Minimum Wage at Ten Dollars Plus Per Hour? Fifteen Dollars?

 

SeaTac, Washington, the town surrounding Seattle/Tacoma’s main airport, recently passed legislation increasing the minimum wage to fifteen dollars an hour. (The state of Washington already has the highest minimum wage in the country at $9.32.) Politicians, economists, and entrepreneurs are scrutinizing the results. What will the increase do to the economy, to workers, to businesses?

Some rally around the measure, saying that even low income jobs should pay a living wage. Some want a higher minimum wage, but not that high. President Obama has called for $10.10 per hour. Some want a gradual wage increase, some all at once, as in SeaTac.

Some suggest that a higher wage, mostly falling into the hands of the less well-off, will boost our economy. Since this population normally is able to spend only for essentials, they will spend almost all of it.

Others say businesses, especially small ones, won’t be able to absorb the costs and will go bankrupt, causing job losses. (Many proposals exclude small businesses, although critics say if some companies offer higher wages, all must do the same to retain workers.)

Others argue that the government pays other costs for inadequate wages. These include medical expenses or subsidized health insurance (low-wage workers often cannot afford health insurance without government aid), food stamps (most low wage workers aren’t single teenagers; many have families to support), and other benefits. These government expenses would be less, the argument goes, if the workers were paid more and had benefits. Some suggest, in fact, that taxpayers subsidize businesses that do not provide adequate salary or benefits.

Washington state, with the aforementioned highest minimum wage in the nation, had an unemployment rate of 6.6 as of January 28, 2014, about the same as the nation. Some states are lower, some higher. Some with lower rates are benefitting from labor scarcity caused by the resource boom in states like North Dakota. Minimum wage appears to influence but is not the sole factor in unemployment or employment.

Part of the problem is what is tagged the “hollowing out” of the middle class, because mid level jobs are more and more being performed by computers. If our job structure is permanently changing, perhaps we should ask ourselves first: what is fair? We are speaking of workers, not the jobless. What is the minimum wage supposed to cover? If middle paying jobs are decreasing, what is fair for low wage workers who increasingly come from the former middle class?

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