Should Minimum Wage be Raised?

Written By: Ben Schmidt 

In politics today, wage and the placement of minimum wage is a heated discussion. As inflation lowers the purchasing power of money, it is important that wages also shift to make sure that people remain with the same amount of purchasing power. Obviously, it would be very hard for the government to raise everyone's wage but they can at least control the minimum wage of the country, which 1.1 million workers work at (or below).

In the graph below, minimum wage, which is adjusted for inflation, is compared from 1964 to 2013. This graph shows how wage is increased and slowly loses it’s same purchasing power (peaks and the descending line that follows) as well as how much money it allows people to gain per year when compared to the poverty line. Though the orange line does represent the wage of one person over the course of the year, it is important to also consider how the poverty line is calculated. The line is purely based on the cost of the minimum amount of food needed for a family. This means that the purple line represents the amount of money needed, in a year, in order to buy enough food to live. This means that the poverty line does not look at extra costs of living, like a home, be it rent or repaying off a mortgage, or healthcare and health insurance. So while someone can survive at the poverty line, they are not living. It is also important to at least briefly consider other circumstances, like a single mother or father, where they would be working below the poverty line for a family of two. All in all, minimum wage is not a livable wage, it is only enough to survive. But, there are people against raising the minimum wage.

The people-against-minimum-wage’s first argument is that if the minimum wage were to increase, the businesses would start to lay off workers because their profit margins would lessen. It is important to understand that this concept isn’t wrong. If the amount of money that it takes to produce something is too high, firms will try to minimize these extra production costs. The issue with these concepts is that there are other inflation-esque properties that are functioning at the same time that are also reducing the money it takes to produce products. You can see it at the grocery store, where companies are reducing the size of their products—like the size of cereal boxes—but selling these products at the same price, this concept is called shrinkflation. Similarly, some companies are reducing the quality of their product in order to keep that product at the same price, this is called skimpflation (in a sense, it seems to be the inverse—of inflation—change in a company’s product to keep prices the same but it is really just following inflation). Connecting this back to laying off workers, if the minimum wage did raise, the amount of money needed to make a product would rise but because of the lowering of quality and quantity of their product, this raise would have minimal effect.

Overall, while companies may push back against a raise in minimum wage, it is important to consider the worker because a change in minimum wage would be able to increase the quality of a person’s life. And in a more cynical sense, a more healthy worker means a better, and more efficient worker, so, in the end, it is important that minimum wage increases to meet the inflating economy and lowering purchasing power of a person’s wage.

Works Cited

“Pros & Cons - ProCon.org.” Minimum Wage, 26 Jan. 2022, minimum-wage.procon.org/.

“Raise the Wage.” National Archives and Records Administration, National Archives and Records Administration, obamawhitehouse.archives.gov/raise-the-wage.