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MINIMUM WAGE PAGE 14

Instructor: Jeremy Grabbe

February 6, 2017

Will increasing the minimum wage amount have a positive or negative affect on society? According to David Cooper and Douglas Hall, “The immediate benefits of a minimum-wage increase are in the boosted earnings of the lowest-paid workers, but its positive effects would far exceed this extra income” (Cooper & Hall, 2014). Often lower income workers get looked over and treated unfairly, and this has to change if we want to keep a healthy and progressive nation. This act is unethical because everyone deserves a fair pay to be able to provide for themselves and their family. Someone who works a full-time job should be able to afford the basic necessities to live and not have to live in poverty. This global social issue has been a topic of discussion for many years and will probably go on for years to come as the cost of living increases. This debate involves to different raise rates which are twelve dollars and fifteen dollars, but this essay will not focus on those two price point instead the primary focus is on an increase of the minimum wage in general. Should minimum wage be increased or not? This essay will explain why the minimum wage amount should be raised and who will benefit from the raise. A minimum wage increase should be implemented because it would promote equality among the nation while also paying workers a living wage to live a decent and healthy life.

Background

The federal minimum wage has been 7.25 for the last eight years, but everyone does not get paid 7.25 as minimum wage. The federal government allows states to create their own minimum wage by law, but the worker will get the higher pay of the two. States such as Georgia and Wyoming have a minimum wage of 5.15. While states such as Minnesota and Arkansas are higher but still under the federal minimum wage. The minimum wage laws was set in place to help those in poverty and to make sure there is equality in wages. Now ask yourself how could a person with a family live off of minimum wage, and the answer is they cannot without the help of public assistance.

Problem

According to the Economic Policy Institute, “53 percent of workers earning less than $12 an hour rely on some form of means-tested government assistance—such as food stamps, Medicaid, refundable tax credits, and housing and energy subsidies”(Economic Policy Institute,2016). By raising the minimum wage, we would save the government billions of dollars to possible create some more affordable housing solutions with better living conditions. Many have fought for years to get an increase, and others have voiced that the minimum wage should remain the same while a small percentage believe the answer is lowering minimum wage.

By increasing the minimum wage, many will be able to afford better housing. A person who works a full-time minimum wage job would not be able to pay rent in today’s high society. Forty hours a week at 7.25 is two hundred and ninety dollars without taxes being taken out so in a month a person would make less than a thousand dollars a month. With the housing rates being so high how can someone on this pay afford housing costs? According to a 2015 report from the National Low Income Housing Coalition,

“A minimum wage earner would therefore need to work 107 hours per week, or have 2.7 jobs, to afford a two-bedroom rental unit. Even to afford a one-bedroom unit, a minimum wage worker would have to work 86 hours per week, or have 2.1 jobs.” (NLIHC, 2015)

Raising minimum wage would allow people to afford housing one of the necessities a needs to survive. The opposition believes that is the minimum wage is increased the cost of housing would also increase, and that will not help anyone. They also believe that a minimum wage worker could afford a modest living if they get another person to split the rent with them. According to an article written by Marta Podemska-Mikluch (2016) titled “Affordable Housing Is Already in Reach for Minimum Wage Workers”, “For two minimum wage workers sharing a two-bedroom apartment, a forty-hour week is attainable if they each spend 42 percent of their income on rent and utilities” (Podemska-Mikluch,2016). While the National Low Income Housing Coalition only uses 30 percent of one’s income the opposite uses 42 percent of two people’s income. A single minimum wage income household could not afford housing and this evidence proves that if you have a family while working a minimum wage job, you could not afford a decent living without working numerous jobs. Yes, some people spend over 42 percent on just rent and utilities, but they find it hard to provide anything else other than their primary needs (NLIHC, 2015). This may lead to an unhealthy family because everyone does not want public assistance to help them scrape by. Many refuse to get public assistance, and they face the consequences of unhealthy living, malnutrition children, birth weights and the death of infants.

The increase of the minimum wage rate would help people live healthier lives. According to Dr. Leigh and De Vogli, “Increasing wages can improve psychological well-being and job satisfaction, increase the opportunity cost of engaging in unhealthy habits, and expand the ability to delay gratification”(Leigh & De Vogli, 2016). People who have money tend to eat better because they can afford the healthier food in most cases. Ultimately this means many will live longer lives and have fewer health issues. Another study by Komro et al., proves that the increase in minimum wage is "associated with reduced low birth weight births and reduced postneonatal infant deaths” (Komro et al., 2016). Pregnant women go through a bunch of stress when they cannot provide for their unborn child or living children which in most cases affects the children. Stress can be very harmful to a pregnant woman. Working pregnant women who cannot afford to keep up with pregnancy nutrition or proper prenatal care are often low- wage workers. According to Komro et al., “if all states in 2014 had increased their minimum wages by 1 dollar there would likely have been an estimated 2790 fewer low birth weight births and 518 fewer postneonatal deaths for the year”(Komro et al., 2016). Children who are born underweight can many different complications. They could be born with congenital disabilities, breathing issues, infections, hemorrhage, among many other complications. The baby could even die due to the mother not being able to care for herself properly. So a minimum wage increase by even a dollar could save the lives of innocent children so what is the hold-up.

