Business, Domestic, Megan Kallstrom, Web Columnists — February 22, 2014 at 3:16 pm

$10.10 an Hour

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(WikiCommons)

(WikiCommons)

SeaTac is a very small town in Washington state and home to the Seattle-Tacoma airport, from which it derives its ungainly name. Almost everyone living in SeaTac works at the airport, which means the population isn’t exactly wealthy. But in November 2013, SeaTac residents voted to raise the city’s minimum wage to $15 an hour from Washington state’s original minimum of $9.19 an hour, which was already significantly higher than the federal minimum wage of $7.25 an hour. And while the raise doesn’t apply to all workers, it’s still an important reflection of how far American workers, pinched as they are by the stubbornly persisting recession, are willing to fight in order to raise the minimum wage—and consequently, an indication of just how much an increased minimum wage would improve people’s lives.

The minimum wage is a tricky subject. As with so many debates involving economics, seemingly-sound, yet antithetical, arguments abound, at times making it nearly impossible to distinguish between right or wrong, good or bad.

Opponents of a raise say an increased minimum wage will increase unemployment, and thus hurt the very workers it intends to help. If companies are not willing to pay higher wages, or cannot afford to, they will simply hire fewer employees or even let a few go. And for smaller business owners, the argument generally goes, such a raise may cut into their bottom lines significantly. Overall, the economy will be hurt, not helped, by raising the minimum wage. (Examples, here, here, here, and… here)

An alternate argument against a minimum wage increase is that such a move would simply inflate pay at all steps along the pay scale. As an employee’s wages rise, so, too, might his employer’s, effectively rendering minimum wage a form of aid in symbolism only, and not in reality.

Supporters, on the other hand, counter that raising the minimum wage will neither increase unemployment nor hurt the economy. Higher wages will incentivize workers to stay at their current job, helping to reduce turnover rates (and subsequently the number of people who are looking for jobs), and possibly increase productivity. And although small business owners might take a small hit when required to raise wages, an increased minimum wage means increased consumer power for a great deal of Americans. By giving workers more money to spend, those workers will be able to afford buying from and supporting businesses in their community, making up for that impact and then some. (Examples, here, here, here, here)

One could spend literally all day looking up arguments for and against the minimum wage, and still not be any better informed. But here’s a real fact about minimum wage, one that doesn’t involve any theory or prediction: as President Obama has pointed out numerous times, the minimum wage’s actual value, when adjusted for inflation, is lower than it was in 1968, when Lyndon B. Johnson sat in the Oval Office. That’s nearly 50 years ago. The current minimum wage has left many of its earners in poverty. That needs to change.

Fortunately, many people have already recognized this need, and 21 states (and not just cities, such as SeaTac) have passed minimum wage laws of their own that mandate a higher wage than the federal standard. President Obama has already made good on his State of the Union vow to act on his own wherever possible, and issued an Executive Order on Feb. 13 raising the minimum wage to $10.10 for federal contract workers.

Now, it’s time for the federal government to follow suit. In November 2013, Senator Tom Harkin (D-IA) and Representative George Miller (D-CA) introduced the Minimum Wage Fairness Act, which would raise the minimum wage from $7.25 to $10.10 over the next three years and index minimum wage to inflation thereafter. The bill has the White House’s support, even earning a SOTU shout-out. According to a recent report from the Congressional Budget Office, while the raise it advocates comes at a cost (the loss of approximately 500,000 jobs), it also brings America a huge gain (900,000 Americans lifted out of poverty).

Raising the minimum wage won’t make every worker’s problems disappear, but it will be one step in ensuring that every working American is duly compensated for her efforts—that she gets out of her job just as much as she puts in.

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