The lowdown on the July 24 increase in the the federal minimum wage? It will be net positive for the U.S. economy. From the rhetoric of the supply side theorists --- the same people who advocated more than $1 trillion in 2001-2008 upper-income-favoring tax cuts that created the fewest jobs in any eight-year presidency since World War II --- increasing the minimum wage by 10.7 percent to $7.25 per hour will mark the end of the free enterprise system in the United States, or something close to it.
Higher minimum wage: Will the economy cease to exist?
Economic conservatives and supply side theorists say that thousands of small businesses will go out of business and millions of jobs will be lost if the minimum wage is raised.
Still, the critics counter that it's perfectly acceptable to pay the lowest-valued work categories sub-living wages because these are 'transitional jobs' that citizens hold for awhile, obtain new skills and experience, and then move on to other, higher-paying positions.
For many, minimum wage is their only wage
They reality is quite different: many citizens remain in minimum wage positions for long periods of time. And for some -- including those in the cleaning, hospitality, hairdressing, textile, social care, and retail sectors -- this is when their raise occurs: when the federal law says it must. For these citizens, the federal minimum wage increase is no inconsequential event.
Economic Analysis: Those who are concerned that the minimum wage is getting too high should digest this statistic: in real, inflation-adjusted terms, the new minimum wage will still be below the $9 per hour minimum wage of the late 1960s.
Further, despite three decades of increasing worker productivity -- including the super-productivity era of the Roaring 1990s -- the nation nevertheless saw fit to let the minimum wage decline, in real terms, from $9 per hour to $5. What's more, the nation thought the U.S. economy would be strengthened by an economy that generates less disposable income for lower-income workers! Talk about self-defeating policies. The nation is now bearing some the fruits of that deeply economically-flawed philosophy -- not the least of which is an economy where an increasing percentage of employees do not have incomes high enough to support adequate U.S. GDP growth. Thankfully, the higher minimum wage, and companion Obama administration economic policies, will help reverse that trend.
What's your view of the higher federal minimum wage? Let us know what you think.
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Reader Comments (Page 12 of 12)
7-21-2009 @ 8:30AM
Iowa Mom said...
I stumbled across this article and have been reading everyone's responses for hours. I am shocked and disgusted on so many levels. When did common sense go out the window?
I am a divorced mother of three who has been working since I was 16. I married young, had children young and divorced at a young age. I worked my ass off at every job I landed and when I didn't get a raise based upon my performance I started looking for an employer who valued a hard working employee. Not only did I gain experience with each new opportunity, but I also gained pay increases and benefits over time.
When I reached my earning potentional with my education, I went back to school, took care of my children and WORKED. Yes it can be done. Anyone who thinks they can't are wrong. Especially non-traditional students. So you will have student loans to pay back, but isn't it worth it when you improve your chances at a better life?
The problem is not with raising the minimum wage but the lack of motivation plaguing America. This is the country of opportunity if you want to make the effort. People need to stop depending on the government to improve their lives and start setting goals and making their own opportunities through hard work, determination and self discipline.
Making $7.25 an hour is tough especially if you have a family, but it can be done even with three children. Granted it is hard and takes careful budgeting and living within your means, but it can be done. I have done it.
Through hard work, determination and self discipline I now have a masters degree, own a small business and I am able to afford those luxeries I could not afford before. Not only am I proud of what I have done with my life, but my children learned the valubale lesson of working hard, setting goals, and daring to dream of a better life without depending on anyone but themselves.
It's time for America to stop giving handouts to people who lack the desire to improve their situation. My two teenage sons have summer jobs paying $9 per hour because they acquired skills in the construction industry through hard work and determination. If you want to settle for a minimum wage job don't expect the rest of us to feel sorry for you for not bettering your situation!!
For those of you who have lost jobs or are unable to find a decent paying job and are now working for minimum wage, DON'T GIVE UP, keep working hard and good things will come.
7-24-2009 @ 10:28AM
matt said...
$7.25 and hour isn't enough to live on by what Americans consider acceptable standards...and yet it's better than $0/hour, which is what people who can't find jobs get when the labor market isn't strong enough to meet demand at the imposed minimum.
Your point about being lower than the 1960's minimum wage is interesting, because it was the highest minimum wage in real dollars in US history, and it caused massive unemployment in areas without strong labor markets (i.e. where poverty already abounded-the places that needed help the most), particularly in the South.
The stimulative effect of the minimum wage is a classic economic fallacy. Wages don't appear out of thin air. Every extra dollar you force a business to spend on wages is a dollar that would have been spent elsewhere under different circumstances, either invested in the existing business, sent to shareholders (usually pension funds helping old people to sustain themselves), or spent on up to ~$1.30 in benefits for the minimum wage employee, since benefits are tax free, but wages aren't. It would be nice if we could invent money for low-wage workers, but we can't.
Minimum wages being ineffective is not some shibboleth of right-wing economists; go to the most liberal schools in the country and you'll find at best only lukewarm support for moderately low minimum wages in the economics departments. If the labor market won't support a price point, imposing one only engineers inefficiency in the form of more unemployment, less fluid labor markets, and decreased business investment. Food stamps and the Earned Income Tax Credit have done vastly more for low-wage earners than feel-good schemes like the minimum wage ever will.
7-26-2009 @ 4:05AM
Birchabaldpbarlow said...
