/Raising minimum wage can help boost the economy and workers’ quality of life

Raising minimum wage can help boost the economy and workers’ quality of life

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Kenneth Tallant
Contributor

A large number of students, in order to support themselves through college, have to work minimum-wage, part-time jobs. Whether the minimum wage should be raised has become an important issue for many, including myself as a student, a worker and a voter concerned about the national economic climate.
It seems sensible for the U.S., as a developed nation, to attempt to eliminate poverty and to provide a better standard of living for its people. By imposing a minimum wage, the government theoretically ensures that no working individual lives below the poverty line.
According to the U.S. Department of Labor, minimum wage law was first enacted through the Fair Labor Standards Act, 1938, under President Franklin Roosevelt, who declared the intention of his administrative efforts was to provide people with wages that ensured “more than a bare subsistence level.”
However, theory and practice often differ greatly. The current reality is that minimum wage barely gives a full-time working person the ability to maintain an above-poverty lifestyle, let alone to support a child or a family unit with a stay-at-home parent.
According to University of California, Davis’ Center for Poverty Research, the 2012 poverty threshold for a single person was $11,945 per year, while a full-time minimum wage employee earns roughly $15,080 annually.
Minimum wage has fallen significantly in terms of purchasing power and no longer serves the purpose for which it was enacted. According to the Inflation and the Real Minimum Wage fact sheet from Congressional Research Service, the statutory minimum wage in 1978 was $1.60, the equivalent of $10.69 today after adjusting for inflation. The current federal minimum wage is $7.25.
Many economists argue against raising the minimum wage on the basis that it will cause employee cuts. However, this fear seems to disregard the fact that as employers pay workers more, the workers, in turn, spend more at establishments. As an establishment gets more business, it will need to expand to satisfy the customers with enhanced spending power. In order to expand, establishments will have to hire more workers, who will go on to spend money. Thus, the cycle of trade benefits both employees and employers.
This theory is backed up by a study by economists Alan Kruger and David Card, in which they found that “stores that had to increase their wages increased their employment.”
There are a growing number of economists who see raising the minimum wage as not only an ethical decision but also an economically logical one. According to Jillian Berman from The Huffington Post Business, more than 600 economists, including seven Nobel laureates, have signed the letter, organized by the Economic Policy Institute, which will be sent to Congress to endorse a raise in the minimum wage to $10.10.
I find the reason why this topic is still much debated understandable. The people who live at the bottom of the American economic structure are constantly in a precarious state and find changes to the current system threatening to their livelihood.
However, the minimum wage would serve no purpose if it no longer kept citizens from poverty. The current minimum wage has not only become an economic hardship for many in the nation but also caused increased government spending on assistance such as subsidized housing and food stamps, which is financed through taxation.
Therefore, I believe that by increasing the minimum wage, we can stimulate the economy, raise the quality of life for those who are being left destitute, and reduce government spending on supporting minimum-wage workers.

Kenneth Tallant is a junior liberal arts major from Troy.