With all the talk about minimum wage, the actual facts can get distorted, and it's easy to get confused. That's why I took the time to digest all the information for you.
I am on my own personal crusade, a cause that drives my entire summer from start to finish. I need to make as much money as possible in my three-month summer break to pay for necessary school items – and to pay for football season! College is expensive; textbooks alone can cost $700, and for me, that is two weeks' pay.
Now football is where a good deal of my money goes. Tailgating, game-day shirts, going out after the game, dinner before Sunday night football – it all begins to cost a lot.
You may be asking yourself how minimum wage factors into any of this. Last year I went to a presentation put on by Nick Hanauer at Washington State University, wherein he made a lot of points that I had never considered and that made sense to me. He argued for a much higher minimum wage and was a key figure behind Seattle’s decision to raise minimum wage to $15 an hour. When workers make more money, businesses have more customers, and therefore more demand is created.
Paying employees more has its consequences, as shown by The Faces of $15. The pay has to come from somewhere, and more often than not that is coming out of the employer’s pocket – which in turn creates a raise in service prices and a reduction in employees.
Now let's go over the pros and cons of raising the minimum wage in order to get a grasp on the whole issue.
Raising the minimum wage will act as an economic stimulus as more money ripples throughout the entire economy. This influx of cash, through consumption, will allow businesses to earn more and hire more people. When more people have high-paying jobs, there is less need for social care programs like food stamps and welfare.
This all sounds great, but in reality, minimum wage is a trade-off. Workers whose wages rise are better off, while those who lose their jobs are obviously worse off. Businesses will pass the added expenses off onto the customers by increasing prices, in turn hurting the customers. As business costs rise, employers will find ways to cut them. For example, an automated teller can run the cash register at a fast food restaurant instead of a full-time worker.
So what is the correct answer to raising the wage? My answer is: I don’t know. What I do know is that there are some things that must be addressed. Minimum wage is supposed to be the minimum salary needed to maintain a minimum living standard, and it was never intended to be a way for a family to be supported.
Working at McDonald’s is considered a career for a high school or college student, but unfortunately this isn’t the reality. “About 30 percent of fast-food workers are teenagers. Another 30 percent are between the ages of 20 and 24. The remaining 40 percent are 25 and older…. Among those age 20 and older, more than one-third are raising children.”(CEPR)
If the wage is meant to be the base amount to survive on, then one could argue that it should at least mirror inflation, “Since it was last raised in 2009, to the current $7.25 per hour, the federal minimum has lost about 8.1% of its purchasing power to inflation.”(PewResearchCenter)
An alternative to raising the minimum wage would be expanding earned income tax credit. The EITC is a tax credit that boosts wages through a tax code instead of forcing increased costs on employers. What this can do is more effectively help those that need a higher wage, i.e. those working a minimum wage job. In Illinois, a single parent can apply to receive EITC benefits, effectively raising their pay from $8.25 an hour to $10.60 an hour. (Saltsman)
What should be done is a much more complicated answer than I can give. Minimum wage should be part of a comprehensive plan to improve the economy. I for one know that when I make more money, I spend more. Those few extra dollars per hour become a few hundred extra dollars, and those become wings at a football game instead of a cup of noodles.
