::Literate Blather::
Friday, June 30, 2006
Essay: Should There Be a Minimum Wage?

The band They Might Be Giants produced a short, catchy pop song called, “Minimum Wage.” Shouting “Minimum Wage” to a building crescendo of music and the crack of a buggy whip, the band puts a happy spin on a dire issue – working for wages below the poverty level.

In a 2003 survey, U.S. economists were asked if they agreed or disagreed with the following statement: “A minimum wage increases unemployment among young and unskilled workers.” A total of 73 percent either fully or partly agreed and only 27 percent disagreed. Most economists seem to support opponents of the minimum wage which say it undermines job creation, reduces the quality of existing jobs, and decreases the opportunity for unskilled laborers.

Is this possible? Should the U.S. enforce a minimum wage and does legislating a minimum wage undercut low-wage workers and harm the overall economy? Few people question the viability of raising a family on minimum wage. It’s impossible without a second income or government assistance (in the form of food stamps, subsidized housing and other federal and state programs).

Right now, the federal minimum wage is $5.15 an hour and adjusted for inflation is at the second lowest level since 1955 – when Eisenhower was president and the Brooklyn Dodgers won the World Series. September 1 will mark the ninth anniversary since the minimum wage was raised by Congress.

A full-time worker earning minimum wage now collects a salary of $10,712 a year – well below the poverty level. As of March 2003, about 13 percent of U.S. workers were considered low-wage earners (making between $5.15 and $7.99 an hour), according to the Economic Policy Institute. The EPI also reports that on average these low-wage earners contributed 68 percent of their family’s income and that 47 percent of low-wage earners were married or had children.

The problem with the question posed to the economists is that it focuses on the effect of a minimum wage on “unemployment.” This assumes that the purpose of mandating a minimum wage is to stimulate job creation. In fact, lower wages do increase the job growth. It’s an economic reality and common sense that if an employer has one employee making $12 an hour and you tell her she can have two employees at $6 an hour or three employees $4 an hour – she’ll probably take it. She doubles or triples the man-hours for the same wage.

That’s a win-win situation for the employer. However, it’s a terrible situation for workers even though more jobs are created. The worker gets less buying power and a wage that falls below livable levels – increasing poverty and government dependence. Instead, of one well-paid worker and two unemployed ones, you end up with three employed people that need to be subsidized in order to survive.

The minimum wage isn’t about creating jobs – it’s about protecting workers. No one should be forced to work fulltime at a wage that is not only unlivable, but well below the established poverty level. This argument works even if applied to teenagers working at the local burger joint to save money for school or for recent immigrants trying to feed their families. The minimum wage should be about fairness. It’s about placing a monetary minimum on the value of work and helping to distribute income up and down the wage ladder.

Abolishing the minimum wage, as many opponents advocate, would undermine the labor market – especially for low wage workers who have little to no bargaining power with employers. Wage disparity has become an enormous concern in the U.S. where CEOs now earn more than 240 times the amount of the average worker. Killing the minimum wage, which has been a foundation of the U.Ss been a foundation of the U.s. the U.e the U.S. wants to spendCEO now earn more than 240 times the amount of the average worke economy since 1938, is not a message the U.S. wants to send.

In fact, it’s time to raise the minimum wage rate. That’s a message many workers want to hear.

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