SPINKS: Worth every penny

Increasing the minimum wage will benefit workers, employers and the economy as a whole

Back in April, my home state of Maryland passed a bill that will incrementally raise the state minimum wage to $10.10 by July of 2018. This is a fantastic legislative success that will benefit working-class citizens and the larger economy in Maryland, and such a policy should certainly be instituted at the federal level.

Besides the recent change in Maryland, trusting the states to regulate their own wages has largely failed — only 21 states have set their minimum wage above the federal mandate of $7.25, and only fourteen states increased their minimum wage in 2014. Congressional Democrats have allied with President Obama in suggesting the federal minimum wage be increased to $10.10, but despite their best efforts, a bill which would have implemented the change was blocked by Senate Republicans at the end of April. The federal minimum wage has not increased since 2009 rises in inflation.

Common Republican arguments against increasing the federal minimum wage sound reasonable at first. Conservative opponents of a minimum wage increase insist that forcing employers to pay higher wages would hurt small businesses and lead to higher unemployment. They also paint the “typical” minimum wage worker as an acne-speckled teenager at a summer job, and claim such workers should feel lucky with the wages they do earn — after all, minimum wage is the highest its ever been. They defend big businesses, which they argue are still recovering from the “Great Recession”.

These arguments, however, simply are not valid or accurate. And although it is slightly incendiary to suggest this, I’d argue that many opponents of a federal minimum wage increase have never worked for the minimum wage — at least not in its current condition with regards to spending power. Those who have spent even a day selling their labor at a rate of $7.25 per hour can truly conceptualize how demeaning and ridiculously unfair it is to have to do so. A full-time worker being paid at the minimum wage earns $15,080 annually, while the federal poverty line for a family of four is set at $23,850. Simply put, if a family of four has only one household earner, they fall nearly nine thousand dollars below the threshold for being impoverished.

And while the nominal value of the minimum wage is, technically, at its highest point historically, its spending power has been steadily decreasing, and in fact was at its highest in 1968. According to the Department of Labor, when adjusted for inflation, “the current federal minimum wage would need to be more than $8 per hour to equal its buying power of the early 1980s and nearly $11 per hour to equal its buying power of the late 1960s.”

And teenagers working part-time jobs are not the only ones being hurt by this pathetic federal minimum wage policy. In fact, 4.3 percent of all hourly-paid workers in the United States are being paid at or below the federal minimum wage, and 53 percent of all minimum-wage earners are full-time employees. A staggering 88 percent of people who would benefit from an increase in the federal minimum wage are working adults.

Furthermore, although the image of the struggling mom-and-pop establishment is powerfully sentimental and thus useful when arguing against increasing the federal minimum wage, it’s also fairly inaccurate. The majority of low-wage workers — 66 percent — are not working for small businesses but rather large corporations who can more than afford a federally mandated increase in wages. And the “economic recovery” argument falls flat as well: far from remaining buried by the economic recession earlier in the decade, big business has made a hearty comeback. Ninety-two percent of the top 50 largest employers of low-wage workers were profitable last year, and 73 percent of those same companies have higher cash holdings now than they did before the recession.

Many will suggest this alternative to a minimum wage increase: expanding social programs such as welfare and Medicare. And while I am typically a huge supporter of social programs, something about this solution feels uncomfortable to me. It feels as if the government would be complicit in the poverty and homelessness problem that our country faces. Rather than addressing at least one root cause — that people are not paid a living wage — the government would merely perpetuate the problem by increasing welfare handouts and subsidized housing options, which don’t effectively improve quality of life.

If the choice is between asking large corporations to absorb a relatively small increase in wages or asking the federal government to go even further into debt by expanding social programs and attempting to support the large impoverished population, it seems the clear option is the former. Studies by leading economists find that increasing the minimum wage can increase employee loyalty, decrease turnover rates, increase productivity, and could potentially cause an increase in economic activity of $22.1 billion. All these advantages are not even to mention the incredible tangible, practical, and psychological benefits that an increase in the federal minimum wage could have for the nation’s hard-working low-wage earners.

Ashley Spinks is an Opinion Editor for The Cavalier Daily. She can be reached at a.spinks@cavalierdaily.com.

related stories