Minimum Wage Laws: The Breakdown

The push for a $15 an hour minimum wage hit a fever pitch last month on the American deadline for paying your income tax. Robert Reich, the former Secretary of Labor under Bill Clinton is running point on making the argument for why the minimum wage must be higher, tax breaks for corporations should be reduced, and why the government needs to invest in the middle class.

Obviously not everyone agrees, especially if you have an (R) after your name. Most people on the right don’t want to raise the minimum wage for a couple reasons, none the least of which is a consistent belief in trickle-down economics. There are also corporate donors to keep happy and raising labor costs across the board is no way to get donations for the campaign season. And besides, Would raising the minimum wage really help anyone?

There are two camps:

1. The Minimum Wage Should Be Raised to Help The Middle Class

This camp is primarily populated by Robert Reich, Hillary Clinton and many liberals who are looking for actionable progress against income inequality and the lack of a significant increase in wages (something that last happened in 1977). Raising the minimum wage also is a very populist maneuver. It plays well to the mass of people looking for some help in their paychecks and also is popular because there are so many displaced workers from the recession who can’t find jobs that pay enough for them to actually pay all their bills. Minimum Wage proponents will argue that it is important to phase this in over time and that raising the minimum wage provides additional valuation for workers in retail, banking, food, and other industries where unskilled workers dominate. Their arguments are compelling with Facebook posts with phrases layered over human faces like, “I’m worth more than $15 an hour” and other heart-jerking phrases. This argument also speaks to people who are in higher wage brackets because most everyone has worked a minimum wage job at some point in their life. There is also a collective idea among many people that $7.27 just is not enough in this day and age. They point to other countries and their higher wages and most importantly the quality lifestyles that these people enjoy. These populist arguments also pull out early 20th century ideas about wages and paying workers well to produce goods and services. In many cases this argument is very strong and many people tend towards it.

2. We Shouldn’t Raise the Minimum Wage: It Over Values Labor and Avoids the Market

This is the side of the bulk of the GOP, most libertarians (who want the government out of such things anyway) and many small business leaders. The argument goes like this: the government should not meddle in free markets. If companies believe that certain labor is only worth the minimum wage then the government shouldn’t try to over-value that labor by raising the minimum wage. It would hurt small business and it would reduce the opportunity for some people to get back into the labor market because for some people minimum wage is the only job available meaning that it will reduce employment and the profits of corporations who employ people who will have less incentive to invest. There is also a feeling in this camp that it is not the governments’ job to be this involved in a free and open labor market where everyone is expected to basically be their own business and act as a one man company. They argue that the market will settle on a fair price and there is some argument. Domino’s Pizza recently stated that they were having to pay more in order to get good people to hire on and stay with the company.  Even Wal-Mart and Target have been forced to raise their pay.

The Bottom Line

Now that we have both sides, I’m ready to drop my opinion on the matter. I’m in favor of raising the minimum wage, but not as high as $15 an hour. I think President Obama’s proposal of $10.10 is quite fair. As someone who has spent quite a bit of time working under the table, working for minimum wage, and There was a Slate.com article about how the minimum wage should be indexed to the living conditions of the geographic location in question. For example: the minimum wage would be higher in Massachusetts than it would be in say, Mississippi. I could be on board with such a proposal as well. I think raising the national minimum wage to $15 is not a wise decision. I think a modest increase, phased in over 5 years, would be appropriate as well as an alternative minimum wage of $8.50 for small businesses under 10 employees excluding fast food or retail. I do believe that we need to start valuing actual work and labor in this country. There are deep systemic things happening in the labor market right now and when that occurs we have to have a conversation about how much humans work and how much they are compensated for that. In the early 20th century automation of that period had reduced the need for human labor and partially powered the movement for the 40 hour, 5 day work week which became standard by the 1930s and was cemented by the 1950s. In the 21st century we may need to reduce down to a 30 or 25 hour work week and raise pay as well. I think many tasks like ordering food will be automated in the future as well. We will still need humans to do things and those humans should be fairly compensated for their time and energies and be able to build a life for themselves.