It is impossible to rent a modest apartment working 40 hours a week while earning the federal minimum wage in every state while still paying less than 30% of one’s income. The federal minimum wage does not cover the minimum living expenses. In other words, it is not a minimum wage. While many states, counties, and cities have raised their minimum wages to more livable levels, most still do not provide enough money to cover the cost of living while working a reasonable amount of hours. It is time for the federal government to not only raise the minimum wage to a living wage, but tie it to inflation so that it can no longer be debated whether or not people who work dozens of hours per week should be forced into poverty.
There is little evidence that increasing the minimum wage causes any substantial decrease in overall employment. Contrary to what free market purists say, the minimum wage does not cause large increases in unemployment. The vast majority of studies find that raising the minimum wage has zero or negligible effects on unemployment. One study of the minimum wage along the Pennsylvania-New Jersey border found that when New Jersey raised its minimum wage, there was no decrease in employment in the food service industry in New Jersey compared to Pennsylvania. The minimum wage was relatively at its highest in the 1960s, a time when unemployment was low and economic growth high. If the minimum wage was suddenly raised by 500%, would employers likely fire workers? Yes. But is that being proposed? No. While employers of course respond to production costs, and may cut some workers in response or pass along some of this increased cost to the consumer, raising the minimum wage gradually won’t cause monumental shifts in these industries. If the minimum wage was raised slowly and gradually, and was then increased based on inflation year by year, it’s extremely unlikely it would cause large spikes in unemployment.
Increasing the minimum wage to a livable one would allow much of the working poor to earn enough money to not be dependent on government benefits. Raising the minimum wage less than $3.00 from the current federal level would yield the government 7.6 billion dollars a year due to decreased benefit payments. Much of this decrease would come from 4.6 billion dollars less paid in food stamps, by reducing the number of people on food stamps by more than 9%. This essentially shifts the burden of benefits from the government to employers. Minimum wage increases also benefits states with decreased Medicaid expenditures. When the minimum wage is low governments are forced to compensate with government benefits, but when the minimum wage is high, workers become more self sufficient.
Raising the minimum wage betters the overall economy by giving the lowest earners more buying power and forcing overall wages up. When high income workers receive a raise they tend to save their money or spend it on luxury goods that are easier produce abroad; however, when low income workers spend money inject it directly back into the economy by purchasing things like vehicles and restaurant visits. This actually benefits businesses who now have a whole new base of buyers who were previously unable to buy the products they themselves were producing. The minimum wage also forces non-minimum wages up. It has been found that the minimum wage produces a so called ripple effect on the overall wage market, pushing up the wages of more than a quarter of the American workforce. This again creates economic growth by increasing demand for goods and services. An increase in the minimum wage doesn’t just benefit minimum wage workers, but the entire country through a larger, more stable economy
The United States is one of the richest countries on Earth; it is simply unfathomable that we don’t pay all of our workers enough to live on. By raising the minimum wage to a living wage, the United States will not only improve the lives of workers and the economy, but reduce income inequality and bring the nation closer to a fair and just economy. It’s time for the United States to guarantee a livable wage. The amount of increase and speed at which it should be increased can be debated, but it is just not acceptable for companies to not pay their workers a living wage.
Liberal Talking Head 