By JOSEPH CLINES
STAFF WRITER
The issue of the minimum wage rate, again brought into the national spotlight during President Obama’s State of the Union Address, has long been a contentious topic that transcends even the most sharply drawn lines of party affiliation. The matter is complicated not only by the need for at least a basic understanding of economic principles, but also by the ethical implications one’s understanding of the minimum wage creates.
The laws of economics suggest that an increase in employee wages, above what the market values labor, will be detrimental to the employment prospects of additional or even current workers. In practice, workers, even those making the highly stigmatized “minimum wage,” are not perfectly automated, nor is the hiring process of new workers perfectly fluid, resulting in less unemployment due to an increase in the minimum wage than economic principles suggest.
Proponents of an increased minimum wage point to the increased purchasing power workers receiving the augmented wage would experience, potentially spurring the economy.
Economic arguments on both sides of the issue are almost negligible in practice and, for argument’s sake, cancel each other out. The truly substantive issue in the minimum wage debate is whether or not an augmented income would tangibly benefit workers and their families on the lower end of the income spectrum.
As Shahmus Khan points out in his TIME article regarding the minimum wage, a worker receiving that compensation can expect to bring home a little over $15,000 annually, without receiving a “cost of living” increase to adjust for the effects of inflation.
Competition, the almost mystical “invisible hand” that regulates wages in the eyes of Republicans who adore the purely free market system, fails, left to its own devices, to augment the salaries of the lowest earners in the economy. This pool of workers, especially in a stagnant economy, is so large that companies will never have to increase the wages they pay out in order to attract employees. When the free market fails, the government should intervene.
It is a common misconception that the majority of minimum wage earners are teenagers, who are responsible for themselves. In actuality, the vast majority of minimum wage earners are adults, many of whom have dependents and families to provide for, albeit on a constricted, minimum income salary. Many students feel that working summer jobs for low wages has given them a better appreciation of the struggle millions of “working poor” families endure. The minimum wage is barely enough to provide for college students’ needs, let alone a family.
The term “minimum wage” juxtaposed with the fallacy of perfect social mobility for those willing to work for it gives the impression that those earning this wage are performing “slack work” and have opted against pursuing more career-oriented work. The gap between rich and poor continues to increase. With policymakers advocating a stagnant minimum wage, the trend is not likely to reverse itself in the near future.
More important than economic data suggesting ominous consequences for a wage increase, parents earning the minimum wage need a way to provide basic sustenance for themselves and their kids. Changing the “job ladders” that prevent truly open hiring processes may prove to be difficult in a free market. However, even if it is merely symbolic in combatting the trend of income inequality, increasing the minimum wage is necessary for a society that has shown itself to be highly progressive.
Inability to solve the root of the problem, the growing gap between rich and poor, is not an excuse for inaction. Millions of families desperately need and stand to benefit from an increased minimum wage.
Schools in impoverished areas have long documented the academic underperformance of students who arrive to school hungry because their parents cannot provide them adequate nutrition. Even an increase of $1,000 a year can help ease the choices between food and basic needs, such as clothing, that too many American families in the the “working poor” are forced to live with.
An increase in the minimum wage may not eradicate the source of growing income inequality is gripping America in recent years. It does, however, allow for low-income families to better meet their needs and provide a realistic shot at the American dream for their children.
Joseph Clines, FCRH ’14, is an economics major from Malverne, NY.