Dr. CHE Sadaphal — On the Minimum Wage

The federal minimum wage is currently $7.25 per hour. President Obama, in his 2014 State of the Union address, called for this wage to be increased to $10.10 per hour. The rationale is that increasing the minimum wage will benefit workers, lift people out of poverty, boost the economy through increased spending, and correct the diminishing value of the current minimum wage by adjusting for inflation. On a federal level, efforts to raise the minimum wage have stalled, but such efforts have progressed in many states (e.g., Vermont at $10.50 an hour by 2018 and Connecticut at $10.10 an hour by 2017) and municipalities (e.g., Seattle at $15 an hour rolled in over time and Los Angeles at $15 an hour by 2020). In some instances, local groups have taken even bolder steps. The Micah Institute, for example, launched the Real Living Wage NYC Campaign this month that seeks to secure $20 per hour for all New York City workers. This figure is not arbitrary, but is the wage required to meet basic needs without government subsidies in Manhattan. MIT has calculated that a genuine “living wage” for an individual living in New York City is $14.30 per hour.

A wide range of opinions exists on tinkering with the minimum wage, as does a lack of consensus about the overall effects of an increase in the figure. Moreover, politics, as usual, tends to taint the facts with agenda-serving biases, so it is very difficult to obtain an objective analysis on whether raising the minimum wage is in fact helpful or harmful.

The point that I hope to convey is that any way you go, someone is going to lose something in the minimum wage fight—it’s just a matter of what they loose and how much. What one chooses to do thus becomes a matter of what variable holds the most weight in their economic equation: profit, workers, or ethics.

On the one hand, full-time employment of 2,080 hours a year at the current federal minimum of $7.25 an hour yields an income of $14,500 a year. This amount is above the individual annual income poverty threshold of $11,770 but below the poverty line of $15,930 for one adult supporting one child. Essentially, what the federal government is saying is that it has set the floor on what an employer can legally pay an employee while also recognizing that the same floor places that employee either just above or well under the threshold of destitution. Living in one of the boroughs of New York City, I am wholly incapable of imagining how a full-time minimum wage worker making $290 a week is able to survive. Honest work deserves honest pay, and $7.25 an hour is nowhere near honest. Even if a $15 an hour minimum wage was federally enacted, a full-time worker would still be making $31,200 a year, a figure significantly below the median 2013 U.S. annual household income of $52,250.

 

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