Another issue to address is will a minimum wage increase affect the amount of job opening. Many debates on whether the economy will fail or succeed it the minimum wage is increased. Some business owners and others who are opposed to the change say that the economy will fail because business will close, reduce hiring, lay-off workers due to not being able to keep up with the new pay increase of their employees. Also, teenagers will suffer due to the lack of experience and education they possess. Some of these accusations have some truth to, but some cannot be proved.

According to the National Employment Law Project, “Businesses are able to absorb the cost of paying higher wages without reducing employment through a range of channels, including savings from increased employee productivity and reductions in employee turnover that consistently result from minimum wage increases”(NELP,2015). Paying living wages will boost the morale of the company and cause fewer turnovers which are all in favor of the enterprise. The increase will also help the economy because low-wage workers will have more money to spend ultimately putting their money right back into the businesses pockets. According to Levin-Waldman, the minimum wage increase will eventually hurt the low wage workers “precisely those whom it was intended to help” (Levin-Waldman, 2014, p.19). Opponents believe the increase will cost many their job ultimately making the situation worse, but evidence proves that to be somewhat false. Of course, it will have some adverse effects on the economy, but the good outweighs the bad in this matter.

In a study by Sanja Blazevic (2013), “the minimum wage increase which manifests itself in a decrease of their employment rate” (Blazevic, 2013) within the most affected of the population which is teenaged workers. Many argue that teenagers learn and benefit the most from low-wage jobs. These jobs are created for them to learn some responsibility and gain some experience. There are valuable lessons a teen's first job teaches them about life and the real world. It teaches them how to be punctual, finical education/responsibility, people skills, productive, confident, solve problems, and other critical skills. Another issue is that teens will be less motivated to finish high school and go on to college to get better jobs if they are being paid so high. Nobody wants the increase of minimum wage to take away from all the knowledge a teenager could learn from their first job. According to Economic Policy Institute, “The average age of affected workers is 36 years old. A larger share of affected workers are age 55 and older (15.3 percent) than are teens (10.7 percent). About two-thirds of affected workers are 25 years old or older” (Cooper, 2015). Many other study show teenagers will not be affected by the increase because most teenagers only work part-time because they attend school. Teenagers could also learn these lessons from many other activities or discussions.

Solution

One solution would be to raise the minimum wage amount according to states. In some states, the cost of living is cheaper so the minimum wage amount does not have to be fifteen dollars because then it would slow down the ambition of the people who occupy that state. For example, if I live in a state such as Georgia where the cost of living is considerably cheaper than states such as Massachusetts and California my wages should reflect that. It is not about just raising the minimum wage to a ridiculous amount it is about paying people living wages. If necessary, the minimum wage increase could even reflect the change due to the cost of living in different cities within the state. According to Robert Pollin and Jeannette Wicks-Lim (2016) authors of is “A $15 U.S. Minimum wage: How the Fast Food Industry Could Adjust Without Shedding Jobs”, offer a solution to the raise of the minimum wage in a four year period instead of right away. With this plan there will be no loss of employment or a very minimal lose because owners will have time to adjust to the changes (Pollin, & Wicks-Lim, 2016, p.716). Nobody should be getting over on the system, but they should be able to live on the system.

The second solution I would suggest is to increase the minimum wage in increments instead of doing it all at once. A massive increase at once could hurt business and workers. So giving them more time to prepare for the change would be helpful. Many sources report that most business owners support the minimum wage increase, but they are worried about how the transition will happen. With the right plan to increase the wage amount, everyone could live a happier and more productive life.

Evaluation of the Evidence

The evidence I used for this essay is all valid and reliable also without any biasedness toward the topic. The sources I used are scholarly and peer-reviewed articles to name a few. I also used some secondary sources which are valid and reliable due to them being government articles from websites and reputable organizations. For example, one source (Economic Policy Institute, 2016) was used to provide facts about the percentage of people who rely on public assistance programs with jobs paying less than twelve dollars. The information this source provided is both valid and reliable. Another source I used was (Cooper & Hall, 2014) and the point of this reference was to strengthen my introduction. It also served its purpose to explain the benefits of the minimum wage increase.

