Solvency – Economy

Center for American Progress 18 (independent, nonpartisan public policy research organization), “Blueprint for the 21st Century; A Plan for Better Jobs and Stronger Communities,” 05/14/2018, https://www.americanprogress.org/article/blueprint-21st-century/#:~:text=The%20Blueprint%20for%20the%2021st%20Century%2C%20or%20Jobs%20Blueprint%2C%20proposes,of%20bargaining%20power%20of%20those

Raising the minimum wage can also help boost the economy. There is increasing evidence that the U.S. labor market does not actually reflect the textbook case of a perfectly competitive market, where wages are set by the market so that employees are paid wages that closely mirror their productivity.260 Instead, firms have market power and can, to some extent, determine the wage they will pay instead of taking wage levels determined by the market—also known as labor market monopsony. Under monopsony, firms can choose to keep wages artificially lower than they would be in a competitive market. This keeps employment and output lower than it would be if employers lacked market power but allows for higher firm profits due to paying lower wages. When monopsony exists in labor markets, wage increases—whether caused by raising the minimum wage, reductions of barriers to entry for firms, limiting noncompete agreements, or collective bargaining—can actually serve to boost employment and output.