With an open mind and two sides of the story, you’re bound to learn something new.
Welcome to the zoo! This is a blog where both the Republican and Democratic viewpoints are represented. The blog is not meant to sway you either way necessarily, just present both sides of the story. You may not agree with the whole article, but hey, you’re likely to agree with half! The topic this week: the minimum wage.
People are overzealous to call for raising the minimum wage – until it costs them their jobs. The Congressional Budget Office projected that a minimum wage increase from $7.25 to $10.10 would cause 500,000 Americans to lose their jobs. This projection has been supported by surveys in which 38% of businesses and human resource professionals reported that they would lay off some employees if this increase in minimum wage were to occur.
Rather than dealing with increased costs in the US, some companies reacted with an increase in the outsourcing of jobs to countries where costs are lower. The Statistic Brain Research Institute reported that 2,382,000 US jobs were outsourced in 2015; 44% of companies reported that outsourcing was implemented to reduce or control costs.
Not only would businesses struggle, but consumer goods would also be affected. A 2015 Purdue University study determined that raising the minimum wage for fast food employees to $15 or $22 would result in a 4.3% and 25% price increase, respectively, or a reduction in product size between 12% and 70%. NBC News also investigated the repercussions and found that the prices of Oakland coffee would increase 10% to 20% with a minimum wage increase to $12.25 and prices of Chicago coffee would increase 6.7% with a minimum wage increase to $10. Consequently, if people are earning more, they will also be spending more – is this not counterintuitive?
Mark J. Perry, PhD, of the American Enterprise Institute holds that “market-determined wages reflect supply and demand conditions that are specific to local market conditions and vary widely by geographic region and by industry,” a severe contrast to the government-mandated wages that “are always arbitrary and almost never based on any sound economic or cost-benefit analysis.” A government-mandated minimum wage results in decreased profits for companies and a subsequent decrease in employment opportunities for unskilled workers, as well as higher prices for the consumer. Clearly, the minimum wage should be controlled by the free market and not the government.
President Obama stated during the State of the Union in 2015, “If you truly believe you could work full-time and support a family on less than $15,000 a year, go try it. If not, vote to give millions of the hardest-working people in America a raise.” Currently, the federal minimum wage is $7.25 per hour; President Obama would like to raise the hourly rate to $10.10. Many argue that this increase would negatively affect the United States economy. However, according to the Department of Labor, increasing the minimum-wage would “have a small stimulative effect on the economy” rather than a harmful impact. Raising the minimum wage would generate an increase in spending by low-wage workers, using their additional earnings. This, in turn, would raise product demand and promote job growth. If we were to adjust the minimum wage to account for inflation, the rate would be about $10 per hour. We have not adjusted properly for inflation and therefore have an absurdly low minimum wage for the cost of living today. As expressed by the White House, the federal minimum wage has increased 22 times since 1938. Since then, the real GDP per capita has increased steadily each time the government raised the minimum wage. Therefore, there is no reason raising the minimum wage to a livable rate today would cause a decrease in our GDP.
The purpose of a minimum wage is to ensure that no one is living in poverty, and that all workers have enough money to live in the United States. Currently, about 17% of all full-time workers receive food stamps (Census Bureau, 2014). If we were to raise the minimum wage, there would be a decrease in government spending on income-support programs including public housing, nutrition assistance, food stamps and medicaid. Raising the minimum wage to $10 would lift six million workers out of poverty. According to the Department of Labor, 3.5 million people of color would be lifted out of poverty if the minimum wage increased. For our country to succeed, and for all deserving Americans to benefit from the “American Dream” and live above the poverty line, the minimum wage should be increased to $10.10.
Rebecca Saber is a junior government major in the College of Arts and Sciences. She aspires to be Secretary of State, but is willing to settle for Supreme Court Justice. When she is not writing about politics, Rebecca can be found watching TV in her bed or at some musical theater rehearsal. Welcome to the Zoo appears on alternate Wednesdays this semester. If you want to chat, Rebecca can be reached at firstname.lastname@example.org.
Katie Barlow is a junior biology major in the College of Arts and Sciences. When not debating politics, she can be found running half marathons, eating mashed potatoes, and teaching tree climbing for COE. Welcome to the Zoo appears on alternate Wednesdays this semester. If you’re up for a chat, Katie can be reached at email@example.com.