On Feb. 12, President Barack Obama proposed that the United States increase the minimum wage to $9 per hour in his State of the Union Address. Since then, the cause of combating the ever-increasing income inequality in the U.S. has gained significant political momentum, especially in the fast-food industry.
Fast-food workers across the country have been protesting for a wage increase to $15 per hour and for good reason. The current $7.25 federal minimum wage in the U.S. is simply unlivable. This leaves the millions of Americans employed at this hourly rate, 84 percent of whom are adults, grasping for any means to take care of themselves and their families.
The Center for Labor Research and Education published a study that showed the majority of fast-food workers or families of fast-food workers receive federal benefits from programs such as the Supplemental Nutrition Assistance Program, the Children’s Health Insurance Program, or Medicaid. This adds up to about $7 billion per year in tax dollars allocated solely to subsidize some of the nation’s most successful businesses–talk about mooching from the government.
And companies, such as McDonald’s, are the first to point their workers toward the federal benefits instead of offering them a living wage. McDonalds’ stores contain posters that advertise a “McResources” phone number for workers who are unable to provide for their families.
The people who answer the McResources hotline provide McDonalds’ employees information about obtaining federal benefits such as food stamps. This means McDonald’s knows that its wages are so low that they are employing people to tell other employees to take handouts from the government to compensate for its avarice.
Given that the U.S. is the wealthiest nation on the planet, at least in terms of GDP, it is complete nonsense that a full-time worker should have to live in poverty in this country. Look at our foreign counterparts — among Organization for Economic Cooperation and Development member countries, the U.S. has one of the lowest minimum wages.
In Belgium, the minimum wage is $11.69 per hour. In France, it’s $12.09, and in Australia, it’s $16.88. If they can do it there, why can’t we do it here?
The truth of the matter is we are certainly capable of doing more. Today’s minimum wage doesn’t even account for inflation, let alone the profit margins corporations make off workers.
If minimum wage kept up with inflation since 1968, it would be $10.74. If it increased in proportion to average worker productivity since that same time period, it would be $22, and if it kept up with the profit margins of the top one percent income earners, it would be $33 per hour.
No credible source is asking for $33 per hour, but minimum wage should at least cover the cost of inflation. If it fails to do that, it is essentially useless, and it shows— there is not a single state in the U.S. where a full-time minimum wage worker can afford the average cost of a two-bedroom apartment.
Maybe that’s why 73 percent of Americans and 50 percent of Republican Americans support raising the minimum wage to $9 per hour, according to a Gallup poll.
Many people argue that raising the minimum wage would result in economic consequences, most of which are either exaggerated or simply untrue.
Most of these assertions boil down to the claim that employers will have to lay off workers or cut hours in order to compensate for the increases in wages. This, they say, will contribute to economic stagnation.
However, a study published in The Review of Economics and Statistics found that there were “no detectable employment losses” from minimum wage increases in the U.S.
According to the Economic Policy Institute, increasing the minimum wage to $9 per hour would contribute no less than $21 billion into the economy, and increasing it to $9.80 would create 100,000 jobs.
These results are explained by what The Economist describes as “trickle-up” economics, which makes a great deal of sense if you think about it.
A study conducted by the Federal Reserve Bank of Chicago concluded that a $1 minimum wage increase would increase spending by $2,800 in households with minimum wage workers.
This is because those at the lower rungs of the economic ladder have less dispensable income than those at the top of the ladder. Therefore, they are forced to spend all of it in order to carry on. Richer people are more likely to save their money, which does not contribute to the economy.
Think about it: You could probably take millions of dollars from people in the upper one percent and, as long they were never alerted that it was missing, and they would never spend enough to notice it was gone. Try doing that to someone who makes minimum wage.
The profits generated from an increase in transactions resulting from an empowered working class will do more than compensate the losses businesses incur due to increased wages.
Moreover, it is well-known that income inequality contributes to lower levels of income mobility. The ability to go from rags to riches is at the heart of the ethos of the American Dream, but we must not let big money interests turn this dream into a nightmare.
