By ISABEL MODELL-KOWALSKI, age 12
Today, many people find that making a living has become a struggle. Currently the federal minimum wage is $7.25, which is barely enough to survive. The last time the wage was raised was on July 24, 2009, from $6.55.
In November 2012, New York Communities for Change spoke with workers at the largest organized minimum wage protest to support fast food workers. Many stated that they were still struggling to make ends meet, even with income from multiple jobs.
In this year’s State of the Union Address, President Obama proclaimed that he wants to raise the federal minimum wage to $10.10. He stated, “The cold hard fact is that most Americans are working hard to get by, not get ahead.”
In response to the State of the Union speech, newly elected Socialist Seattle city Councilmember Kshama Sawant stated that raising the minimum wage to $10.10 “is not a ticket out of poverty.” She leads a program called 15Now, which calls for an increase to $15.00 for a more realistic way to get by.
The recent economic recession is affecting everyone. According to the University of California Davis Center for Poverty Research, the current minimum wage for full-time work results in an income of $15,080 annually. In 2012, the federal government defined “poor” for a family of four with two children as earning $22,283 or less yearly. According to the MIT Living Wage* Calculator, the living wage for a family of four in New York, before taxes, is $46,421.
A number of recent polls show that about three-fourths of Americans favor an increased minimum wage. While the majority of those employed at minimum wage would probably agree it should be raised, some people argue that unemployment rates would go up and poverty would increase. If businesses had to pay their workers more, they might lay some of them off to save money.
The National Federation of Independent Businesses creates an example scenario: “A community-based pizza parlor is selling 100 pies a day for 360 days at $10 each. Total [profit] is $360,000. It employs 10 minimum wage workers earning $7 per hour, working 2,000 hours a year, making labor costs $140,000.” To keep its costs the same, the pizza parlor would have to lay off three workers.
However, Councilmember Sawant proposes that small businesses could be subsidized** with money from increased taxes on big companies. She also argues that raising wages actually lowers unemployment: “When working people have more income, their spending power goes up, which in turn boosts sales, which further increases jobs and overall spending power, and so on.”
The main challenge right now is to make sure workers earn a living wage so that they and their families don’t live in poverty, while convincing employers it would be good for business.
*Living wage: the amount of money people must make to support themselves and their families in a given location. It must cover the costs of food, housing, healthcare, transportation, child care, and other necessities.
**Subsidy: a sum of money given by the government to a company, organization or individual, often to support social policy. In this case, it would help small businesses afford to pay their workers higher wages.
1 thought on “The Wage War”
duncan, and others intreestedThe mechanisms for increased employment through higher minimum wages are simple enough.Poor people spend all their money (and then some), so when you give them more of it to spend it boosts the entire economy equal to the drain it applies. It does hurt low-wage employers relative to others, but that’s usually a positive overall.It doesn’t hurt anyone much though, employers of minimum wage earners usually can’t function with fewer workers, and are normally only competing directly with other minimum wage employers: overall, no real ability to make layoffs in the first place, and little or no direct competative disadvantage with increased wage costs anyway.Most importantly, increasing low end wages allow poor people to have proportionately more discretionary spending, icreasing the free flow of money and thus making capitalism work better (assuming it’s reasonably free to work it’s magic).As for exporting poverty, as mentioned by Genius, yes, that’s rather unfortunate, and pretty much complete here. Perhaps if we had stronger unions or an actual left-wing government they’d have something to say about the import of slave-made goods.