Many of the sources I used had accurate information, and they displayed that by using a graph, charts, tables and basically anything to show others a visual of the evidence. The National Low Income Housing Coalition (2015), display a visual picture of the amount needed to afford rent:

The evidence is clear. A person with a minimum wage paying job at 7.25 or the states minimum wage is not going to be able to afford a one-bedroom apart with just working a full-time job in the majority of the states. Minimum wage is not livable if you cannot keep shelter for you and your family.

Ethical Outcome of Solution

The issue with increase the minimum wage is some people could possibly lose their jobs. My solution makes it, so no one loses their job, but you cannot predict the future of the economy. If some workers were to lose their job, we would be using the utilitarianism approach for solving this issue. Julia Driver states, “Utilitarianism is generally held to be the view that the morally right action is the action that produces the most good. There are many ways to spell out this general claim” (Driver, 2014). This ethical theory is based on what helps the majority of people and increasing the minimum wage would help far more people than hurt them. Parents will be able to survive and provide for their children. The Economic Policy Institute stated that “Raising the minimum wage to $12 by 2020 would directly or indirectly lift wages for 35.1 million workers—more than one in four U.S. workers” (Cooper, 2016). It is the right thing to do for everyone.

The positive outcome will affect millions, and those millions will be able to live comfortable. Workers should be able to get a living wage, not a minimum wage that falls short on providing adequate wages for workers to survive. It is unethical to make someone work 40 hours a week and still not be able to live. This solution could even free up some jobs for people by allowing a person with two or more jobs to be able to live off of one job.

Conclusion

The rise of the minimum wage is beneficial to everyone affected by it, but it will also have some downsides. It would help low-wage workers more financial stability. Everyone should be able to provide for their family and live a comfortable life. While a minimum wage increase could cause job loss, a minimum wage increase should be implemented to promote fairness and equality because it will boost the morale of the business employees, it benefits the economy, and it will help keep working families out of poverty happier and healthier.

References

Blazevic, S. (2013). Is Employment Decreasing Due to Minimum Wage Increase? Ekonomska Istrazivanja/Economic Research, 26, (1), 69-100. Retrieved from the EBSCOhost database.

Cooper, D. (2015). Raising the Minimum Wage to $12 by 2020 Would Lift Wages for 35 Million American Workers | Economic Policy Institute. Retrieved from http://www.epi.org/publication/raising-the-minimum-wage-to-12-by-2020-would-lift- wages-for-35-million-american-workers/

Cooper, D., & Hall, D. (2014). How raising the federal minimum wage would help working families and give the economy a boost | Economic Policy Institute. Retrieved from http://www.epi.org/publication/ib341-raising-federal-minimum-wage/

Driver, J. (2014). The History of Utilitarianism (Stanford Encyclopedia of Philosophy). Retrieved from https://plato.stanford.edu/entries/utilitarianism-history/

Komro, K. A., Livingston, M. D., Markowitz, S., & Wagenaar, A. C. (2016). The Effect of an Increased Minimum Wage on Infant Mortality and Birth Weight. American Journal Of Public Health, 106(8), 1514-1516. doi:10.2105/AJPH.2016.303268

Leigh, J. P. (2016). Could Raising the Minimum Wage Improve the Public’s Health? Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4940672/

Levin-Waldman, O. (2014). A Conservative Case for the Minimum Wage. Challenge, 57, (1), 19-40. Retrieved from the EBSCOhost database.

National Employment Law Project. (2015). Minimum Wage Basics: Employment and Business Effects of Minimum Wage Increases |. Retrieved from http://www.nelp.org/publication/minimum-wage-basics-employment-and-business-effects-of-minimum-wage-increases/

National Low Income Housing Coalition. (2015, May 26). NLIHC Releases Out of Reach 2015: National Low Income Housing Coalition. Retrieved from http://nlihc.org/article/nlihc-releases-out-reach-2015

Podemska-Mikluch, M. (2016). Affordable Housing Is Already in Reach for Minimum Wage Workers | Foundation for Economic Education. Retrieved from https://fee.org/articles/affordable-housing-is-already-in-reach-for-minimum-wage-workers/

Pollin, R., & Wicks-Lim, J. (2016). A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs. Journal of Economic Issues (M.E. Sharpe Inc.), 50, (3), 716-775. Retrieved from the EBSCOhost database.

The impact of raising the federal minimum wage to $12 by 2020 on workers, businesses, and the economy: Testimony before the U.S. House Committee on Education and the Workforce Member Forum | Economic Policy Institute. (2016, April 27). Retrieved from http://www.epi.org/publication/the-impact-of-raising-the-federal-minimum-wage-to-12-by-2020-on-workers-businesses-and-the-economy-testimony-before-the-u-s-house-committee-on-education-and-the-workforce-member-forum/