Almost two weeks ago, an acquaintance sent me a video detailing how any form of minimum wage is not only useless, but actually detrimental to the United States workforce. I was curious to learn how the abolition of the minimum wage would help the people of this country, so I decided to watch through the video and see if there was any merit to it. When it was finished, I decided that the video's bold claim warranted a response, and so I did some rudimentary research and began to tackle the subject. The video was hosted on the website Prager University, featuring David R. Henderson as the presenter. I encourage you to take a look at this video, enlighten yourself -- here's the link.
First off, let me point out what my skeptical eye noticed almost immediately. Prager University is "not an accredited academic institution," clearly labeled at the bottom of the page. While watching the video itself, I observed that Henderson didn't cite a single survey or study to support his assertions. After digging around, I also noticed that the site has a clear conservative bias, and I personally believe that the best educational institutions should remain objective. That being said right off the bat, I'm going to address each one of Henderson's points individually.
Henderson claims that raising the minimum wage results in unemployment. This is, however, not supported by the majority of economists. In fact, economists are almost evenly split when asked if raising the minimum wage decreases jobs. It is mostly a matter of opinion, as there is no clear correlation that has been recorded between higher minimum wages and lower jobs. The most significant research shows that the minimum wage has very little to no effect on available jobs. It is also worth noting that more than 600 economists, including seven Nobel Prize winners wrote to President Obama stating that an increased federal minimum wage has no negative effect on the availability of jobs. In fact, providing a higher wage gives workers a greater capacity to spend and stimulate the economy, ultimately benefiting the job market.
When Henderson states that businesses must employ less workers to make up for the higher wages, that is complete nonsense. Large corporations are more than capable of paying their workers a living wage. According to the Washington Post, corporate CEOs make over 350 times the average worker's wages today. This chart from the Boston Globe demonstrates the ratio of CEO-to-worker pay over time in this country.
Graphic via https://www.bostonglobe.com/business/2014/10/25/gr...
As you can see, the American CEO has gone from making about 20 times the average worker's salary to about 300 times. So the argument that a company is incapable of paying for a higher wage is ridiculous, the wealth is there, it has simply trickled up to the top instead of being shared among the workers. In addition, the U.S. Department of Labor reports that even small businesses can afford to pay a higher minimum wage. Paying workers more puts more cash in their pockets, increasing their ability to spend, and increasing the demand for goods and services. This creates more customers and brings in more business, benefitting both the business and the workers.
Henderson implies in the video that minimum wage workers are teenagers and young adults working their first job that will eventually give them the experience necessary to move up in the workforce. However, Pew Research Center has found that over half of minimum wage earners are above 24 years old. These are not part-time teenage workers, they are adults working full-time and still unable to support themselves on their wages. And with such low wages, how could they afford an education to lift themselves out of a minimum wage job? Henderson stated that working an entry-level job prepares you for a better paying job ahead. But it is impossible to get a better paying job without the necessary education; today's job market requires more than fry cook experience to land a decent career. And it is impossible to get an education when you're working full time and still living in poverty. A worker being paid the federal minimum wage of $7.25 an hour, 40 hours a week for 52 weeks in a year, would earn an annual salary of $15,080. This is not a salary that a person can support themselves on. Minimum wage is not something only part-time teens are paid -- it's something that millions of adult Americans are trying to support themselves on with no other alternative. Increasing the minimum wage would stand to assist these Americans, while taking the minimum wage away would leave millions with even less capability to support themselves or their families.
PolitiFact has investigated and concluded that raising the federal minimum wage stands to potentially raise almost a million Americans out of poverty. My personal argument is that ending the federal minimum wage, which Henderson asserts is the best policy, would be disastrous. Throughout American history, big businesses have exploited their workers by providing incredibly low wages, even utilizing child labor to cut costs (before it was made illegal). Look farther back, and you will see slavery as an example of corporate exploitation and greed. If there's anything to learn from history, it's that large corporations will pay workers the lowest wages possible to save themselves money and maximize their take. Corporations exist for one purpose only: profit. Without federal regulations to keep them in check, businesses would utilize every possible measure to cut costs and maximize revenue. Without a minimum wage, businesses could pay devastatingly low wages to unskilled employees. The Economist has estimated that given the wealth in America, the lowest-paid workers should be making around $12 an hour. But this isn't the case, because businesses will pay the lowest wages they possibly can. So most businesses only pay minimum wage to their unskilled workers. Eliminating the federal minimum wage would only inspire employers to decrease wages and drag even more Americans below the poverty line. This is what big businesses want, and that's why they support the conservatives that circulate these nonsense videos with no research or evidence to support them. They want you to think that having no minimum wage actually benefits you, when it only hurts you in order to benefit them. Alternatively, increasing the minimum wage stands to bring almost a million Americans out of poverty. I'd argue that this is a better outcome for this country.
