A few weeks ago, Democrats in Congress brought forth a bill that would raise the Federal minimum wage from $5.15/hour to $7.25/hour. A group of Republicans brought forth a similar plan that would raise the minimum wage to $6.25/hour. Both proposals failed in the Senate.
I see many problems with the minimum wage—it forces prices higher, it increases unemployment (businesses can’t afford to hire as many workers), it is applied equally to poor single mothers and to teens who want some extra money, and it generally represents our federal government meddling in an economy it cannot fully understand. The free market is supposed to be self-governing—that’s what free means—so let’s keep the grimy, inept hands of Congress out of it except where absolutely needed.
But let’s accept, for the sake of argument, that the national minimum wage is somehow a grand idea. We’ll just ignore those pesky side arguments (for the moment) and presume that the federal government knows best how much a fast-food worker’s job is worth. If so, they need to do a much better job.
Minimum wage rates ought to keep pace with inflation. The $5.15/hour that entry-level workers get paid today was set in 1997—when it was worth about $6.20 in today’s dollars. In other words, a person making minimum wage today is making about 20 percent less than somebody who made minimum wage in 1997.
But, more importantly, we need to think about what we’re trying to accomplish. The argument that is often made by minimum wage proponents is that everybody should be able to make a ‘living wage’—i.e., somebody with no qualifications and no work experience should be able to pay their bills and feed their children. The most obvious problem with that is lots of people working these minimum wage jobs are not paying bills or feeding children. Why should a 16 year old who lives at home and just wants some extra cash for movies and Playstation games be automatically guaranteed a ‘living wage?’
If we’re going to do this minimum wage thing, let’s apply it only to adults (and teens who live in a household with a combined income below the poverty line).
But the more fundamental issue is this: Why should entry-level minimum wage jobs come with a ‘living wage’ anyway? The easy answer is something along the lines of, “So everybody can afford the necessities—food, a home, a car, and so on.” But that again ignores the fact that minimum wage jobs are generally intended for teens to earn some spending money and get some work experience, not for adults to support families with. Adults with families, in theory, should be able to do better.
Even those who support a substantial increase in the minimum wage seem to recognize this, although they’d probably never admit it. At $7.25/hour—the most liberal of the proposed increases—a full-time worker would only make slightly over $15,000 annually (before taxes). For a family of three or more, that’s still below the poverty line.
So if we’re going to put another burden on businesses, we might as well make it a useful burden. How about leaving the minimum wage where it is (or, possibly, eliminating it), but using one of our myriad business taxes to provide good job training and placement programs for people below the poverty line? A good program could lead those people into better jobs with higher wages and better prospects for promotion. Or, how about improving the schools so those at the lowest end of the economic ladder have the tools with which to start climbing early?
Heck, I’m willing to entertain any idea that would treat the problem (lack of job skills) instead of the symptom (low wages). What incentive is there for an inner-city kid to do well in school and work hard if they know that they can survive (and all they see is people surviving) on flipping burgers at McDonald’s?
The beauty of this country is that anybody—and I mean anybody—can succeed. I have no problem with the government giving people the tools and opportunities they need to get ahead, but we cannot ignorantly assume that merely raising the minimum wage will have any long-term positive impacts. The people who are working full time at minimum wage jobs will have a little more money in their pockets, but they will still lack skills and they will still need training and they will still be condemned to the lowest rungs of the economic ladder. And this passes for ‘social justice?’
Some have said that our society, after eight years, owes the poor an increase in the minimum wage. I say we owe them better.