What I Really Think About Increasing the Minimum Wage

Have you ever worked for minimum wage? I have, twice:

  1. When I was a teenager, I worked as a lifeguard for a local recreation center. While basking in the summer sun all day may sound like a dream job, it was far from it. Rather, I spent 10-hours a day sweating in the sun, watching kids (many of whom couldn’t swim a lick) splash around, knowing it was inevitable that I’d eventually have to jump in to pull one of them out. At the time, the federal minimum wage was $5.15.
  2. In college, I took a job waitressing in an off-campus restaurant. I made less than minimum wage, thanks to an exemption that allowed my employer to pay me less with the assumption I’d make enough in tips to bring me up to minimum wage. The restaurant was a POS, and we didn’t do a lot of business during my late afternoon shift. I was still making $5.15/hour.

Thankfully, my parents were still supporting me during these employment stints. These part-time jobs were designed to supplement my spending money and give me a sense of the real world and the responsibilities that came with it.

But for some people, minimum wage jobs are a lifeline – a shoddy lifeline, but a lifeline nonetheless. Unfortunately, someone working full-time at minimum wage – which today stands at a federal minimum of $7.25 an hour, although many states and municipalities have mandated higher hourly wages – makes $290 a week; that comes out to just over $15,000 a year.

The poverty line for an individual in 2012 $11,170; for a family of two, it’s $15,130. In other words, a single mother supporting a child on minimum wage is living below the poverty line.

Are you ok with this?

Why doesn’t s/he just get a better job?

This is one of the things I often read when people speak out against increasing the minimum wage. I think this is a snobbish, elitist statement. Just as Rick Santorum once blasted President Obama for publicly saying he wanted every child to be able to attend college – on the basis that not everyone has the chops to do so – neither does everyone have the ability to get a higher-paying job.

On top of that, during the recession, America lost more middle- and high-paying jobs than its gained back in the years since. According to the National Employment Law Project, 79% of the jobs lost during the recession were middle- or high-paying; yet, they represent just 42% of the jobs added to the marketplace since then. Low-paying jobs represented 21% of those lost, but a whopping 58% of new jobs. In other words, someone who lost their well-paying job four years ago might not be able to find a position that pays as well. Their alternative? Take a lower-paying job – at least in the interim – just to get by.

Raising the minimum wage won’t make much of a difference to workers.

Currently, nearly 3.8 million Americans make at or below minimum wage. To them, $7.25 an hour compared to $9 represents a difference of $3600 a year; it pulls a single mother of one above the poverty line. It gives that person more of a cushion to pay for things like adequate food, shelter, and child care; it gives that person more opportunities for growth through things like education and job retraining. What would you do if someone offered you a $3600 annual raise? I don’t think you’d scoff at their offer and say it wouldn’t make a difference to you, your family, or your life.

A minimum wage increase will lead to inflation.

Economists don’t agree on this topic, nor do they agree on another key issue surrounding the minimum wage debate: whether or not it will kill jobs. Whenever you pump more money into the economy, you always run the risk of inflation, but you also create some economic stimulus. The key is establishing that fine line where stimulus turns into inflation.

But if you want to consider inflation, consider this: in 1968, the minimum wage was $1.60/hour. In today’s dollars, that’s equivalent to $10.59/hour, or 46% higher than today’s federal minimum wage. In other words, today’s minimum wage workers are making substantially less than those in equivalent positions were 45 years ago.

So what is the answer?

I’m not an economist, nor am I a politician – I don’t suppose to have all the answers. But I do have an idea that I think might be fair(er) to all involved.

When I was weighing my first job offers in journalism, the difference between the salaries varied greatly from market to market. The differences were tied to the cost of living in these locations. You know the old story – it costs more to live in New York City than it does to live in a rural community.

I think minimum wage should be tied to regional consumer price indexes. Anyone with half a brain knows that $7.25 an hour will take you much, much further in Siler City, North Carolina, than it would in Alexandria, Virginia. The minimum wage shouldn’t be the same for workers in these two locations. Lawmakers in many states and cities have already realized this. In San Francisco, the city raised its minimum wage to $11, reflecting the fact that the city by the bay is one of the most expensive places to live in the country.

Tying the minimum wage to regional CPI would do two things. First, it would eliminate regional discrepancies and create a more even playing field for employers and employees alike. It would also lead to automatic increases in the minimum wage – much like the automatic increases we see in Social Security payments – and eliminate the need for lawmakers to involve themselves in it at all. And any time we can eliminate politicians from decision making these days, the better.

What do you think of my idea? What would you do to alleviate the plight of the working poor in this country?

Libby Balke

Libby is a jack of all trades, master of… well, you know how the saying goes. Media consultant by day, mommy by night, you can usually find her with a glass of wine in hand, provided the kids are in bed!

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