There’s been much debate in recent years over raising the federal minimum wage to fifteen dollars an hour to benefit the working poor and to combat poverty. Supporters of this wage increase have stated that their objective was to have every worker in this nation make at least fifteen dollars an hour for the services in which they render. Certain states and cities have mandated a fifteen dollar an hour minimum wage in response to this ever-growing movement. While we certainly need to implement increases in the wages of those who work these types of jobs over a period of time, a fifteen dollar an hour federal minimum wage is not a good solution. Here’s why.
Think about it, what exactly is the minimum wage? The minimum wage is basically the floor value for wages. It is the lowest hourly wage an employer can compensate an employee for their services. Take that in for a second. If the minimum wage is the floor value in regards to pay, what happens if you raise it? It will still be the lowest wage an employer can compensate an employee for their services. You might ask, where am I going with all of this? Well, the point is, if the federal minimum wage were tripled from what it is now, minimum wage earners would still be at the bottom in terms of hourly wages. Supporters of this initiative have often stated that this measure would be effective in the fight against poverty, placing individuals above the poverty line. However, if these companies implemented price increases in response to this initiative, that would lead to further inflation, and over time, the poverty line would be adjusted for inflation, leaving those who earn the minimum wage right where they have always been, which is, for the most part, struggling to get by, as well as being below the poverty line.
A large percentage of minimum wage earners are employed by small businesses across this nation. It seems that the mindset of people pushing these initiatives is that these businesses can afford such an increase in the cost of labor. When I was employed in the beverage distribution industry, I dealt with a lot of small business owners, and a lot of these businesses struggled just to keep the lights on. These small businesses couldn’t absorb the cost of paying their employees fifteen dollars an hour in parts of the country where the cost of living is much lower. That would ultimately be disastrous to these businesses. If these small businesses close, those who are employed by them are going to be out of a job. So, what good is that going to do for the minimum wage earner? If these businesses can’t absorb the cost, then the only other option that they really have is to pass the burden of cost on to the consumer. This would, once again, either put the small companies out of businesses due to lagging sales caused by the price increase, or it would be inflationary because businesses would have to implement price increases. Businesses would have to devise a way to cover paying higher wages. Minimum wage earners would be right back where they started from at the end of the day or worse, they could be unemployed.
It’s not that anyone should struggle and fail to provide an adequate living, but it is entirely fair to point to everyone that the minimum wage is always going to be the minimum wage. It’s a terrible experience whenever someone pours their heart and soul into a paycheck and they can’t even make ends meet. The only way to combat poverty and truly assist those who are considered the working poor is through economic opportunity, training, education, etc. Whenever our elected officials are making promises to raise the minimum wage to give people a better life, they are only talking pillow talk so they can get elected to another term. Raising the federal minimum wage to fifteen dollars an hour is not a good solution, and will more than likely do more harm than good for the very people that it is attempting to assist.
“It takes nothing to stay in poverty, but everything to break free from it.”
– Idowu Koyenikan