$15 Minimum Wage: Yay Or Nay?
Start writing a post
Politics and Activism

$15 Minimum Wage: Yay Or Nay?

We must have a living wage rather than a minimum wage!

97
$15 Minimum Wage: Yay Or Nay?

As we all know, there is a whole “Fight for 15” going on; Americans fighting the raise the minimum wage to $15 an hour. There are compelling arguments for the Fight for 15, and there are compelling arguments against the $15 minimum wage. There are even arguments for reducing the minimum wage or not having a minimum wage at all? Which is the right way to go? Is there a happy middle ground between the Federal minimum wage of $7.25 an hour and the proposed federal minimum wage by Senator Bernie Sanders for $15 an hour?

Before I present the argument for the fight for 15, the argument against the fight for 15 and a potential happy medium, I’m going to start off by saying the removal of the federal minimum wage or potentially lowering the minimum wage as proposed by Donald Trump is preposterous. Prior to Federal minimum wage laws being enacted in 1938 of $0.25 an hour, employers were allowed to pay workers whatever they wanted. Employers have never decided to pay their employees higher sufficient wages. Before there were federal minimum wage laws, employees were paid virtually nothing. In fact, unions were formed so wages would be increased amongst other reasons. Now that there are laws created to destroy unions such as “Right to Work” laws, workers will make much less than they make today, not more. This will result in higher poverty levels, an even more massive income and wealthy inequality and eventually an inevitable economic collapse. Getting rid of the minimum wage or decreasing the minimum wage is absolutely not an option.

There are those that believe that raising minimum wage to $15 an hour is a horrible idea. Many people have said that raising the minimum wage would kill jobs. Basic economics says, when the price of something goes up, frequency of purchasing that item goes down. So if an employer is forced to pay their workers higher wages, they will hire less workers. When minimum wages are increased, it has an adverse effect on the people it was supposed to help. Instead of helping low skilled workers by paying them higher wages, low skilled workers are losing their jobs. Therefore, increasing the minimum wage does more harm than good. Companies will do whatever they can to cut costs; if they must lay off workers, they will do so. Companies that have the bandwidth will replace workers with machines. It is much more cost effective to build a kiosk as opposed to paying an employee $15 an hour or a salary of $31,200 a year.

Such a substantial increase in the minimum wage would attract retirees to return to the workforce. Minimum wage jobs were created for people that don’t have job experience and need to gain that valuable experience. Employers, despite what they may say are always looking for someone with some type of experience. The employer would hire someone with experience who doesn’t have to be trained that would work for the same pay as someone who has yet to be trained, almost every time. Training an inexperience worker is expensive. As mentioned previously, businesses will do whatever they can to cut costs. They definitely don’t want to add costs like training new employees and having to deal with the mistakes and relative unproductiveness when compared to their experienced peers. Instead employers will bring in a veteran.

Another common argument is raising the minimum wage to $15 an hour is the inflation of prices of goods. As stated earlier, basic economics sates, when the price of something goes up, the frequency of purchasing that item goes down. Higher wages are an expense to companies. In order to cover their expenses, companies must raise prices to compensate for the pay increase. The higher prices are raised, the less a consumer will buy leaving companies with a net loss. Companies cannot afford to have net losses, especially small businesses. This will again lead to the laying off or replacing of low wage workers. If increasing the minimum ultimately leads to job loss, why is it even being discussed? Is there a legitimate argument for increasing the minimum wage when increasing the minimum wage ultimately harms those it was supposed to help?

Well, there are plenty of compelling arguments for why the minimum wage must be increased to $15 an hour. In 1968, the minimum wage was $1.60 an hour. When adjusted for inflation, that $1.60 an hour in 1968 is equivalent to $11 in 2016 dollars. Had minimum wage just rose with inflation, employees would make $11 an hour today. The current federal minimum wage is $7.25 an hour. Today, we make $3.75 or 34 percent less than we made in 1968. The current minimum wage of $7.25 an hour is unacceptable. Since wages are much lower than they should be, consumers are spending less which in turn hurts the economy. On the other hand, with an increase in wages, means more money is put in the hands of the workers who then becomes consumers. When consumers have more money in their pocket, they spend it. This creates higher demand which in turn creates jobs, not job loss. This benefits everyone. It is a virtuous cycle.

American workers are about twice as productive today as they were in 1968. If the minimum wage kept up with inflation and productivity, it would be nearly $22 an hour. If inflation is rising and the cost of goods are going up, where does all that extra money go? Well it’s pretty simple, the 34 percent of lost wages from 1968 to now went directly in the pockets of the top 1 percent of Americans. While the middle class has been in steady decline, the top 15 richest Americans saw their wealth increase $170,000,000,000. To put that in perspective, just the increase in their total wealth is more wealth than what is owned by the bottom 40 percent of Americans. These large corporations can certainly afford to pay their workers much more than what they pay them now. Keeping the minimum wage at a poverty wage or just above it is completely and utterly inexcusable.

