I have to begin this post by saying that I have not always been a proponent of raising the minimum wage. I feel this is a starting point and one should not be earning this wage as they progress through life and gain more experience and education to move up the income ladder. However, with the economy being what it is right now, I wonder if it is time to raise the minimum wage.
While campaigning, President Obama suggested raising the minimum wage to $9.50 by 2011. Now might be the time for him to re-visit this idea. As the economy has tanked, wages have stagnated, and many that have jobs are having trouble meeting their families’ basic needs. Accounting for inflation, weekly wages have actually fallen by 1.3 percent in the past eight months, and the Commerce Department reported that consumer spending, which makes up 70 percent of the economy, dropped in June for the first time in nearly two years. To raise the minimum wage puts a little more money in pockets of the lowest-paid workers. Many of these workers would spend that additional income immediately which could help restore the consumer spending that businesses need to grow.
Raising the minimum wage would also help workers whose salaries are at lower end of our economy. Low-wage work is becoming the livelihood of an ever-growing number of workers. A new analysis by the National Employment Law Project finds that while the majority of jobs lost during and after the recession were in mid-wage occupations, roughly three-quarters of jobs added since job growth resumed are low-wage. While the number of low-paid workers is growing, their wages are declining: workers in lower-wage occupations (with median wages under $13.52) have seen a 2.3 percent decline in real wages since the recession began.
On the other side, I know there are arguments against raising the minimum wage saying it would lead to job loss. This theory was tested in 1993 by Alan Krueger, Obama’s nominee to head the Council of Economic Advisers, and economist David Card. They published a study comparing over 400 fast-food restaurants in New Jersey and Pennsylvania. In 1992, New Jersey raised their minimum wage from $4.25 to $5.05 an hour whereas Pennsylvania kept theirs at $4.25. This study found that relative to stores in Pennsylvania, fast food restaurants in New Jersey actually increased employment by 13 percent. Now, this was just one study but many still use to this to contradict the point that raising the minimum wage would lead to job loss.
Like I mentioned before, I see both sides of this argument. I know many business owners invest their lives into their companies and feel it is unfair to have to pay some of their employees more. On the flip-side, with the economy showing no signs of recovery right now, it is important to look at as many options as possible. Raising the minimum might be one of these options.
What do you think about raising the minimum wage?
Photo credit: jypsygen
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