Minimum Wage Increase is a No-Brainer


In 2008, after being elected to his first term in the White House, President Obama promised to raise the minimum wage to $9.50/hr by 2011. Nearly five years later and almost a half year into his second term, he now only hopes to raise it to $9.00/hr by 2015. The federal minimum wage currently sits at $7.25/hr which is just over $15,000 a year. As has been the case with so many hopes left unfulfilled, it seems President Obama missed his opportunity to deliver the change he promised when he had the chance and now his goals seem fleeting and unattainable due to the intransigence of Republicans in congress. To me, it seems that raising the minimum wage is a no-brainer and the fact that it hasn't been raised is a testament to the abysmal state of affairs in Washington today.

For one, is it not the job of a representative government to produce policy that reflects public opinion? A Gallup poll taken in early March posed the question "Suppose that on Election Day you could vote on key issues as well as candidates. Would you vote for or against a law that would raise the federal minimum wage to nine dollars an hour?" Of those polled, a whopping 71% said they would vote yes, while only 27% said they would vote no. It is truly shameful that congress cannot pass a bill that would be supported by such a vast majority of the populace.

Those who oppose raising the minimum wage often make the argument that doing so would create higher unemployment rates because small businesses would be forced to hire less workers, as the cost of keeping them would be raised. Speaker of the House John Boehner made this argument earlier this year in response to the president's recent calls for a raise. "When you raise the price of employment, guess what happens? You get less of it. At a time when the American people are still asking the question, 'Where are the jobs' — why would we want to make it harder for small employers to hire people?"

In that statement, Boehner suggested that raising the minimum wage would be counterproductive because of the budget issues a higher minimum wage would create for small businesses. Something that might surprise the House Majority Leader is that small business owners support raising the minimum wage almost as much as the American people do as a whole. A national poll of small business owners taken by the Greenberg Quinlan Rosner Research, found that 67% of small business owners support a higher minimum wage. Interestingly enough, 47% of respondents in the poll were Republicans and only 35% identified themselves as Democrats.

If there is any truth to Speaker Boehner's criticism, and there is certainly a logical basis to his argument, one would have to wonder why small businesses so overwhelmingly support a higher minimum wage. The simple answer is that they believe it would help the economy and, in turn, help their businesses. 65% of respondents in this poll agreed with the statement that "increasing the minimum wage will help the economy because the people with the lowest incomes are the most likely to spend any pay increases buying necessities they could not afford before, which will boost sales at businesses. This will increase the customer demand that businesses need to retain or hire more employees." In other words, small business owners believe that a minimum wage raise would act as a stimulus to the sluggish economy by putting more money into the hands of consumers.

Furthermore, 85% of the small business owners polled stated that all of their employees were already making more than the federal minimum wage. So, if the American people overwhelmingly support a higher minimum wage and so do the vast majority of small business owners, who opposes it? Well, since we know that most small businesses already pay their employees more than minimum wage, perhaps a better question would be: who is employing the bulk of the minimum wage earners in this country and would therefore stand to lose the most from a higher minimum wage? Well, the top 5 employers of low-wage workers in America today are, Wal Mart, Yum! Brands (Taco Bell, Pizza Hut, KFC), McDonald's, Target and Sears, respectively.

If anyone can afford to pay their workers a living wage, it is these mega-corporations which year in and year out rake in humungous profits. Companies like Walmart exploit criminally cheap labor in third world countries in order to produce goods at very low prices which are then sold to American consumers by low-wage service employees in their department stores and super centers throughout the country. Aside from changing their consumption habits, there are limited ways in which American consumers can improve the wages of sweat shop workers in foreign countries ... but by raising the minimum wage, we can at least guarantee that low wage workers in our own country are making enough to get by.

Not only do miserly wages hurt the workers and those dependent on those workers, but they also hurt the average American taxpayer. While conservative politicians like to paint the recipients of government assistance as lazy freeloaders, the reality is that most of those who receive government aid are the working poor. When Walmart chooses not to pay their workers enough to meet their basic needs, the burden is shifted from the mega-corporation to the American taxpayer. A recent study released by congressional democrats reported that one Walmart supercenter in Wisconsin costs the taxpayer roughly $900,000 a year in food stamps and publicly subsidized healthcare to its low-wage employees.

Above all, this is an issue of fairness and a moral issue. In the richest country this world has ever seen, all workers should be making enough to meet their basic needs. Adjusted for inflation, the minimum wage has decreased significantly over the years, even as worker productivity has gone up and CEO pay has increased by a staggering 900%. The minimum wage in 1968 would be $10.50 in today's dollars and even the minimum wage from 1956 would be $8.56 today, more than a dollar greater than the current minimum wage. As profits, executive compensation, and worker productivity have risen, median wages and the minimum wage have stagnated or decreased. The minimum wage in the United States even lags behind most of the industrialized world. There are 10 countries in the Western industrialized world with higher minimum wages than the United States and, of those 10, only Sweden and France have a higher unemployment rate. In Australia, the minimum wage is $16 an hour and the unemployment rate down under is only 5.5%.

The fact that raising the minimum wage seems like a tall order for President Obama really speaks to why congressional approval ratings are at historically pitiful levels. If Congress cannot pass legislation that is supported by over 70% of the population, what does that say about the state of our representative democracy? Raising the minimum wage is a no-brainer issue that would stimulate the economy and benefit millions of American workers who are struggling to get by. The United States is the richest country in the world and there is no reason that we should not be able to guarantee that every worker is making enough money to meet their basic needs.