Dylan Powers
The minimum wage is designed to be the minimum amount an individual would need to survive in the American economy. Hence the name, “minimum” wage. Some people feel that it should be able to support a family. However, according to the Legal Information Institute of Cornell Law School, “The minimum wage was designed to create a minimum standard of living to protect the health and well-being of employees.” Later, it presents an alternate purpose. Neither listed purpose mentions families or dependents. If you have a dependent, not only do you get a tax cut, but there are programs meant to help low-income families. For example, the Dependent Care Assistance Program and the Dependent Care FSA (Flexible Spending Account). Even given this, the current minimum wage is far too low for the cost of living in almost all areas. There is legislation that will raise the minimum wage, however this raise is far too dramatic and will hurt the economy overall. There is a middle ground where we can raise the minimum wage without hurting the economy.
All past minimum wage increases have been nominal and gradual. From 1990 to 2009, the minimum wage was increased by $3.45/hr. That is approximately $0.18 per year. If the minimum wage were to be increased from $7.25/hr to $15/hr by 2024, assuming nothing would happen until the start of 2020, the annual average increase would be about $1.94 every year. That is a 1078% larger increase every year than the increases between 1990 and 2009. Plus, there hasn’t been an increase in the minimum wage for 10 years, therefore the market is not used to regular minimum wage increases. Between the drastic increases and the surprise effect on the market, an increase to $15/hr by 2024 would have an overall negative effect on the economy. Furthermore, as you can see below, adjusted for inflation, the minimum wage has actually been decreasing overtime.
Therefore, a more middle-of-the-road approach is required. The definition of the minimum wage is to provide the minimum that one person needs to maintain a normal standard of living. The definition of a living wage is a wage that is high enough to maintain a normal standard of living. So why are they not one in the same? Who knows, but they should be. There should be legislation that ties the minimum wage to the living wage of the area. It is important to ensure that it is tied to the living wage of the immediate area because the cost of living in California is much higher than in Wisconsin. If this legislation were to be introduced, the minimum wage in Wisconsin would be raised to about $11.50 on average; and in California it would be raised from $11 to about $15 (Living Wage Calculator, MIT).
Some would argue that in high cost of living areas, the minimum wage would have to be raised to $15 anyway, so why not raise it to that across the board. The first part of their argument is correct, however they do not consider an important fact. The minimum wage of high cost of living areas has already been raised above the federal minimum wage in order to attempt to combat the low income problem. In California, the minimum wage would only be raised $4/hr. This is true for moderate cost of living areas as well. As seen above, Wisconsin’s minimum wage would only be raised about $4 on average. Others argue that raising the minimum wage would cause massive job loss. Not only does history show that there is very little significant job loss after a minimum wage increase, recent studies conclude similar truths. The Congressional Budget Office (CBO), a nonpartisan governmental organization, conducted a study researching the job loss effects of minimum wage increases. They found that raising the minimum wage to $15/hr would cause 1.3 millions jobs to be lost, a significant number. However, “A $12 minimum wage, for example, would lead to median job losses of 300,000. A $10 hourly minimum could trigger about 100,000.” This shows an exponential decrease. This study was conducted assuming a flat increase of the minimum wage across the country, which is far inferior to the legislation proposed above. Not only that but the Washington Center for Equitable Growth claim that the CBO used, “flawed theoretical foundations and outdated research”. Even if the worst case scenario came about and 300,000 jobs were lost, that isn’t actually all that bad. Losing 300,000 jobs would result in a 0.1% more unemployment. Overall, this does not hurt the economy because full employment is about 4%-6% and the current unemployment rate is 3.5%.
Works Cited
Campbell, Alexia Fernández. “A $15 Minimum Wage Could Lift 1.3 Million out of Poverty - and Cost 1.3 Million Jobs.” Vox, Vox, 8 July 2019, www.vox.com/2019/7/8/20686392/federal-15-minimum-wage-raise-the-wage-act.
“Dependent Care Assistance Program.” ConnectYourCare, 27 Sept. 2019, www.connectyourcare.com/dcap-dependent-care-assistance-program/.
“Dependent Care FSA.” FSAFEDS, www.fsafeds.com/explore/dcfsa.
