Tuesday, February 26, 2013

Is the Proposed Minimum Wage Increase Good or Bad?


During the Presidents State of the Union address, he spoke about raising the minimum wage to $9.00 an hour. Specifically he said “No one who works full time, should have to live in poverty.” When its put like that, its pretty hard to disagree with, how could anyone disagree with that? Well, those people are called Republicans. When it comes to proposing an increase to the minimum wage, their trepidations aren’t exactly unfounded and wrong. There are legitimate reasons why an increase to the minimum wage, especially in this economy, is a bad idea. 

Obama's State Of The Union 2013
First lets be clear, a minimum wage of $9.00 an hour still represents minimum wage workers being behind and living in poverty anyway. The minimum wage right now is in no way commensurate with the current cost of living. No matter how you calculate it, if the minimum wage had kept pace with the average cost of living, it might have been close to $10.50 today. If it had kept pace with the productivity of the market place, it just might have been more than $18.50 an hour today. Union members in skilled professions make that much these days, and they get attacked as gluttonous. So why is it not possible in this country to have a wage that would allow everyone to be prosperous? The simple and unfortunate answer is that we, simply can’t afford it anymore. Maybe at one time we did? This country used to be a financial dynamo that could compensate its employees fairly and proportionate, if not better than the cost of living. Those days are sadly gone.

Now, you may think that “well if the executives in the big companies, didn’t make so much money, they could pay their people more?”. This might be true, but one of the biggest employers in this country, is the federal government. There are around 2.5 million federal government workers in this country. That doesn’t include state governments that employ millions of more people. Also those numbers exclude the government workers that are unionized such as police, fire, sanitation, postal, etc. that would expect a raise if the minimum wage was to go up. Now expecting workers to be get more money in a booming economy is one thing, but this a very turbulent time in American history. Sure the market may reflect some sort of growth and prosperity, but that increase is certainly artificial, and could topple at any moment. So the real answer is that this country can’t afford an increase to the minimum wage right now. Can the private sector afford the increase? 

The short answer is no. When people think of the minimum wage or an increase to the minimum wage, they think of the big box stores. Stores such as Wal-Mart, Best Buy, Costco, Target, etc, the emblematic stores that employ people from ages 16 to 96. Now it maybe true that people who earn the minimum wage come from stores such as this, and these corporations can certainly spare the money to pay their workers a fair minimum wage, but what about the small businesses? What about the small business that has just over 100 employees and quite recently just got saddled with a whole new series of tax increases this year along with a federal requirement to provide its employees health insurance? Not only now are they being taxed, more than they ever have before but now they are going to be forced to pay their 100 workers almost $2.00 more an hour. In this economy were every cent counts, its impossible to expect small business owners to shoulder that new burden. 

I certainly think that we should pay our workers a fair wage that allows them to compete with all of the rising costs in the market today. It is horrible to think that in the “most powerful country in the world” nearly 22 percent of American children live in poverty. That 16.4 million children are living in a household that makes under $20,000 a year. Its disgusting to think that we live in a country that thinks a person who make $20,001 a year isn’t living in poverty and instead, is living the good life. What I mean is that, yes some people might be better off than others but can we agree that the person making $22,000 a year and the person making $20,000 a year aren’t exactly that far apart on the poverty scale? With that being a consideration there could be more than 22% of our countries children living in poverty. 

Contrary to what Republicans say about raising the minimum wage, its not just a raise for teenagers, who are working part-time for alcohol, video games, drugs, and junk food, as some members of the house of representatives like to claim. Only 15.9 percent of people who “benefit” from a minimum wage increase to $9.00 are under 20 years old, while 84.1 percent are 25 and older. The bottom line is that the minimum wage going to $9.00 an hour from what it currently is will only barely scrape the surface on what needs to be done to get people out of poverty in this country.

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