Arrington: It's Supposed to Be a Living Wage

The federal government needs to raise the minimum wage.

by Katherine Arrington | 2/1/21 2:00am

The Fair Labor Standards Act of 1938 introduced the first across-the-board federal minimum wage in American history. The aim was that the minimum wage — 25 cents per hour at the time — would provide a standard to protect the health and well-being of people in working-class jobs. The thought was that workers should at least be able to support themselves by working full time.

The reality of the current minimum wage, however, does not resemble its intended purpose. Over half of all minimum-wage workers are adults, and at the current federal hourly rate of $7.25, a full-time, 40 hours per week worker with no vacation makes only $15,080 per year. For a household of one, this is only $2,200 above the poverty threshold. For a family of two, it is $2,340 below the poverty line, and for a family of three, it is $6,880 below. And that’s before Social Security and Medicare come out of the paycheck. When people work full time at a minimum-wage job, yet can barely support themselves — let alone any children or other dependents — the minimum wage is clearly not serving its purpose.

Our economy depends on minimum-wage jobs. Child care workers, janitors, delivery drivers and restaurant workers are all vital. Imagine a world without them: no babysitters, no clean streets and no restaurants. Keeping the minimum wage below a living wage devalues these jobs and their importance to society.

A livable minimum wage would also decrease the amount of federal spending currently allocated to welfare. At $7.25 an hour, full-time workers cannot afford to feed their families, meaning they often fall back on government programs such as the Supplemental Nutrition Assistance Program — food stamps. Raising the minimum wage to $15 would reduce dependence on these programs, and thus save money. 

A higher minimum wage would also have an immediate positive effect on the overall economy. Most minimum-wage workers do not have much disposable income, and as a result, most of what they earn gets spent immediately on basic necessities like food, rent and other bills. Increasing the wages of minimum-wage workers would thus have an immediate effect on local economies. More disposable income to go around means increasing the market for local goods and services, thereby directly stimulating the economy.

The most common argument against increasing the minimum wage is that such an action would cause a shortage of jobs and increase unemployment, as businesses would have to fire workers rather than pay increased wages. However, substantial research has shown that raising wages actually works as intended: It increases the income of the working class without creating a significant drop in employment rates. In fact, thousands of small businesses and many business groups have gone so far as to endorse a $15 minimum wage, and companies like Amazon and Walmart have started to raise their wages on their own accord in response to public demand. Besides, businesses face deeper issues if overworking and underpaying their employees is what they must do to survive.

The United States’s current minimum wage is actually lower in real value than it was in 1968: adjusting for inflation, the minimum wage then would amount to $11.90 today, 164% of the current minimum wage. Even since the minimum wage was raised to $7.25 in 2009, the cost of living has gone up with inflation. The fact that our minimum wage is lower in real value than it has been in the past should be a cause for concern. If the minimum wage rose proportionally with labor productivity since 1968, it would be $21.25 today. Instead of increasing with the cost of living and labor productivity as it should, the minimum wage has decreased. Thus, not only do we need to raise the minimum wage to a livable wage, we should adjust it for inflation each year to prevent the minimum wage from depreciating in value as the cost of living goes up.

It is unjustifiable that any Americans should work full time and still be unable to provide for themselves and their loved ones. For both the economic and social benefits, Congress should pass legislation to raise the minimum wage to $15 as soon as possible. A $15 minimum wage would make a minimum wage worker’s yearly income $31,200 per year, allowing workers to support themselves and families of four people while staying above the poverty line, without too much of a cost to business prosperity. After that, they should institute a plan for the minimum wage to increase with the cost of living, so that we do not end up in the situation we are in today again. Raising the minimum wage is the first step in reducing the greater issue of income inequality; it is essential that we take it boldly and immediately.

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