Greetings all!
This post comes as Americans celebrate President’s
Day, an agglomeration holiday meant to declare our gratitude towards our great
leaders of the past. Sadly, we seem to always look backwards for an example of
a great chief executive, and while not without reason this is disappointing.
Much of our dislike for the office of the presidency in America has centered on
our last president, George W. Bush, and the current president, Barack H. Obama.
And while the former deserves every criticism thrown his way as a war criminal,
neither he nor Obama is truly the worst president in American history. This is
true regardless of what those on the extreme end of the GOP establishment may
claim. I was particularly surprised by the outpouring of hate this week after
the State of the Union address, when the president’s remarks about raising the
federal minimum wage were touted as more socialist, anti-American policies
intended to destroy us and our economy while attacking the very values our
country was established upon. And so, in order to wash these rumors away, I’ve
decided to write something in support of raising the minimum wage. This week’s
quote comes from Adam Smith, an economic philosopher widely renowned for his
ideas about economies and how governments should be run in order to prosper.
In his State of the Union address, President Obama
noted that our economy is on the rise, but our loyalty to our workers and our
treatment of labor is in decline. While saying comparatively little about
unions as I had hoped, the president then pledged support for raising our
federal minimum wage to nine dollars an hour. Should this be instituted, a
person working full-time for 5 days a week would earn under 19,000 dollars a
year, and this figure excludes holidays and other reasons for not working a few
days. For a single person, this easily reaches over the federal poverty line
(although it still ignores typical costs of living in America). For a family in
America, however, this is still barely enough even with some small tax
exemptions for those in the lower classes. In essence, it is similar to the
stimulus package of 2009; it does not do enough to address the problem.
While raising the federal minimum wage to nine
dollars may be small, it is still a necessary and beneficial step we can take.
I would love if the minimum wage were $21.72 as
it should be, but if we are going to raise wages we might as well start
somewhere. Of course, raising that wage level starts at Congress, and we should
hope that something which seems like common sense will at least be viewed
favorably by some conservatives.
Arguments which argue against raising minimum wages
are plentiful. One of the most prominent arguments tends to flow in the same “common
sense” direction that raising the minimum wage does. This is a very basic
economic argument which states that if employers have to raise wages for
employees, they will start hiring workers less and start firing workers more to
save money. It seems simple, and therefore it is easy to listen to and believe.
However, economics are not quite so simple, and there are far more variables at
play in a large economy than just business profits versus worker benefits. We
must consider the realities of our so-called market economy if we wish to
analyze what a raise in minimum wages would do to business and consumers alike.
For example, we must examine how consumption would
be affected by such a raise. Obviously, we must exclude all people in the U.S.
not working for the minimum wage. This still leaves about 30
million Americans as consumers on the minimum wage, when excluding those
whom live in poverty above the minimum wage. So, that means we have just fewer
than 10% of our population on the federal minimum wage. Now, remember that in a
mixed-market economy business and trade is driven by consumption and
production. This cycle is fueled by the amount of money consumers have to spend
on items beyond necessities, otherwise known as disposable income. At the
poverty line, disposable income does not exist; poverty is a state where
wasting money on anything besides necessities is foolish. And while such
spending occurs, it is fairly rare (hopefully) and does not do much to improve
our economy.
By introducing a new factor like a raised minimum
wage, the situation is altered. Now, there is more cash in the pockets of
consumers. Undoubtedly, some of this will be put towards increased living
standards, getting through bills, covering debt, etc. However, any leftover
cash which does not get put towards these things only really has two uses from
there on: investment and indulgence. It’s fair to say some of those
experiencing this windfall of cash will invest it in retirement funds for
themselves, college funds for their children, etc. But chances are that most
people, when suddenly experiencing extra cash, will not make the wise forward-thinking
decision of investment and will instead spend that cash on other things. People
are impulsive with money, especially when there is so little to go around. And
so consumption would likely rise dramatically with a wage increase for those
earning the minimum wage today, thereby benefiting the economy and decreasing
business incentive to cut down on employees to make profits. While paying a
higher wage may be more difficult for employers on the surface, it becomes more
than worthwhile in the long term.
Another common argument against the minimum wage
increase is that doing so decreases a person’s incentive to work harder. This
essentially compares a minimum wage increase to an automatic promotion that
people do not necessarily deserve. The major problem with such a comparison is
the implications it creates; do people not deserve a living wage? In what case
could it be feasible to subject any person to life-long poverty? Why would any
person ever deserve that kind of suffering and scraping by? It is hard to make
the argument that any person making minimum wage deserves that kind of pay,
even if they have a meager work ethic. The truth is that “welfare queens” do
not really exist, as current American welfare programs are simply not enough to
live any kind of comfortable life. We do not provide a hammock for the poor to
rock in; the poor are called poor for a reason. Those in the lower classes of
society do not live well, and no amount of food stamps helps enough to
de-incentivize work. The same can be said of wage increases; even at $21.72 an
hour, people will still always desire more than a living wage because they are
greedy and envious. People want luxuries in order to make themselves feel
successful and to lord these things over others. This is what capitalism
breeds, so we may as well make it happen.
The only other argument I have encountered when
opponents of raising the minimum wage stand up is that by requiring greater pay
for workers, we take money out of company and entrepreneur pockets. If
employees are not then fired to make up for lost revenue, we lose out on the
private sector investment and expansion that our economy finds useful. However,
this is a flimsy claim at best; private sector investments do not absolutely
even have to buoy our economy if we increase public sector investment. Plus,
increasing the minimum wage would not truly hurt a business unless the majority
of its workers get the minimum wage. All those minimum wage employees in
America do not work for one company, they work for thousands. Spread amongst
the owners of these companies, the raise is not harmful. Even with some cash
out of pocket, these companies and entrepreneurs will easily make up for it in
new revenue through consumer spending.
That is all for this week, and I hope I have
provided solid reasoning. I am still open for feedback through my email at zerospintop@live.com, as well as my
Facebook, Twitter, DeviantArt, Steam, and Tumblr accounts. I also now have a
Reddit account as well, just look for KnoFear. And this is KnoFear, signing
off.
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