Maximum divide on minimum wage: studies abound on the minimum wage, but the conclusions drawn vary greatly.

• Author: Mejeur, Jeanne
• Position: WORKFORCE - Cover story

To paraphrase an old joke, if there were only two economists left in the world, they would disagree about the minimum wage. Does it cost jobs or create jobs? It's a valid question, but the answer depends on who you ask.

Opponents of minimum wages contend that increased labor costs force businesses to cut staff, costing jobs. That sounds reasonable. Proponents of minimum wages argue that giving workers more disposable income puts money back into the economy, which in turn creates jobs. That makes sense, too.

So what's the answer?

Studies abound on the minimum wage. Some make common sense arguments while others use enough fancy math to dazzle any economist. Most studies are published by interest groups that either support or oppose a minimum wage, or from authors connected to such interest groups. If you read enough of these studies, you'll likely come to the realization that, almost without exception, they are trying to persuade you more than inform you.

The Pro Arguments

Commonly used arguments supporting increases to the minimum wage follow.

1. Increases put more money into the pockets of low-income workers. According to a 2013 Congressional Research Service report, a single parent with two children who works full time at the current minimum wage would be earning around $15,000 and living at 76 percent of the federal poverty level. If the federal minimum wage was raised from the current $7.25 to $9.00 an hour, the same family would be at 94 percent of the poverty line.

2. Minimum wage increases shrink the gap between low-wage and higher-paid workers, lessening income inequality, both within individual businesses and in the larger economy. 3. Minimum wage increases put more money into the economy since low-income workers are more likely to spend their higher wages than are their higher paid counterparts, who are more likely to save them. This increased demand for goods and services tends to stimulate the economy which, in turn, leads to job creation.

4. Higher minimum wages reduce turnover among low-wage workers. Lower turnover rates are a net positive for businesses, since high turnover increases training costs and results in lower productivity.

   The Con Arguments

   Following are the most commonly cited arguments against minimum wage increases.

1. It results in job losses. Labor costs are the largest share of the budget for many businesses. Mandatory increases in hourly wages mean that businesses will be forced to cut jobs or reduce hours to maintain their bottom line. That could mean no income or reduced income for low-wage workers.

2. There are better ways to address poverty, such as income tax credits for low-income workers or tax policies that encourage asset development and savings for low-income families.

3. Increased labor costs will be passed on to consumers through increased prices. Higher prices lead to decreased demand, which can have a depressive effect on the economy.

4. Increased labor costs result in lower profits for businesses. Lower profits mean that businesses have less money to put back into their...