Minimum Wage: Up it or Leave it

money-found-1428300-mIn recent times one of the biggest headliners is how President Obama had increased the minimum wage of federal contract workers to $10.10. This, however, isn’t where he wants to stop: he is out to increase the public minimum wage to the same amount, so that everyone making under $10.10 an hour will see an increase in their pay checks. This has sparked debates between many types of people, from politicians to the average person. The current minimum wage is $7.25, which is on the lower side, and people who work 40 hours a week for this amount are barely able to support themselves, much less their family. For example here in Hawai’i minimum wage workers currently earn $15,080 annually working 40 hours a week for 52 weeks. A person with one child earning $15,080 is $2,770 below the Hawaii poverty level in 2013. The increase in minimum wage would be very helpful to these people, as they would be able to live a bit more comfortably. Living more comfortably means more spending, which leads to an overall healthier economy. The increase of the public minimum wage would give a boost to the economy that we need.

Most republicans argue that the proposed minimum wage hike will bring nothing but harm to job holders and small businesses, which will then harm the economy because small businesses would no longer be able to support as many workers. The Congressional Budget Office claims that 500,000 jobs will be lost due to the increase of the minimum wage. This is a big number, and people who are working for small businesses will of course start to worry a little. However, people won’t necessarily lose their jobs with the increased minimum wage. The linked article is an aggregation of multiple studies on how the minimum wage affects jobs. One of the more recent studies posted on that page found that the low wage job market has been increasing in size. These low wage jobs aren’t coming from small businesses, but bigger ones, like Walmart and McDonalds, who can afford to hand off millions of dollars to their executives in the form of compensation packages. This money could instead be used to pay their lower leveled workers’ wages closer to living wage, which is the amount needed to sustain a person’s basic needs like shelter and nutrition, rather than minimum wage.

With the hike about 900,000 people currently in poverty will be lifted above the poverty line and will be able to have a more comfortable life as well as having some spending money. The increase will also raise the income of about 16.5 million people, not limited to only minimum wage workers. In fact, this increase would increase the net income for most income groups, especially those who are below the poverty line. The only people who would see a decrease in their earnings are those who are already making a large amount of money.

The claim that small business owners will suffer and therefore will have to reduce the amount of employees they have is also quite wrong. When some small businesses were polled about the change, more than half of them say they support the minimum wage hike. This same poll also found that the majority of the polled businesses already pay their workers above minimum wage. In Connecticut, the first state to mandate the $10.10 minimum wage, small business owners aren’t really panicking very much. In fact, some of these small businesses already pay their workers over $10 an hour. While some say things will be a little tight, they still believe that the increase is a good thing. Sure they might have to increase their prices, but if people have more money, they’ll go out and spend more money, which is how a healthy economy should be.

When Robert Reich recommended that the minimum wage should be increased back in 1996, most Republicans claimed the exact same thing: that jobs would be in danger. However, they were wrong, as the amount of jobs created skyrocketed in the next few years. While this is probably the biggest increase in minimum wage in its history, it may very well follow the same path as previous increases. In fact, the Economic Policy Institute, in 2012, found that the increase of minimum wage creates jobs, rather than kill them off.

When people have more money, they are willing to spend it on more things. Ben Cohen, one of the co-founders of Ben & Jerry’s ice cream, makes a great analogy in the support of raising the minimum wage and its effect on the economy: “There is only so much Chunky Monkey one rich guy can eat. For Ben & Jerry’s to succeed, we need more than one ice cream buying rich guy, raise the minimum wage and everyone can have a scoop.” The rich are a small group of people, they can only consume as much as their small group can handle. However, the working class and those who are barely making ends meet are an enormous group. If more money were put into their hands, businesses would see them as a far greater asset than the small group of people holding all the money, as the consumers are where the profits lie.

Consumer demand is the most important thing when it comes to creating a stable and healthy economy. Making it so those consumers have money in their hands to spend artificially increases the demand, this in turn can create more jobs. Even larger companies such as Walmart feel that the increase will put more money into their customers’ hands. From this perspective, there is nothing to lose when it comes to increasing the minimum wage, especially for the big business owners.

So what should be done? Do we keep the minimum wage where it’s at right now? Do we leave 900,000 people struggling to support their families, or even just themselves? No, I don’t think this is what we should do. Even in the worst case scenario where many people will end up losing their jobs, the benefits far outweigh the cost. This cost doesn’t actually mean much as well, if the trend of job creation follows its predicted increase, those people can get right back in with a higher salary floor than before. So why are we still waiting? What’s holding us back from improving the lives of the working class? The minimum wage hike is something that should be enacted, and the sooner it happens, the faster we can move towards a better economic future.

Advertisements

One Comment to “Minimum Wage: Up it or Leave it”

  1. I’m in full support of increasing the minimum wage. Especially here in Hawaii, where the cost of living is exceptionally higher than the mainland, $7.25 an hour is not enough to make ends meet. It’s great to read that small business are not suffering from the increased wages in Connecticut, this should serve as a catalyst for other states to follow suit! It’s really important for money to be made and spent in the economy, as you mentioned. If wages are raised, there’ll be more money in the hands of consumers, so businesses (big and small) should expect more sales. Citizens cannot spend money if they are not making enough to meet their essential needs first.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: