I was thinking to myself the other day and I made a realization………I think I am against raising the minimum wage to $10.10
I have been told raising the minimum wage to $10.10 (or $10.50 or $11.00) will lift about 2% of people below the poverty line to above the poverty line. That is great news; anything to help alleviate the poverty problem in this country should be brought forth and discussed.
But…….what happens after that?
People making minimum wage are usually (not always) young, uneducated, and/or unskilled. What happens to the pay of long term employees, the highly educated, and/or the highly skilled? I graduated with an advanced degree and worked in research, I made $14 an hour for the longest time. After eight years of higher education, my pay was $3.90 an hour more than the projected pay of the person working the frialator at McDonalds.
Some jobs deserve higher pay. Hard work should be rewarded.
I don’t want to sound as though I am saying some people are better than others, this is not what I believe. I don’t want to keep anyone down. I think there are better ways to get people out of poverty; more affordable higher education, an introduction to vocational skills at a young age, training programs, etc.
A good company will accompany the minimum wage raise with a raise (even the slightest) for the other employees; it will keep morale higher, and seem fairer. Will this in turn raise the price of products and services (not all CEOs/business owners are going to take a pay cut, some actually can’t)? If so, will it counter act the expected increase in spending of those who saw their minimum wage increased? Which ends up keeping the status quo and the poverty line experiences no change?
I was, up until recently, all in for a minimum wage increase.
This is not the way I want to think. Tell me I am wrong and I am misunderstanding something.
ryepower12 says
because there is a ripple effect.
There’s lots more research out there which shows increasing the minimum wage has a very real impact for many people who make more than that. I’ve seen studies that have shown small impacts can exist for those who earn upwards of $20 an hour, but they certainly would exist in very real and significant terms for those making $11-14.
If your boss is so stingy that he won’t give you a raise, the two absolute best things that could happen to you is 1) the minimum wage increase passes and 2) you give a ring to a union and start to get your office organized, because nothing could help ensure you are fairly compensated and treated well in the workplace like being organized.
fenway49 says
There is a large amount of research showing that a minimum wage increase is not followed by any major rise in inflation.
The biggest economic problem of the past 40 years is that, even as the American workforce has become better educated and more productive, wages have been sluggish at best. Since the 2008 crash this has only intensified. Right now the official unemployment rate’s gone down, the Dow is up, but wages have gone nowhere from their 2007 or 2009 level. It truly seems like we are witnessing the breaking of the middle class in this decade, as people work more hours for less pay than even 15 years ago.
In academia and research, this trend is particularly bad thanks to the adjunct-ification of the faculty and downward pressure on the wages of all researchers. But the way out of this is not to keep the minimum wage low just to maintain a visible gap between minimum wage workers and yourself. Those benefitting from the current situation would love for you to believe that. But the fact is the minimum wage earners are paid too little and, given your skills and education, you’re paid way too little. We need to pursue, aggressively, any policies that will raise incomes across the board.
Bryan says
You should do some research into the statistics. As some of the other comments here suggestion, the numbers don’t line up with your thought process. The economy is a complex thing, you can’t make simple rationalizations like paying people more leads to inflation.
blueinsaugus says
Thank you all for the polite dialog, I really appreciate.
What you are saying makes sense. I would imagine my hesitation with this minimum wage increase stems from my own bitterness towards my own pitiful paycheck, and that is just the wrong way for me to approach it.
I had a thought process that keeping the a gap between the wages might be cause to motivate others to strive for more; dig into their untapped potential. There are some people who don’t have the luxury of following that path (which is quite sad in its own regard and a shortcoming of the system we have in place).
As mentioned above, the time has come to organize and raise incomes across the board.
Thanks for setting me straight.
fenway49 says
I understand completely where you’re coming from. The sad thing is that there’s less and less for people to strive toward. We’ve always said education correlates with a higher income but your situation — and you’re far from alone — shows that doesn’t always work these days. There are tons of people with college and even graduate degrees working part-time jobs for $10 an hour.
If minimum wage workers were motivated by a gap and managed to obtain the same credentials, there’d just be more of a glut of people at your level and your pay might even go down. It’s a sad state of affairs today and we have a lot of work to do.
seamusromney says
It devalues debt. So young people in particular should be cheering for inflation to go up. The devaluation of student loan debt, which is a fixed dollar amount, would more than compensate for paying higher prices for necessities. And those price increases are themselves offset by the wage increase. Inflation accompanied by rising wages only becomes a noticeably bad thing when you have significant positive net worth but hold too much in cash (if it’s invested in your house, real value of the house stays the same while real value of the mortgage falls). So basically, you have to be both rich and stupid to really suffer from it.
pogo says
…I rated you a +, but felt the need to point out the other side of the coin. Yes, in general inflation is the enemy of the rich and the friend of the poor…but a stable economic environment (with slow inflation growth) is something we can all live with.
markbernstein says
It’s important that inflation not be too high, because people with fixed incomes are hurt by inflation. (Of course, most people don’t have fixed incomes; social security, pensions, 401K plans, and investments are linked in some direct or indirect way to the prevailing rate of return.)
But if inflation is too low, the economy become harder to manage. If inflation is running at 4% and we have a sudden recession, we can cut interest rates to compensate. If inflation is running at 0% and something upsets the economy — bad crops, a disruption in the Middle East — we can’t cut interest rates to help.
markbernstein says
In point of fact, right now — and we’re talking about raising the minimum wage now — these wage increases would not be inflationary.
We’re in the midst of a long and severe recession. Real interest rates are near zero. There are lots of unemployed people and lots of spare production capacity; there aren’t enough willing buyers to go around. In fact, if we did simply raise everyone’s wages a bit, that would be a terrific advantage for the economy and it wouldn’t budge inflation.
That won’t always be true, just as you won’t always see mortgages under 4%. Someday, raising everyone’s wages might be inflationary. (It still might be the right thing to do, but that’s a separate discussion.) But that day is not today; we can increase the minimum wage, improve people’s lives, and improve the lives of the people who supply goods and services to those people. And we can do this without fear of inflation.
We need only fear Republicans.