“Democracy is mob-rule. Our founding fathers were very concerned about the mob majority simply voting in their own self interests. Parasites that will inevitably devour their host, if you will.” – Steven Crowder (Louder With Crowder)
“I was working as many hours as possible – normally up to 80 a week – and rarely saw my son and three daughters. My wife had just been diagnosed with cancer, and I could barely scrape together enough money to help her receive treatment.” – (Alvin Major, KFC Employee in Brooklyn, NY)
Most have heard about McDonald’s response to the $15 minimum wage increase, and the debate is fierce on both sides. Self-order kiosks have begun replacing Seattle’s fast food employees in hundreds of locations, and stores in L.A. and New York could very well follow suit as states gradually raise salary requirements. Is McDonald’s just another example of corporate greed over the benefit of struggling American workers? Or is it a testament to the destined failure of wage increases?
As is often the case, the answer is somewhere in between.
In January of last year, President Obama received a letter signed by over 600 economists—seven of them Nobel Prize winners—urging the federal minimum wage be increased to $10.10 by 2016, followed by measures to automatically adjust for inflation. A more modest number than $15 per hour, salaries for full time minimum wage workers would still improve from $15,000 to around $21,000. It’s nothing to sneeze at.
Nevertheless, other economists are split on the issue. Perhaps the most objective source is the 2014 Congressional Budget Office report. Its findings on the effects of raising the minimum wage to $10.10 produced mixed results that both parties largely agree on. First, the increase would potentially lose 500,000 jobs by the end of a three-year period. Hiring and paying workers would become more expensive, thereby raising product prices and driving down demand for said products.
On the other side of the argument is the finding that 900,000 people would rise above the poverty threshold. People like Alvin Major would see real improvements in their lifestyle and have an easier time paying for medical treatment (even more so for Major if New York approves the $15 hike). Not only that, families with income up to six times the threshold would see an increase in salary. 25 million Americans would benefit.
All that said, federal legislation for the increase has failed to pass since Obama’s 2014 State of the Union Address. But rather than wait for the federal minimum to rise, some companies are increasing their wages voluntarily. Walmart and Gap Inc. insist that shareholders will see a positive outcome as a result of happier personnel, increased productivity, better health, less employee turnover, and improved company image. Other companies like Starbucks and Costco have agreed to raise their minimums over the next few years.
What the minimum wage is unlikely to fix is the other 44 million Americans who will remain at or below the poverty line. Nor is the minimum wage likely to solve the bridging gap in inequality between the rich and poor. $10.10 an hour goes farther in cities like Macon, GA—where prices are 12.2 percent below national average—than cities like New York (22.3 percent higher). Wherever you stand on the issue, economic realities are far more complex than idealistic theories. In supporting any legislation we must understand the consequences of our actions, both positive and adverse.
