Raising the Minimum Wage – In Support

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"Super Size My Wage" - Workers Protesting Low Minimum Wage

“Super Size My Wage” – Workers Protesting Low Minimum Wage

The United States was established based on the principle that all citizens should be guaranteed the right life, liberty, and the pursuit of happiness. However, it is hard to live a happy, fruitful life on $7.25 an hour, the current federal minimum wage. In his State of the Union Address, President Obama acknowledged this issue and advocated for the passage of legislation to raise the minimum wage to a rate of $10.10 an hour.

This type of legislation is what the American workforce needs. As reported by Mother Jones, productivity levels have skyrocketed along with the top 1% percent of wages. However, average wages have hardly risen. Additionally, †he real value of the minimum wage has risen by 21% since 1990. However, the cost of living has risen by 67%. These figures are scary: as the productions of goods cheapens and becomes more efficient Americans should have more purchasing power, not less.

Change in productivits and wages since 1979. Originally posted by Mother Jones.

Change in productivits and wages since 1979. Originally posted by Mother Jones.

The national poverty level, as defined by the US Census Bureau, is at $11,945 for an individual and $22,283 for a family of four. Yet a full-time annual salary is only $15,080. As the 6th richest nation in the world, the United States only has the 11th highest minimum wage. Even worse, the US Census Bureau reports that 15%, or 46.5 million people, live at or under the poverty line. With this many people underpaid, it is no surprise that fast food workers have been protesting in mass and that change needs to begin quickly.

When David Card and Alan Kreuger studied the effects of raising the minimum wage at fast food restaurants in New Jersey, they found no loss in the employment of workers, one of the major critiques conservatives have of a raised minimum wage. In fact, they found an increase in employment. Furthermore, the increase in employment costs caused little backlash, with some consumers lying higher prices and some employers taking smaller cuts.

Though there have been competing studies with different findings, the Card-Kreuger conclusion falls along with common sense. When an employee is able to earn adequate wages, they have a greater incentive to work at a more effective, productive rate. Additionally, job satisfaction increases which in turn provides a better experience for customers and a lower turnover rate for employers. A great example of this idea in practice is the company Costco. As reported by CNN Finance, Costco pays its hourly workers an average just over $20 an hour. Since 2009, Costco’s profits have risen 15% and its stock price has nearly doubled. On the other hard, its competitor Walmart pays under $13 an hour, on average. Also lower is its growth, as profits have raised by 7% and stock price has only grown by 70%. While more than just wage rates affect a company’s growth, this shows how a company can pay its employees well and perform even better with the resulting increase in work and customer service quality. Walmart is well-known for having high employee turnover rates, while Costco’s employees stay with the company for much longer stretches of time. Walmart has been cutting staff with revenue decreases, and Costco has been hiring more. Walmart has been striving to reduce costs, and Costco aims to provide the best possible experience for customers – and it’s paying off.

Labor and economic policy issues are complicated, with many variables. However, raising the minimum wage is a common sense solution to help American workers. This will likely lead to boosts in productivity and revenue, which will in turn aid workers and the economy even better. Fortunately, President Barack Obama has taken the first steps, now it is time for Congress to finish the job and make American jobs better. The minimum wage should, and must, be raised.


Photo Credit: Steve Rhodes

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