Our View: An increased minimum wage would help, but how much?

 

 

 

It's been a decade since an increase in the federal minimum wage, which if history is any indicator, means an increase is likely to come soon, especially as we head into the Presidential election year of 2020.

 

Since 1978, the federal minimum wage had been increased 10 times -- on average a increase every three years. Proponents of a raise say the increase would boost the economy -- more pay for low-wage earners is almost always poured back into the economy -- while lifting people out of poverty and decreasing demand on federal assistance. Detractors say an increase will result in job losses and inflation as employers pass along the extra labor costs along to consumers.

 

Both arguments are valid. The question is a matter of to what degree either of those scenarios will play out and how long those conditions might persist. What is the net effect? Both sides of the ledger must be considered to arrive at a reliable conclusion.

 

 

There has been a long history of minimum wage increases that help us determine that overall impact.

 

That history suggests that those increases have not produced dramatic impacts on the nation's overall economy, most likely because those increases have been small and incremental.

 

The past 10 increases have ranged from a low of 20-cents per hour (1980) to 80-cents per hour (2009). Thanks to those increases, the minimum wage has risen from $2.65 per hour to $7.25 per hour today.

 

It should be noted, however, that when adjusted for inflation someone making minimum wage in 1978 was making the equivalent of $10.16 per hour. By contrast, those earning minimum wage in 2009 made the equivalent of $8.63 per hour.

 

Minimum-wage earners are falling farther and farther behind, even with those increases. It seems more than obvious that an increase in the minimum wage is long overdue. The question becomes how much?

 

There is now a popular effort to establish a $15 per hour minimum wage, which would, by a large margin, be the biggest increase since the federal minimum wage was first enacted in 1928.

 

It is certain that such a raise would have a widespread effect on the national economy -- in both goods ways and bad. It is projected that such a raise would immediately lift 16 million Americans out of poverty. But it could also lead to job losses, which would also affect the lowest wage-earners. Essentially, such an increase would pit one low-wage earner against another. It seems reasonable to suggest that inflation would increase.

 

At a time where unemployment is at a record low but wages had increased only slightly, it seems entirely reasonable that an increase in the minimum wage would do far more good than harm.

 

In a study that looked at 130 state minimum wage increases since 1979, it was found that employment of low wage earners was not affected by the increases. Another study has found that raising the minimum wage results on less dependence on public services such as food stamps and tax credits.

 

But $15 per hour? That's like trying to eat in elephant in one bite.

 

That kind of increase also doesn't allow for the disparity in the cost of living across the country. Compare housing costs in Mississippi to California and you'll immediately understand that it is purchasing power than determines the value of wages rather than the pay itself. The impact of a $15 minimum wage would have a far greater impact in Mississippi than in California. The benefits would be magnified but so would the costs. It would be a huge gamble in Mississippi because the stakes would be so very high.

 

But even in states like ours, where the cost of living is low, minimum-wage earners struggle. They often rely on federal assistance for housing and food, another hidden cost for a minimum-wage that is no longer fair or even cost-effective. The stagnant minimum wage has become a drag on our economy.

 

It seems a far better approach to raise the minimum wage as we have in the past -- at regular intervals.

 

That approach would address the concerns of both those who argue for an increased minimum wage and those who oppose it.

 

 

 

printer friendly version | back to top

 


 

OTHER STORIES OF INTEREST

 

 

 

Follow Us:

Follow Us on Facebook

Follow Us on Twitter

Follow Us via Email