I’m not really one for arguing politics, which means making my first blog post on such a divisive issue kind of a strange choice. First off, some clarification. I don’t identify as a Democrat, Republican, Libertarian, Socialist, Communist, Anarchist, Neo-Nazi or any of the labels people attribute to themselves and others. I hold a variety of views, liberal and conservative. The title of this article is directed towards conservatives, many of whom I have great respect for, but in many cases have been in opposition to a wage increase.
What interests me about this issue is that as bipartisan as it has been made, raising the minimum wage actually doesn’t have to be such a difficult decision. If everyone takes a step back and looks at the issue through a thoughtful lens - I think most if not all will agree that raising the minimum wage simply makes sense. And let’s face it - America’s parties desperately need some common ground.
My encouragement to you with this blog post is to take the claims you hear from your favorite and least favorite politicians, the late-night talk hosts, your parents, your girlfriend, and even me (!) and actually look at the claims they make. We should arm ourselves with information and truth. Not for the purpose of yelling at people or telling them that they’re wrong, but so we can look at our lives and choices and say: “I took ownership of them”.
Note that I’m not an economist - I’m not bringing anything particularly new to this debate. Instead, this article will aggregate arguments that I think many against raising the minimum wage are unaware of. I’m going to break down some of the claims being made on both sides of the issue and then present what I think are the strongest arguments to be made for a minimum wage increase.
Have you ever taken a step back and look at something common and established in your life and thought - hang on, there was a time without that! Lots of people point to recent technological changes, but there is so much progress and development happening beyond them. Did you know that the whiteboard wasn’t invented until the late 1950s? Even then, it wasn’t generally accepted until the 1970s when the dry erase marker was invented. Think about it - such a simple, commonplace item, completely missing from your life. Laws are like that too. They all have beginnings, and you’d be surprised how recent some commonplace legislation is.
Believe it or not, federal minimum wage laws didn’t come to effect in the United States until 1938. The minimum earnings for Americans were originally set at 25 cents an hour - only $4.24 in today’s money. In spite of that, the laws were revolutionary at the time, and just like every other groundbreaking law, it was challenged in the Supreme Court. The Court ruled that Congress could regulate employment conditions, and employers gradually made their peace with, what was in many cases, a sizable increase. The law was effective in guarding against oppressive employment practices in which women, children, and minorities were unfairly compensated for their labor and could hardly pay to survive.
Since then, the federally-mandated minimum wage has been adjusted many times. Its modern-day purchasing power remained at around $4 until 1950 when it spiked significantly to over $7. It reached its height in 1968, at $10.91 (the same as $1.60 back then). The longest stretch of unchanged wage was $5.15 established in 1996, which prevailed until 2007 when President Bush signed into law the current $7.25 wage that we know today. So as you can see, minimum wage changes are not uncommon, and it’s been far higher than it currently is today. Yet our minimum wage hasn’t been adjusted for inflation in quite a while. Based on historical change, we are, at the very least, due for an inflationary upgrade.
Instead of focusing on the arguments for a minimum wage increase, I’m going to rely on specific claims made by conservatives in opposition to it to guide me through this issue. Here they are:
This is possibly the most heavily debated among the claims for and against the minimum wage. But let’s just cut to the chase - based on historical data and the research of very, very smart people (600 economists - plus 7 Nobel Prize winners) raising the minimum wage has no discernible effect on employment. The paper suggests that reduction in
- Job turnover
- Wages of high-earners
and increases in
- Organizational efficiency
- Price (small ones)
are sufficient to combat employment losses, even for companies with lots of low-wage workers. Frankly, the details and mechanisms of this conclusion may be complicated, but the logic of the argument checks out nicely.
There are some very wealthy people in executive positions at these businesses that have to make a choice in the event of a minimum wage increase. Either they watch their businesses shrink as they lay off employees, or they take (relatively small) cuts in their salaries and continue to invest in their business’s growth. Not only that but money in the economy never just disappears. It is redistributed - in this case to those with less wealth. Now I know this idea in general is distasteful to many conservatives, but there are a few things that would guard against a “Robin Hood” scenario.
First, it’s pretty clear that raising the minimum wage would increase overall spending, possibly offsetting all losses in company finances. Americans are awful at saving.
The average American puts less than 5% of his or her disposable income toward savings
That’s insane. That means this redistributed money doesn’t get tucked inside pillows or stashed in a bank. It gets used. This leads to growth for businesses. After all, Bill Gates only buys one smartphone, but his money in the hands of the general population buys millions more.
Second, an increase in wages for the impoverished would decrease our country’s current reliance on welfare, which would ultimately mean less aggressive taxing across the board.
This is a likely scenario, but not one to be afraid of. A commonly-cited 2004 review found that since employment and profits are not significantly affected by minimum wage increases, higher prices must result to compensate for lower profits. It was found that
a 10 percent increase in the U.S. minimum wage raises food prices by up to 4 percent.
Basic mathematics reign supreme here, however. A 10% increase in wage results in a significantly larger change to wages than to food (wages are larger than food prices)! That’s on top of the fact that 10% > 4%. Therefore, even with price increases, consumer purchasing power is significantly increased by raising the minimum wage.