Many Americans detest having to pay to subsidize low waged employees. By increasing the minimum wage, Americans will pay less in taxes because workers can afford to pay more money towards public housing, food stamps, Medicare, Medicaid etc. With the current minimum wage in place, low waged workers simply cannot afford to pay for these expenses without an increase in pay. A person against the minimum wage hike and against social programs cannot have it both ways. If you are against paying taxes to help subsidize low wage employees, then you must support a wage high enough for employees to support themselves.

So what about the small businesses and the inevitable increase in prices that will occurs to support the minimum wage and the potential massive job loss? Well, prices will have to increase to support the minimum wage, but not nearly as much as you think. In fact, the increase pay on a Federal level would more than offset the price increases and result in a net gain for each individual person. I will explain. Let’s saying you work in a small restaurant in New York City. The minimum wage in New York City is $9 an hour. An increase from $9 an hour to $15 an hour is a 66 percent increase. That big an increase seems like it would bankrupt any small business. You must look beyond the surface to understand that it will actually help small businesses.

If you own a small restaurant and have seven employees making $9 an hour, each and every one of them work full time five days a week. This will never be the case but let’s just assume this. Each employee will make $18,720 before taxes. The seven employees will make a total of $131,040 a year. Once the minimum wage hike takes effect, each employee will now make $31,200, an increase of $12,480 per employee. This small business will now be paying their employees $218,400, an increase of $87,360 a year. On a typical day, prior to the minimum hike, the seven employees would make a total of $504 a day. After the minimum wage increase to $15, the seven employees will make a total of $840. That is $336 more per day that this small restaurant is paying their employees.

I’m going to keep this ultra-simple. There are many other things to factor in that would make prices much cheaper than in my example but that would require a book. Let’s say this small restaurant serves only 100 people per day and every item on the menu was $7 no matter what you are buying and every customer only bought one item per day from this restaurant. The restaurant would generate $700 per day in revenue while having to pay their employees $504.00 per day at the current minimum wage of $9. The restaurant would have a profit at the end of each day of $196. Once the minimum wage is increased to $15, restaurants would now have to pay their employees $840 per day. Without a price increase, it the restaurant would suffer a net loss of $140 per day. To cover just the cost of the employees this restaurant would have to raise their prices 20 percent. This means the cost of a $7 meal would rise to $8.40. To continue to make the $196 profit, the restaurant would have to raise their prices 48 percent more from the original cost of the products. This would bring the cost of the products to $10.36. That is a lot of money for a burger. Well that’s only if you look at it from today’s dollars. While prices may have jumped 48 percent to support this pay increase, the increase in wage for employee would be 66 percent.

Remember this is a federal proposal that the minimum wage be increased to $15 an hour. This means wages of the consumers have increased as well. When adjusted for inflation, consumers will have a net gain of 18 percent more money to spend. Using percentages is rather hard to fathom. What does this mean in dollars? With the minimum wage at $15, after spending $10.36 on an item, you will have $4.64 left in your pockets to save or spend on something else. At the current minimum wage in New York, after spending $7.00 at this restaurant, you will have only $2 left in your pocket. An increase in the minimum wage more than doubles the money left in the pocket of the workers/consumers after purchasing an item from the restaurant. Raising the minimum wage to $15 an hour puts more money in the pocket of the worker because the percent the wages increased by is far higher than the levels of inflation. Of course there are much more to take into account that would make the prices much lower than displayed in my example. Of course it people have more money in their pocket, some people will buy more than one item and every item of course wouldn’t be worth the same prices. Small increases relative to the size of your business on each product will lower the prices much lower than the 48 percent increase if only one item was purchased. My example also doesn’t take into account that more people will eat at this restaurant because they now have much more money to spend. Prices will rise a bit but not even close to the 48 percent that would be necessary in my simple example. Even if it did, the net outcome is more money in your pocket than if the wages remained stagnant.

When we look at major corporations like Walmart, they can afford to pay their employees $15 an hour without a noticeable price increase. Walmart would only have to increase their prices 1.6 percent in order to pay their employees $15 an hour if they wanted to pass costs on to the consumers. What does that look like to the consumers? Well if you bought a box of macaroni for $0.74, the box of macaroni would now be $0.76. For large restaurants such as McDonalds, some analysist say a price of a Big Mac would increase somewhere between as low as $0.15 to as high $1.50 as reported by Neil Cavuto of Fox News. If it did increase by $1.50 the $6 increase in wages would leave you with $4.50 extra.

Some believe that raising the minimum wage would cause employers to replace workers with kiosk. To that, I say rubbish. Businesses and corporations are always looking for ways to cut costs. It has absolutely 0 to do with the minimum wage. Technology has and always will replace lower skilled jobs that can be done more effectively by machines. No matter the wage, over time workers got replaced by whatever technology that was more efficient. Before federal minimum wage laws existed, workers were being replaced by more efficient machines even though they were getting paid virtually nothing. A prime example of this is during the Industrial Revolution. Workers made barely anything and still were replaced by machines. Don’t allow someone to convince you that wage increases lead to job loss. There is zero correlation between job loss and hikes in minimum wage. In fact, there is a negative correlation between job loss and increased wages.