“History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938 - 2009.” U.S. Department of Labor, www.dol.gov/agencies/whd/minimum-wage/history/chart.
“Living Wage Calculator.” Living Wage Calculator, livingwage.mit.edu/.
“Minimum Wage.” Legal Information Institute, Legal Information Institute, www.law.cornell.edu/wex/minimum_wage.
“Research Shows: Raising the Minimum Wage Does Not Spell Job Loss.” Equitable Growth, 10 July 2019, equitablegrowth.org/research-shows-raising-the-minimum-wage-does-not-spell-job-loss/.
Zipperer, Ben. “Gradually Raising the Minimum Wage to $15 Would Be Good for Workers, Good for Businesses, and Good for the Economy: Testimony before the U.S. House of Representatives Committee on Education and Labor.” Economic Policy Institute, www.epi.org/publication/minimum-wage-testimony-feb-2019/.
I liked that you talked about a topic that is so controversial. It is important to know both the benefits, and the drawbacks of raising the minimum wage. I like that you focused primarily on the benefits, like creating a minimum wage that is also a living wage for people whose jobs only provide them minimum wage, even though they might have to be providing for a family all on their own.
ReplyDeleteThis topic is something that a lot of people are talking about these days, so I really appreciate how you actually have a stance on how to increase it, and the fact that we as a country should. So many adults say that minimum wage isn't supposed to be livable off of, but if that definition is going to change according to what these officials keeps saying, then the wage needs to increase. Definitely not at a rapid pace, but something that will work for the growing economy and allow families to live with these minimum wage jobs that are sneered at by boomers.
ReplyDeleteI found it very interesting that the minimum wage is the minimum amount a person would be able to survive on as I thought it was always just a term used to describe how small the wage actually is. Personally, I believe the minimum wage should be higher also, because some families require a higher pay based on the area they live in.
ReplyDeleteI like how you mentioned the fact that it does not state the minimum wage is designed to support families. If you are working for minimum wage, you are typically someone who is either in high school, or does not have a degree. One of which is by choice. There are many jobs that pay higher than minimum wage, and if you are someone who has children and are supporting a family, minimum wage won't cut it, there fore you should and could find a different job.
ReplyDeleteYour argument shows both sides of the argument and then presents a reasonable and logical solution to this problem that satisfies both sides of the argument. Your unbiased path by only following what the facts showed was probably difficult and makes this blog really good to read. You showed that an increase in minimum wage means you would loose jobs as the amount demanded decreases and the dead weight loss increases meaning that we loose more money but also showed that accounting for inflation the amount payed is decreasing so the dead weight loss accounting inflation is decreasing and that is why few jobs will be lost. Keep up the good work.
ReplyDeleteAgastya Asthana,
ReplyDeleteThe minimum wage is a hot issue and to many people it is as simple as raising the minimum wage. The problem with raising the minimum wage is that the price of all products is related to that wage so if the minimum wage increases, so does the price of all other goods that people. The only way to satisfy peoples need is that there is a higher % change in the minimum wage but only a little amount of % change in the price of all other goods would be really nice to have. You did a great job with your blog post and hit all the points that needed to be covered as well as convincing explanations.
I completely agree The minimum wage should definitely be raised. Getting paid 7.25 an hour is not gonna cut it living basically anywhere in the United States stated by Ian, I Think the government should change the wages now rather than waiting another 4 years until 2024. But then again what effects does that have on the company or your employer 8 dollars more might not seem like a lot but over time that builds up for the company having to pay you more money.
ReplyDeleteWow! Your argument is very well thought out and is also very logical. People often miss the idea that minimum is not meant to be a living wage for a family. I would even go as far to say that those who choose to work a minimum wage job, knowing they won't be able to support their family, are immature. Also, the point that you made about how damaging doubling our minimum wage could be is very strong and your use of logic and statistics was coherent and made sense the whole way through. You have great reasoning and explanation in this writing and your clear ideas made this post all the more convincing. Great job!
ReplyDeleteI like the thorough analysis of the true impact of minimum wage increase in this post. Normally the argument is generally "it's fine where it is" because of the threat of potential job loss for millions, however, just ticking it up a little, or in this case, to $10-13, would only slightly increase the general unemployment rate in the United States as a whole. Greatly informative.
ReplyDelete