Some suggest no
…the analysis demonstrates that an increase in the national minimum wage produces a value-added tax effect on consumer prices that is more regressive than a typical state sales tax and allocates benefits as higher earnings nearly evenly across the income distribution.
Others say yes
Overall, there is robust evidence that minimum wage increases lead to moderate increases in incomes at the lower tail of the family income distribution.
It seems that the consensus in research is, at the very least, that a minimum wage hike is not harmful to the impoverished: at worst, it has no effect. On the other hand, there is quite a bit of research that suggests a wage increase would help the impoverished significantly. According to Dube, previously cited, increasing the minimum wage to $10.10 is projected to bring 4.6 million people out of poverty. Other studies, even one done by minimum-wage increase opponent David Neukmark, suggest the same as Dube.
Some argue that employers become less and less interested in paying for training with minimum wage increases. Since the same jobs pay more, they claim, people with more education are more willing to take work that would traditionally be considered reserved for those with low income. A $15 an hour job at McDonald’s could seem great to someone straight out of high school. Those skills that a high school educated individual possesses could give them an advantage in job hunting, pushing out those who failed to graduate and may not already have some of the skills they need to perform a job.
This claim is ignorant of a few realities - as we’ve already established, the minimum wage doesn’t effect unemployment rates at all, so the same jobs that people were taking before are still available to them. A high school graduate may choose to work at McDonald’s, but that’s not for lack of other options.
Additionally, service jobs, generally regarded as low-paying, can rarely be outsourced. Employees have to be physically present in a location to perform them. These jobs are not in jeopardy, pretty much ever, so we can rest assured that there will still be plenty of work to go around. Note that some make an argument that automation will replace these jobs - to that I respond, have you ever seen an unstaffed self-checkout at the grocery store?
If an individual can make a full living wage working the cash register at a fast food restaurant, why should they be motivated to strive for better? The implication of this argument is that the current minimum wage is “good enough”. Working full time, an individual can make $15,080 (before taxes) being paid the minimum wage. The poverty line for a single individual is $11,770, but when you factor in only one child it is already raised above the minimum wage salary, at $15,930. It is incredibly stressful and difficult to survive off of this amount of money - and the prospects for a job making much more than that are low for a large portion of minimum wage workers. I reject the idea that we should tolerate people in our society being physically incapable of supporting themselves and their families financially.
A few months ago I went to Whataburger late at night, popping in for a quick snack before I headed home. I’d had a long drive before arriving and I went in the restaurant to stretch my legs. There was a lady behind the counter who took my order. She looked tired and apologized for yawning as I gave my order. I made some remark about “long day” and she proceeded to tell me how she was working both day and night shifts in order to support herself and her family financially. Something about our quick conversation struck a chord in me and I realized I had great respect for her. If she’d been able to find employment elsewhere with higher pay and better hours I have no doubt she would have taken it in a heartbeat. Instead, she put in hour upon hour of mind-numbing work because she believed it was worth it, while I sat in Whataburger with my keys and fries in hand, thinking about my privilege.
People can argue all they want about lazy workers and takers. But I strongly believe there is no shame to be had in any profession as long as one does honest, hard work. When as a society did we become OK with the idea that some people are less deserving of a fulfilling life just because they are in a low-paying profession? This is not about being liberal or conservative. I believe that all parties and people of all affiliations have compassionate individuals that want to see people live lives of freedom and worth.
Let’s raise the minimum wage. It may enable the lazy to continue their ways, but I think it’ll have far greater benefits. Imagine the woman at Whataburger being able to work normal hours and spend her disposable income on community college classes. Higher pay doesn’t decrease the opportunity for mobility - it makes it even more possible. We can enable that progress.
If raising the minimum wage will not decrease unemployment, will result in higher prices alongside higher wages, and may or may not decrease poverty, why even bother passing the legislation at all?
This is the spin that many minimum-wage dissenters chose to put on the arguments I presented. And in some ways they are right. At its worst (and unlikeliest), a higher minimum wage will mean simply maintain the status quo. That’s it - the worst possibility suggested by anybody with a PhD. But if one takes a step back and looks at optimistic predictions, you realize there’s a chance for far, far more benefit.
Many of the arguments I hear from those who oppose an increased minimum wage are not found in empirical data and argument. Instead, I hear things like
- Why should they earn more when I’ve worked hard to be where I am?
- I’m sick of all of those poor people who just take and take.
- Why should I put up with increased prices for the benefit of other people?
It doesn’t take a genius to see the root of those arguments - simple, unadulterated selfishness. Make no mistake - a minimum wage increase would have across the board benefits for just about the entire range of the lower to upper middle classes and maybe everyone. Yet many in that range simply see the impoverished as “others” and “leeches”, taking and taking. They see them as people who are worth nothing.
I’d encourage you to look closely at society and the individuals you interact with every day: do any of these people truly deserve such a label? Try to look with compassion on the struggling and needy. Our fight for them does not stop at the occasional volunteering or donation. We as a country can decide that a minimum wage hike, even if it draws us closer to income equality, is a policy that we should pursue.
Whoever is generous to the poor lends to the Lord, and he will repay him for his deed.