Minimum wage increase would boost economy, assist low income families

Four years have passed since the federal minimum wage last increased in 2009 as part of a three-step process that was passed in 2007. Congress has barely touched the issue since, leaving low income families across the nation to struggle.

The only thought that went through my mind when President Barack Obama declared he wanted to raise the minimum wage to $9 an hour in his State of the Union address was “finally.”

The federal minimum wage currently sits at $7.25 an hour, earning a full-time, minimum wage worker about $14,500 per year. For a family of two, the poverty threshold was at $15,130 per year in 2012, so even at 40 hours a week, the family would still be living in poverty. It’s unjust that full-time workers should have to live in poverty in one of the world’s wealthiest nations, and it’s only further contributing to the income gap.

The bipartisan Congressional Budget Office looked at wages from 1979-2007 and found that wages for the top 1 percent of earners tripled, while wages for the bottom 20 percent of earners only increased by 18 percent after adjusting for inflation.

The land of equal opportunity isn’t looking so equal anymore.

Critics are concerned that such a sharp increase would shock businesses into laying off workers and would slow hiring, yet the president’s plan isn’t a sudden increase. Under President Obama’s proposal, the minimum wage would increase in a series of stages until it reaches $9 per hour in 2015. After that point, it would be indexed to inflation so that the minimum wage increases automatically each year at the same rate as inflation. Given that Congress has again proven that they are unable to act in a timely manner, the automatic increases would be a welcome change — one that businesses can appropriately plan for.

Speaker of the House John Boehner spoke out against the plan, saying it will decrease overall employment but economics experts disagree. Alan Krueger, chair of the Council of Economic Advisers for Obama, studied how fast food companies who start workers at minimum wage adapt to an increase in the minimum wage. He found that these companies can raise the price of their food only 3 percent, which is hardly a noticeable difference to the average consumer, to cover the higher wages. The result is more spending money in the economy — because lower wage earners tend to spend nearly all of their paychecks — not decreased employment.

Businesses may actually benefit from an increased minimum wage. Many companies may want to raise workers’ wages but are hesitant to do so because the competition will have a lower cost of labor. But if all businesses have to increase wages, then it’s no longer a problem. Worker turnover, which causes inefficiencies, will also decrease if minimum wage is higher.

When it comes down to it, raising the minimum wage isn’t a left or a right issue, it’s an issue of humanity and necessity.

White House officials estimate that 15 million workers would benefit from this increase which is enough to help spur economic growth and bring full-time workers above the poverty line.

— Nathaniel Drake is a sophomore studying political science and communications. He can be reached at letters@wildcat.arizona.edu or Twitter via @WildcatOpinions.