Raise the Wage: An Issue of Prosperity & Justice

Trevor Brown

@WittTorchBrown

The central argument against raising the minimum wage is simple: “the raise will kill jobs.” While seemingly logical, this is not an argument supported by studies, nor is it an argument championed by economists—at least not the 600 that signed an open letter last month urging the President and Congressional leaders of both parties to raise the minimum wage.

To be fair, there are economists that disagree; these economists, however, are few and far between, and lack data-driven evidence.

Opponents further contend: “most affected by a minimum wage increase are teenagers. They don’t need the money!” This is also false. According to a recent study by the Economic Policy Institute, 88 percent of the workers that would be affected by a raise would be 20 years or older; 33 percent affected would be 40 or older. In fact, the median age of those affected would be 35.

Opponents also forget that low-income earners are those who spend the largest portion of their income. More specifically, when low-income earners receive a boost in pay, they tend to immediately spend it, which spurs the economy.

But this is not only an issue of economic prosperity—more importantly, it is an issue of justice. In 1968, the minimum wage sat at $1.60, an equivalent to $10.56 today adjusted for inflation. In that same time period, the average worker’s productivity has increased by over 80 percent. If the minimum wage were adjusted to both inflation and that productivity spike, it would be $22.72, according to a study published by the Center for Economic and Policy Research.

So, in the world of evidence—a raise to $10.10 is quite pragmatic, and doesn’t go far enough.

Despite this steep productivity increase and rampant inflation—the minimum wage has effectively decreased over the past three and a half decades. This has happened, of course, as the country’s wealthiest one percent has seen an unprecedented income increase, as corporate profits have grown to a record level.

Raking in record profits while paying workers poverty wages is unfair all by itself, but here’s the kicker: as low incomes become effectively lower, minimum wage and low-income workers find themselves drawing food stamps and welfare to make ends meet.

In short, amidst this unparalleled prosperity for billion-dollar corporations like Wal-Mart and McDonalds, taxpayers are subsidizing their labor, picking up the tab for their workforce.

It is worth it noting, however, that the stagnating minimum wage is only a small part of the country’s growing income inequality. As this debate presses on, the rich continue to get richer while the poor get poorer.

2 Comments

  1. To bring things a little closer to home.

    Wittenberg is experiencing some financial distress. There have been cut backs and reductions. I assume Wittenberg provides jobs to some students on the basis of need. If the minimum wage is increased where will the money come from to pay? Do you think the same number of students will continued to be employed?

    The State of Illinois University System has already announced they cannot afford a wage increase and will reduce or eliminate student jobs should wages be increased. I imagine most schools are in this position.

    Many companies in the private sector find themselves in a similar situation, as well.

  2. Your main source of fact, Economic Policy Institute, is a 501(c)(3) non-profit. Their website basically acknowledges that they are liberal biased. Is it fair to assume they too lack “date-driven evidence,” at least any that is relevant. I would suggest using .gov data regression rather than .org theories.

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