What about the argument that retirees would re-enter the workforce because of the higher wages and would take jobs away from teens and young adults who need to minimum wage jobs? That argument is baloney. If minimum wage jobs were created for teens and young adults, that’s certainly not who occupy those positions. 50 percent of all minimum wage earners are 35 or older and are the primary income earners in their families. An increase in the minimum wage would raise millions of families out of poverty.

That being said there is a possibility that jobs could be lost with the minimum wage increase. The only way that would occur is if minimum wage increases so much that it is not sustainable. So how much of an increase wouldn’t be sustainable? Well no one knows for sure but $15.00 an hour doesn’t seem like the straw that would break the camel’s back.

Americans will never completely be on the same page on this issue. So what would the happy medium be? Would it be $12 an hour on a federal level as proposed by Hillary Clinton? Some will have their qualms over that. I’m not sure that is a legitimate middle ground. What I would propose, is the basing the minimum wage off of what the living wage is for the county that you work in for each county in America. The wage will rise gradually with inflation and be $0.25 to $2 higher than what the living wage in your county depending on the size of the business/organization. What exactly does that mean? If you living in New York City, specifically Kings County, a living wage there today is $14.30 per hour as of 2016. For Kings County, my proposed minimum wage would range between $0.25 to $2 higher than the $14.30 living wage depending on the size of the company where you work. For example, if you work at a small business, the minimum wage would be $0.25 additional to the $14.30 living wage. If you work at McDonalds, your wage will be an additional $2 to the $14.30 minimum wage. If you live upstate New York somewhere like Onondaga County, a living wage there is $10.27. Small business in Onondaga County will pay closer to $0.25 more than the minimum wage there while the larger businesses will pay closer to $2 more than the living wage. This plan would be enough to lift millions out of poverty while not putting a strain on small businesses.

Report this Content
This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
Student Life

Waitlisted for a College Class? Here's What to Do!

Dealing with the inevitable realities of college life.

58549
college students waiting in a long line in the hallway
StableDiffusion

Course registration at college can be a big hassle and is almost never talked about. Classes you want to take fill up before you get a chance to register. You might change your mind about a class you want to take and must struggle to find another class to fit in the same time period. You also have to make sure no classes clash by time. Like I said, it's a big hassle.

This semester, I was waitlisted for two classes. Most people in this situation, especially first years, freak out because they don't know what to do. Here is what you should do when this happens.

Keep Reading...Show less
a man and a woman sitting on the beach in front of the sunset

Whether you met your new love interest online, through mutual friends, or another way entirely, you'll definitely want to know what you're getting into. I mean, really, what's the point in entering a relationship with someone if you don't know whether or not you're compatible on a very basic level?

Consider these 21 questions to ask in the talking stage when getting to know that new guy or girl you just started talking to:

Keep Reading...Show less
Lifestyle

Challah vs. Easter Bread: A Delicious Dilemma

Is there really such a difference in Challah bread or Easter Bread?

37744
loaves of challah and easter bread stacked up aside each other, an abundance of food in baskets
StableDiffusion

Ever since I could remember, it was a treat to receive Easter Bread made by my grandmother. We would only have it once a year and the wait was excruciating. Now that my grandmother has gotten older, she has stopped baking a lot of her recipes that require a lot of hand usage--her traditional Italian baking means no machines. So for the past few years, I have missed enjoying my Easter Bread.

Keep Reading...Show less
Adulting

Unlocking Lake People's Secrets: 15 Must-Knows!

There's no other place you'd rather be in the summer.

959323
Group of joyful friends sitting in a boat
Haley Harvey

The people that spend their summers at the lake are a unique group of people.

Whether you grew up going to the lake, have only recently started going, or have only been once or twice, you know it takes a certain kind of person to be a lake person. To the long-time lake people, the lake holds a special place in your heart, no matter how dirty the water may look.

Keep Reading...Show less
Student Life

Top 10 Reasons My School Rocks!

Why I Chose a Small School Over a Big University.

194161
man in black long sleeve shirt and black pants walking on white concrete pathway

I was asked so many times why I wanted to go to a small school when a big university is so much better. Don't get me wrong, I'm sure a big university is great but I absolutely love going to a small school. I know that I miss out on big sporting events and having people actually know where it is. I can't even count how many times I've been asked where it is and I know they won't know so I just say "somewhere in the middle of Wisconsin." But, I get to know most people at my school and I know my professors very well. Not to mention, being able to walk to the other side of campus in 5 minutes at a casual walking pace. I am so happy I made the decision to go to school where I did. I love my school and these are just a few reasons why.

Keep Reading...Show less

Subscribe to Our Newsletter

Facebook Comments