimum wage which provides one of the few hopes for measuring long term effects.

      The context of the debate was the FEDERAL minimum wage. If the Federal minimum wage were abolished, there would be a wide variety of State minimum wages in place or enacted. Many higher, many lower, some not at all. After a period of time there would be enough comparative data for states to compare with neighbors and make better judgement on the right wage policy in their state. If the goal is figuring out, over the long term, if a particular wage policy helped low wage workers wouldn't you want this data to be collected and this policy experiment to be tried at a smaller scale than at the Federal level?

    • Comment Link Brian Thursday, 25 April 2013 18:17 posted by Brian

      At what point is a fair wage, as you describe it, controlled by functions outside of the worker's control? Things like owner's/shareholder's wages, market stability, and product cost interference from a slave wage using competitor. Low skill workers will not have the opportunity to excell on a consistent basis. This has been demonstrated with our current rate of upward mobility which is far below other developed nations.

      History has shown that as long as there is an excess of workers, wages will drop. At the turn of the last century demonstrated this so well, that policies such as minimum wage, OSHA, and social security were all put in place to protect labor from their employers.

      I need to be shown that more jobs will equal an increase in the standard of living before I can support this measure.

    • Comment Link Mike R Wednesday, 24 April 2013 20:13 posted by Mike R

      We might agree on what should be a livable, dignified wage, but a *fair* wage is one consistent with the value a worker contributes to his/her employer. If wages are artificially increased the point where the cost of a job exceeds the economic value an employer derives, it makes no sense for that employer to preserve that job or create it in the first place. The MW kills low-skill jobs and, perversely, it is unfair to the most vulnerable workers -- businesses will survive without them. The MW limits opportunities for first-time workers, very low-skill people, and even folks who just want a lightweight or fun job that won't exist at MW.

      Helping to ensure a dignified living wage for all working people is a noble goal, but the MW is simply the wrong approach because it causes catastrophic harm to some of the very people it's intended to help. It's much better to ensure that all folks who want to work have opportunities to do so, then to help working poor families with programs such as EITC to supplement incomes.

    • Comment Link Brian Wednesday, 24 April 2013 12:32 posted by Brian

      Something that I did not see in this debate was the effects upon standard of living for the society. The reason this law came about in the first place was because of the use of the poor and unskilled workers which drove downward general wages but employers.


      If the wages are lower with the redaction of minimum wages but employment rates are higher, will this cause a significant drop in cost of living that would allow a larger percentage of people to enjoy a higher standard? Will this create a more stable economy that will put less stress on the working classes and thereby increase productivity? Or will we have an ever increasing number of businesses that use the Walmart Method of paying low wages and then relying upon government safety nets to allow their employees to survive?

      Do the supporters of of this idea, to remove the minimum wage, also see the development of unions to be a free market solution to wages; or will they percieve them as a threat to the negotiating power of business versus worker?

    • Comment Link stuart Monday, 22 April 2013 11:52 posted by stuart

      The argument made by the abolish advocates is that some employees are not worth 7.25 an hour. I find that offensive. The minimum wage is a statement, by a self respecting society, that no employee, no matter how 'unskilled' is worth a minimum amount. There are no jobs in this country worth say, $4.50 an hour. I cannot think of a job or task whatsoever in this country where a worker should make less than the current minimum, and even that is far too low.

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