Column: Raise the federal minimum wage
In light of Proposition 206 passing in Arizona in the recent election, the controversial raising-the-national-minimum-wage conversation is due.
There are plenty of misconceptions about the correlation between minimum wage and economic growth, with one of these being that minimum wage causes inflation. The correlation between minimum wage and inflation doesn't work in the manner many Americans think it does, though.
Minimum wage is supposed to keep up with inflation which means that as inflation rises, the government must ensure that minimum wage increases.
At the United States’ current federal minimum wage of $7.25, a full-time minimum wage worker makes approximately $15,080 per year. For a single parent with one child, this wage would put them below the poverty line of a $15,930 annual income.
This means that some low wage workers in the U.S. can't afford to support their basic needs.
Due to inflation, living expenses have increased, but the federal minimum wage has stagnated. The last time the federal government raised minimum wage in the United States was in 2009.
According to the Pew Research Center, inflation has gone up 8.1 percent since 2009, but federal minimum wage has not increased at all.
Even though minimum wage has steadily increased since its inception in 1938, the minimum wage adjusted for inflation has declined since its peak in 1968.
Some say that minimum wage promotes job loss, but in 1968, the unemployment rate was actually lower than it is today.
There are other factors that affect minimum wage. According to The Economist, compared to other advanced countries, the U.S.' minimum wage is low by quite a large margin. If the United States’ minimum wage matched the gross domestic product, the minimum wage would be at $12 an hour, which is what Arizona plans to raise its minimum wage to by 2020.
Despite the inflation and GDP statistics, there are other reasons why minimum wage should undergo reform.
When workers make low wages, they have a lower incentive to work productively. They are also more likely to leave jobs to find other work if they are unsatisfied with their pay, which loses the business' money.
People against raising minimum wage think raising the wage will decrease job growth, but a review of 64 studies conducted by economists Hristos Doucouliagos, Ph.D., and T.D. Stanley, Ph.D., found that there is no inherent correlation between minimum wage increase and job loss. And minimum wage does not just affect the 1.532 million minimum wage workers—it also impacts the 1.8 million tipped employees who make less than minimum wage, according to a 2014 study by the Pew Research Center.
When wages are increased, people are likely to spend more, which raises the U.S. GDP and helps the United States' economy, which attributes for up to 70 percent of its make up to consumer spending.
People who are below the poverty line in the United States are also the most likely to use government subsidies, but if their wages are increased to push them above the poverty line, they will not need to use as much of the government’s money.
Increases in the minimum wage are not only beneficial to workers, but to the United States as a whole. The country is behind where its minimum wage needs to be to support its lower wage workers.
Raising the wage is past the point of being solely beneficial—it is now a necessity.
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