Why not make the minimum wage 25-30 dollars an hour and make us all wealthy and think of the boost this will have to the economy on top of making us all earning a cool50-60k a year overnight. I would prefer 50 an hour minimum wage as the100,000k a year would offer me the extra monies to luxuriate in luxury the way I deserve to. This kind of bg brother knows best government interference in business where it really has no business is always useful to draw out the crowd of people whose mastery of the emotion masqurading as thought titans of intellectual vacuity and glittering jewels of ignorance proving that the most exoensive commodotity in America has long been ignorance and longer still will it be. First you have the babies who throw tantrums about how little the wage they makle is and how much this costs and why they have such a raw deal wauhg waugh waugh. Hey baby hueys of the world grab your cry towel, pull up your diaper and take some resposibility for yourself and your lifes destiny you whining brats are pathetic like your helples uin the big mean world and youir big mean boss only pays you $ 6.00 an hour and people who oppose you geting wages mandated by the govenment should try working for 6.00 an hour. Hear is where we see a diconect that does not allow this person to act or think like an adult or apparently do much of anything but lay around on your backs while the rest of us must work th subsidize you. This is one of the biggest problems with things that are government entitlement and how quickly they sap away all human dignity making wards of the state anyone whose reducd thier own dignity to the point where they have ceded control tpo the government all responsibility for thier carew and also the control over thier own destiny which is not going to see much more that misery in the hands of the State. The reason why I would not work for the minimum wage or should one not exist the .25 cents an hour that we would all be paid in the warped and perverse mind of the statist whose lacking in rudimentary understanding of economics and human nature is typical, is that I understand that I akm respossible for myself and my own well being furthertmore I have a free will and this still being a free country for now, I do not have to work for any wage that I am not willing to accept for my labor. The employer employee relationship is a contract that is mutually agrewed upon by both parties and no one is forced into accepting a contract that is not fair or they donot like. This is called liberty and the notion that but forthegovernments interference in private contractual arrangments employees woould all have to work for food. Almost without exception the small business owners I am familiar with pay thier employees a wage that is based on the the quality of the labor that the worker provides them and I have founf that you must have good employees who are happy working in the environment provided them and feel that they are fairly compenstated for the work they do. The notion that as the employer it is in my economic intrest to try and slash thier pay and cut thier benefits and provide no more paid vacations either and this would bring in a windfall os cash for me as if there is no consequene to such action and busdiness carries on as usual regardless of wages, benifits , and the environment provided by happy employees and one that is madse up of disgruntled workers. If this were so why pay a wage atr all as the impression one gets from way to many people is thatg they are being forced to work for low wages doing lousy work and if they are being held against there will I agtree that it is outrageous. The fact that they are not makes me wonder if they are aware of the dignity of the individual that is the underpinning of what America recognizes and is supposed to protect from force or fraud as a legitimate govermnet function and that regardless of how far from that we have gotten the individual is still given the freedom to determine how they would best like to use it and if the 7.00 an hour you are making shoveling horseshit in Lousiana is an insult to your real worth to an employer who will indeed pay you 15.00 an hour if your labor is worth that much based on the amount accomplished during that time. If I have a worker whose productivity per hour bring in only 3.00 per hour than if I pay him more that that I will lose money for every hour that he works for me so what should be done here maybe see iif he will add another shift so I can make it up in volume? If I was General Motors that is just what I'd be doing but since I am not ging to be subsidised for making bad and ineficient decision that I will be the one who loses out on earning if I do somthingstupid or make poor choices in how I run my company. You would be suprised by the efficincies that this builds into a business that is not on the Govermwent dole that is, as such companied have littled incerntive to motivate efficient business actions as the net of safety will always discourage additional disciplines and business structures to maximize efficincience.
I also would point out that where I live in Minnesota starting from around 1998 and ending with the recent economic malaise the minimum wage was as low as 5.25 and as high as 6.75 per hour during that time and whithout exception every fast food joint, retailer and other relativly low skilled employment opputnuity was offer at least 9.00 an hour to start. I remember onr series of years that saw that number rise to10.25 an hour and I saw a news story about this local burger jing whose manager was having to close ther place down at times because he could not getevough employees to run the operation at a whopping 10.25 an hour which is not a professional wages are pretty good for working at Arbys.
I would also point out that based on our currenmty system, and the madates sety forth by the goverment it is the employee whois the net loser at the days end and yhr goverment who makes it so. The governent has apoligists everywhere for every aspect of life that is often made far worse by governments tyhat far better and all of these fabian socialst policies arfe falure in the extreme and the countries in Europe who progressive policies you blindly endorse without really looking into it first there is a reason that those nations all have run double digit unemploymnt ovedr there as a rlule not the excaption for over twenty years now unemployment over 10% is not a sign of the exellent success of the State and its usual effect on commerce at an exellerated pace of socialist stimulus working its magic overnight.
As usual the costs of emplying someone are hidden from all but the employer and these burdens are huge and I would abolish tthem along with the minium wage and the raise ion pay that everuonewould see would be treal suctainabk a far better deal for the low wagre worker whose been tricked by ther govrnment into thinkingh the goverment is helpinjg you and gerttig you moore money when it is infact ripping you of for massive sums of money and it does this to everyrone who is not a member of congress, or railroad employee so lets do the math on who is doing what to who and see what the numbers tell us in the case of a lower wage worker whose earings are 7.00 an hour. The truth is gher real wage is higher that thart by a decent summ ,of money. The 7.00 an hour in wages she recieves call for the folowing rough estimates:
Her real wage is 7.53 an hour based on the social securtity and medicare martchs mandated by the governmet. If you toss that in there and allow for what her forces contibution would be she is taking 1.05 an jour less that the government has cannibalized and the phony programs ofSocail securtiy and medicare are insolvent busgted finito thanks the the wondergul worl f goverment and morons who are ignorant of history's teachings about Governmet people and