Raising the Minimum Wage

There has been an ongoing argument for years that the Federal Minimum Wage should be raised, but by what degree?  At the position our country and its citizens is in right now, employees would definitely benefit from an increase in the minimum wage whether it be federally or on a state-by-state basis. The cost of living has done nothing but increase in the last ten years, however the wage has not. If we look at how things have progressed over time, nothing is becoming any less expensive in terms of rent or mortgage, furnishing. and servicing a place to live. If children are involved, it is also much more expensive.

It is my belief that the congress has failed to see how much of a problem this really is. They continue to turn down proposals to make an increase in the minimum wage.  The National Petroleum News presented a viewpoint about the petroleum-retailing industry and its employees. They speak about the recent shoot down again of an amendment that within a two-year time frame would raise the federal minimum wage from $5.15 an hour to $7.25 an hour. There are plenty of individuals who depend on minimum wage to make ends meet, and right now it just is not enough.  There are more families than not who would welcome with open arms a raise in the wage. Even if the minimum wage job that one holds is a secondary source of income, a raise would still be very beneficial.  The NACS says “Such a dramatic increase would be damaging to the convenience- and petroleum-retailing industry….This type of increase will impair the creation of entry-level jobs for lower-skilled employees.” (National Petroleum News, Aug2006 p10-10)  What does this statement really mean? To me it sounds like an excuse to not pay people what they are worth. There are many variables in the cost of living from state to state, and even each city within the state. This just further proves the point that each state should establish a special minimum wage to reflect the cost of living at the state average. Chances are if this were to be initiated, the minimum wage would increase every year, just as property values, product costs, and interest rates do.    

According to the US Department of Labor, twenty-seven out of fifty-one states already have a their own minimum wage laws in place, however it is not very much higher than the federal minimum wage in any case. Also, in most of these territories, a higher rate only applies when working for certain types of corporations or enterprises. For example, in the state of Minnesota, the minimum wage is $6.15 if an individual is working for an enterprise with annual receipts of $625,000 or more and $5.25 at enterprises with less than $625,000 annually. So, in essence the wages still are not based upon the cost of living in any case. Instead they are established by what businesses gross yearly.  This is not fair to the general public. Are they really being paid what they are worth, or are businesses really the ones making the laws as they are in order to save money? It is a sad thought because while so many people are struggling every month and year to make ends meet, the truth is that it really does not matter at all how hard they are working. Ultimately, it boils down to how much businesses will suffer if they are required to pay employees more than their budget can afford.   Of course, in any state where minimum wage rates differ from the federal, the higher rate applies. The diagram below demonstrates these statistics.

The USA Today printed an article in September 2006 entitled Struggling to make ends meet. It stated that adults make up for roughly 70% of minimum wage workers that would benefit from an increase. Think about how many families have one adult who works full time, pulling in the majority of the money needed to run the household, and one who works part-time to supplement what is not there, or for extra cash flow. For instance, a secondary income is used only for groceries, monthly utility bills, or possibly to be able to budget a few fun nights each month for the whole family.  This family would be so much better off after a raise in minimum wage. In reference from the last increase in the federal minimum wage; “on average, workers affected by the increase contributed more than half (54%) of their family’s income.” (USA Today, Sep2006)

Whether we want to believe it or not, the real value of the minimum wage is not what we think it is. The Economic Policy Institute recently posted statistics from 1947-May 2006 showing how inflation has affected the real value of what minimum wage workers make. Therefore, the dollar has never gone as far as it should in terms of what we make and what it takes to live comfortably. Attached is a chart demonstrating how much inflation has had an affect on wages over time, and the question still remains, why have increases been so hard to come by?

In the article “I’ll Raise You” from October 2006, Chris Pentilia speaks about the argument by many that some companies are already hiring at above the minimum in order to have better recruitment rates, but in truth this really would not be necessary if the wage was raised.   It is very likely that competition would not exist between large businesses in order to sign on new employees. The fast food industry is a perfect example of this. These days it is hard to get people to work for these companies because the minimum wage is still too low. Even high school students looking for their first job, or college students in need of extra cash, are shying away from these positions and seeking companies that want to hire at a higher starting wage.  Think about it this way, it would not be necessary to search this hard if only the minimum wage was higher. Just as it was the last time the minimum wage was raised, everything would be even straight across the board.  “Most businesses already hire at wages above the minimum wage.” (Pentilia, Chris, Oct 2006 p26-26) Would it really affect these businesses?

Once again with the start of a new year, another proposal will be taken before congress. Only time will tell whether all the opposition and argument over time will make any difference. It really is time for a change, and hopefully congress will finally make the decision to pass the bill for an increase.

In conclusion, we must consider that throughout time United States citizens have really had no say in the decisions that congress makes on this issue. There are a large amount of people who consider themselves to be the “low man on the pole” and that is no way to live.  Maybe members of congress have never felt, or possibly they have forgotten what it is like to struggle to make ends meet.

References

The Economic Policy Institute; www.epi.org; 2007

Pentilia, Chris I’ll Raise You….  Entrepreneur; Oct2006, Vol. 34 Issue 10, p26-26 2/3p

Senate, House defeat attempts to raise minimum wage, National Petroleum News;

            Aug2006, Vol. 98 Issue 9, p10-10, 1/2p

Struggling to make ends meet,  USA Today, 07347456, SEP 05, 2006