We Can do More Than the Minimum

Graphic by Sacha Verlon

Graphic by Sacha Verlon

With the presidential election coming up in about a week, people all across the U.S. are analyzing policies and disputing who should be elected. Of the many issues that candidates take a stand on, the federal minimum wage is a crucial one in this election. Over fourteen percent of Americans are currently in below the poverty line, which is defined by earning less than $11,770 in annual income per adult, or $24,250 annually for a family of four (11). The working class of the nation is crying out for a change, and that solution is raising the federal minimum wage.

Among all of the 2016 Presidential candidates, Bernie Sanders takes the strongest stand on raising the minimum wage. He wants to raise the federal minimum wage to $15 an hour, which is over double our current federal minimum wage of $7.25 (6). His plan was to raise the minimum wage from a “starvation pay” to a “living wage.” Although he is not in the presidential race anymore, he helped open America’s eyes on the issue of the minimum wage.

Gary Johnson, the Libertarian nominee is another candidate who sparked a conversation on the issue. He wants to eradicate the federal minimum wage altogether, and let supply and demand in labor markets set the minimum (7). This outraged many people, since it would backtrack the progress of the U.S. to before the Fair Labor Standards act of 1938, when large corporations were legally able to exploit workers by pay them as low as a few cents an hour (12).

Now, many Americans are faced with the same question: who is right? Which candidate will create the best outcome for the American Economy? Many people argue that raising the minimum wage will do more harm than good, but statisticians and economists prove otherwise. In fact, about 600 economists, including seven Nobel Peace Prize winners, have contacted the President and legislation urging them to raise the minimum wage (4).

Some citizens argue that raising the minimum wage would substantially raise prices of products, when in fact prices of products do not raise a considerable amount when the minimum wage rises. Michael Reich, an economist from University of California, Berkeley, stated that restaurant prices increase 0.7 percent for every ten percent increase in the minimum wage. For example, say the price of a sandwich is five dollars. If you rose the federal minimum wage to $10.10, which is what Obama proposed to raise it to, the cost of a sandwich would raise to $5.14. This price increase is not enough to persuade people to stop buying a sandwich (1).

Contrary to popular belief, raising the minimum wage will not result in any sort of job loss. A substantial amount of research by Hristos Doucouliagos and T. D. Stanley in their publication “Publication Selection Bias in Minimum-Wage Research? A Meta Regression Analysis” has proven that there is no correlation to raising the minimum wage and job loss (9). Studies of counties bordering counties from different states with a different minimum wage by the University of Massachusetts, University of North Carolina, and University of California proved that raising the minimum wage did not cause any downturn in employment rates (4).

 The state of New York is currently putting these studies to the test. In Nov. of 2015, Governor Andrew M. Cuomo passed a bill that would gradually increase the minimum wage from $9 to $15 an hour. The minimum wage will increase by about one dollar each consecutive year, until it reaches $15 by July of 2021 (4).

Many New Yorkers believe that the majority of people who are earning a minimum wage are teenagers, who are earning it for pocket change to spend on the weekend. Because of this, many people think that raising the minimum wage wouldn’t help any low-income adults in New York. In actuality, half of workers earning $15 per hour are older than 35 in New York. In New York City, 80 percent of workers that are earning minimum wage are over 25. This means that raising the minimum wage would impact adults in poverty instead of just teenagers (4).

According to a study conducted by New York State Department of Labor, raising the minimum wage in New York would increase the wages of 2,362,500 people, which is around 10 percent of the population. This means that workers earning the minimum would earn an annual salary of $31,720, which according to the New York Division of Budget Analysis, is estimated to be enough to provide for a family of five above poverty (4).

Not only does raising the minimum wage pull millions of people above the poverty line, but it also puts extra money in the pockets of workers, which gives them more money to spend on businesses. Studies show that for every dollar increase in the minimum wage, workers pay $2,800 more in customer spending towards businesses which will grow the economy. An estimated $15.7 billion will be generated in the state’s economy through raising the minimum wage (5).

Australia is a great example of a country that is prospering from a higher minimum wage. Their minimum wage is $17.70 in Australian dollars, which converts to $13.60 U.S. dollars. The Gross Domestic Product per capita, (which is a measure of the amount of money produced in a country divided by the population of a country), in Australia is $67,458, compared to the U.S.’s $53,041. This shows how much stronger Australia’s economy is compared to the U.S.’s, when compensated for population. Employment in Australia is not significantly low either, with the employment rate at 94.3 percent (5).

People earning the minimum wage are tired of working for long, grueling hours and not being able to support their families, or even themselves. In the long run, raising the federal minimum wage is the best way to grow our economy while giving the working class and their families an opportunity for a better life.


https://news.vice.com/article/what-will-happen-to-the-economy-if-we-raise-the-minimum-wage (1)

http://www.valuesandcapitalism.com/what-actually-happens-when-you-raise-the-minimum-wage/ (2)

http://journalistsresource.org/studies/economics/inequality/the-effects-of-raising-the-minimum-wage (3)

https://www.governor.ny.gov/sites/governor.ny.gov/files/atoms/files/Minimum_Wage_Report.pdf (4)

https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/minimum-wages (5)

https://berniesanders.com/issues/a-living-wage/ (6)

http://dc.medill.northwestern.edu/blog/2016/08/16/eliminating-the-minimum-wage-inside-gary-johnsons-plan/ (7)

http://www.nytimes.com/2015/11/11/nyregion/andrew-cuomo-and-15-minimum-wage-new-york-state-workers.html?_r=0 (8)

Hristos Doucouliagos and T. D. Stanley. “Publication Selection Bias in Minimum-Wage Research? A Meta Regression Analysis.” British Journal of Industrial Relations, 2009. vol. 47, no. 2, pp. 406-428. (9)

http://obamacarefacts.com/federal-poverty-level/  (10)

https://aspe.hhs.gov/2015-poverty-guidelines (11)

https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/fairlaborstandardsactof1938.aspxm (12)