Column: Raising the minimum wage returns a balance

Column: Raising the minimum wage returns a balance

Following President Obama’s State of the Union Address, where he promised to raise the minimum wage of federal employees to $10.10 an hour, the debate of national minimum wage standards has again resurfaced, sparking more dissentions between Democrats and Republicans over how to best balance free-market capitalism with social welfare ideals.

Oftentimes, however, people ignore, or even forget, the basic aim of minimum wage standards, so to adequately solve the problem, understanding must be the first step. When President Roosevelt instituted minimum wage in 1938, the aim was to protect the rights of workers and to try to uplift every American worker from poverty, providing them at least the chance to chase the elusive ‘American Dream.’ And, for a while, this was effective. Between the 1960s and the 1980s, someone working one minimum wage job for an entire year could support a family of two and keep them out of poverty. When examined, the ratio during these years of minimum wage to the average wage earnings of an American worker was around half; today, that difference is about one third. Here lies our first indication that the minimum wage should be raised—and using this model, it should be higher than the $10.10 that President Obama proposed. Current average wages are around $22, lending minimum wage standards to be set at least $11 per hour, significantly higher than the $7.25 that it currently is today.

Many opponents of raising the minimum wage argue that it will result in job loss, higher costs of products, and overall economic stagnation. However, there is no evidence to back up these arguments, showing even more proof that America’s low-wage earners deserve higher minimum standards. A recent study done by over 600 economists, including multiple Nobel laureates and former presidents of the American Economic Association has revealed that higher base wages has no direct correlation with harms to employers. What it concluded is that employees gain greater freedoms with spending power, contributing to the capitalist, consumer economy of America while not effecting employment at all (i.e. no job loss).

Further arguments about product cost increases are also not backed up by empirical findings among the consumer market. Oftentimes, businesses adjust for base wage raises first by cutting wage raises in managerial positions and employing small product raises. There are no large-scale layoffs or massive lack of employment, nor is there immense raises in product cost, as employers know this would only harm them in a competitive market. So not only would this increase spending power of the 27.8 million people reliant on minimum wage jobs, helping raise them above the poverty line that no American should live under, but it would also return the driving force of the nation to the middle class, as it would slowly reduce the income disparity benefiting the top 1%. As their pay raises slow, their wealth becomes more manageable in the eyes of the common man, creating an egalitarian society over a plutocratic one.

All facets of the minimum wage argument lends itself to raising the base levels significantly, even more than the $10.10 set forth by President Obama. However, the stark opposition of Republicans makes even the minimal effectiveness of the nearly three dollar raise a worthy goal for the common American proletariat.