Pro and Con; Waging War on Minimum Wage


--Camila Torres
–Camila Torres

Pro: Lea Yared

According to the National Low Income Housing Coalition, there is not a single state in America where a minimum wage worker can afford a two-bedroom apartment working a 40-hour week.

If the minimum wage had kept up with inflation over the past 40 years, it would be $10.70 today, instead of a measly $7.25, which amounts to just $15,080 annually for a full-time worker a�� just below the poverty line.

Raising the minimum wage is a key tactic to ensure the nation’s economic recovery. By putting a significant amount of money into people’s pockets, more money will be pumped into the economy through increased consumer spending, which in turn will help effectively sustain businesses.

President Barack Obama called for raising the minimum wage to $9 an hour in his State of the Union address this year. The increase would occur in stages until 2015, at which time the amount would be tied to inflation.

When picturing minimum wage workers, many think of teenagers or seasonal employees working for small salaries before they advance to better employment. This leads to the argument that the minimum wage is not meant to be a living wage.

However, the White House estimates that less than 20 percent of the 15 million low-income workers who would benefit from a minimum wage increase are teenagers. And according to the Current Population Survey, the average minimum wage worker brought home 46 percent of their household’s total income in 2011.

As for the teenagers who would see their paychecks rise, the extra money made could be saved towards higher education. These savings could help young adults pay college loans quicker and pursue higher employment.

Studies show that modestly increasing wages leads to more stability in the workforce due to less turnover and increased worker productivity. Research published in the Review of Economics and Statistics also indicates that slight increases in wages “suggest no detectable employment losses.”

If the President’s proposal is enacted, a family making $20,000 to $30,000 a year would make an additional $3,500. That money could cover the cost of groceries, gas or utilities for an entire year. Why should working families scrape by to make ends meet while the average CEO makes a staggering $12.3 million?

Rewarding work by raising the minimum wage is a no-brainer. As President Obama said in his address to Congress, “Let’s declare that in the wealthiest nation on earth, no one who works full-time should have to live in poverty.”

Con: Nora Wahlbrink

One question is on every working class American’s mind: what effect will raising the minimum wage have on the U.S. economy? The Obama administration claims that it will be stimulating; however, the facts do not coincide.

The current minimum wage is $7.25. With the president’s proposal to raise it to $9, that is an extra $1.75 per hour for employees. Although this might not seem like much, to a small business it makes a huge difference.

To put it in perspective, say a small business has 5 employees each working 20 hours a week at the current minimum wage. That would be a total of $725 the business would pay out for salaries each week, $145 for each employee. Now say the Obama Administration raises the minimum wage to $9. Now it is $900 per week for the business, and $180 per employee.

Most small businesses do not have the funds to spend that much additional capital on employment, so in order to save money, they would have to fire an employee, which would lower their weekly output back to $720.

This scenario is backed up by most studies. According to a 182-page summary of research on wage hike-related job loss from the last two decades done by economists David Neumark (UC-Irvine) and William Wascher (Federal Reserve Board), 85 percent of the best research points to a loss of jobs following a minimum wage increase.

The idea behind the wage raise is that it will help people out of poverty by tying the wage to the cost of living. However, according to the Census Bureau, about 60 percent of people living in poverty do not even work, and thus would not benefit from a raise.

Census Bureau data shows that among people who do work and would be covered by the President’s $9 proposal, the majority live in families far above the poverty line. With that data in mind, a bump in the minimum wage would likely increase the gap between the middle and lower classes rather than close it.

Research from economists at Florida State University and Miami University finds that two-thirds of minimum wage earners receive a bump in pay in their first 1-12 months on the job. That means that a majority of people who are able to hold a steady job and deserve a raise will get one.

Also, for people who are really struggling, there are federal entitlement programs like Medicaid to help them attain stability. Raising the minimum wage is anything but a benefactor for people holding entry level jobs.