The "living wage" debate has been discussed at length on Grounds and beyond over the past few years, and has often proven to be a polarizing issue. As this topic is argued, the federal minimum wage has remained unchanged for 10 years. Does it not make sense to first discuss the merits of a minimum wage increase?
The initial purpose of a federal minimum wage, first enacted in 1938, was to lift the earnings of low-wage workers by preventing market forces from driving down wages of the least-skilled and least-educated workers in a race to the bottom. The government desired to put a firm ground under workers and their families and strengthen a depressed economy by increasing consumer purchasing power.The current federal minimum wage is $5.15. Since September of 1997, the purchasing power of minimum wage has deteriorated by 20 percent, and after adjusting for inflation, the value of minimum wage it is at its lowest since 1955.
Most Americans readily agree that working a steady job should keep a person out of poverty, but this is clearly not true. Currently, someone earning minimum wage while supporting two children would have combined earnings and tax credits which would leave the family at 11 percent below the poverty level. Even a couple with two children would have to work 3.3 full time jobs in order to provide well for their family.
The current minimum wage has undoubtedly failed to keep pace with inflation and the increasing cost of living. Should Congress agree to raise the minimum wage, it is likely that a ripple effect will lead to an increase in other wages as well. An additional 6.6 percent of the workforce would profit from this, approximately. Increased wages would stimulate spending and put money back into local economies.
Higher minimum wages would also alleviate discrimination against women and minorities, because they currently hold a disproportionate number of minimum wage jobs. A stagnant minimum-wage has allowed an increasing gap between rich and poor, causing the middle class to dwindle. Even as early as 2000, the average CEO made as much as 1,223 minimum wage workers combined. If minimum wage had increased even at the same rate as the average CEO's salary, it would currently be $22.08. An increase would help bridge this gap and support a rejuvenated middle class.
Some people argue against the economics of raising minimum wage. One common belief is that an increase would cost low-wage workers their jobs, since employers would not be able to afford as many workers at a higher salary. Many studies have been done following the most recent wage increases that have found no substantial evidence proving that this is true. Some economists theorize that this is due to the fact that employers are free to set their own wages because they are assured that workers will face more substantial costs while unemployed. Also, it is believed that higher pay leads to lower turnover, which in turn provides more experienced workers, higher productivity and lower recruiting and training costs.
The truth is, there is no evidence that companies systematically lay off workers as a result of a minimum wage increase. Similarly, critics claim that an increase will hurt small businesses. On the contrary, the number of businesses with less than 50 employees rose twice as quickly in states with minimum wages higher than the one set by the federal government.
Another frequent argument is that most of the benefits would go to teenagers and families with relatively high income levels. This is simply not true; the average minimum wage worker brings home more than half of his or her family's weekly earnings, and 36 percent depend exclusively on them. In fact, 39 percent of the benefits generated would go to the poorest 20 percent of the population.
Minimum wage has not only remained stationary at a frighteningly low level, but also has come close to destruction. Since the year 2000, George W. Bush has endorsed the decision to raise minimum wage by one dollar, but only if states are given the choice to opt out of the increase. This effectively repeals the federal minimum wage entirely, a dangerous idea since several states currently have no minimum wage laws at all. After ten years, an increase in minimum wage is far overdue. This increase would allow minimum wage to serve its original purpose: to enhance the earnings of unskilled workers and boost the economy by increasing spending power.
Most importantly, it is time for working Americans to earn enough money to live above the poverty level and support themselves and their families.
Arin Smith is a third year in the College.
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