Raising the federal minimum wage is a hotly debated topic in congress. However, a November 2013 Gallup poll indicated that 76 percent of Americans support raising the federal minimum wage, which is $7.25. A popular action like this should be easily implemented; however, detractors of a higher minimum wage believe that it would hurt the country economically.
This is not the case. According to the U.S. Department of Labor, the minimum wage back in 1968 when adjusted for inflation and purchasing power peaked at $10.77, and has gone down on average since then. The unemployment rate that year was 3.6 percent, and only exceeded 6 percent in 1975. During that time period, a global recession had hit the U.S. hard, thus showing no correlation between a higher minimum wage and unemployment, since unemployment rose as minimum wage began to fall slowly.
Another concern that many people who are against a minimum wage hike tend to espouse is that it would substantially hurt small businesses within the country. However, this would not be the case, as a study by the National Employment Law Project shows that 66 percent of all low wage workers are employed by large corporations with over 100 employees; hence the burden would be much heavier on corporations like Wal-Mart rather than a local flower shop for instance. Furthermore, a poll conducted by the progressive Lake Research Partners showed that 61 percent of small business owners favor a higher minimum wage since they believe it helps their local economy, and thus creates more demand for their products and services.
The biggest beneficiary of a higher minimum wage would be families who live under or straddle the poverty line, who, according to the 2010 census, make-up half the population. A recent Congressional Budget Office study titled “The Effects of a Minimum-Wage Increase on Employment and Family Income” predicts that if the minimum wage were to be increased to $10.10 by 2016, then the average family income of those under the poverty line would increase by 3 percent, and move approximately 900,000 people above the poverty line.
The impact would be so great that the study “The Effects of Minimum Wages on SNAP Enrollments and Expenditures” published by the American Center for Progress shows that if the minimum wage were raised to $10.10, over 3 billion people would not be reliant on the SNAP program (aka food stamps), saving the American taxpayer over $4 billion per year. This would especially help children in impoverished households described above, considering a 2013 report by UNICEF found that the US has the second highest child poverty rate in the world, behind Romania.
Overall, empirical data has shown that boosting the minimum wage will improve the lives of many Americans economically. Despite the fact that U.S. productivity has grown exponentially since 1979, most of the economic gains have gone to the top 1 percent of income earners, while the wages for the bottom 99 percent of Americans have remained relatively flat within the same time frame. Raising the minimum wage is a step towards bringing some of that prosperity back into the hands of common American citizens, so they can live a more dignified life, rather than enduring the brutal reality of living paycheck-to-paycheck in order to simply survive.
Jacob Yungman is a junior majoring in political science.