Raise the Minimum Wage!

Here we arrive again at the minimum wage debate in the United States. The continual call for a $15 minimum wage is now louder than before. With a global pandemic that has exposed social and equitable disparities within the country, reform is demanded and much needed. To some, it seems that with President Joe Biden and the Democratic Party’s Control of Congress, now is the best time to enact legislation to increase the minimum wage. 

As politicians bicker and banter over proposed minimum wage legislation, the lives of everyday and low-wage workers remain stagnant - nothing substantial is happening. It’s important to understand the complexities and nuances of the situation. Minimum wage earners are in every state, city, and local town. Additionally, the cost of living and quality of life varies state by state, city by city, and town by town. For example, New York City and other larger metropolitan areas (compared to more suburban or rural areas) typically have higher costs of produce, goods, and other services. Regardless of where people live, minimum wage workers still find it difficult to live. New York, for example, only has a minimum wage of $15 per hour in New York City; nearby areas either have a minimum wage of $14 per hour (Long Island and Westchester), or even $12.50 per hour (rest of the state). Compare that to the state of Ohio, where the minimum wage lies at either $8.80 per hour (when an employer’s annual gross receipt is above $305,000) or $7.25 per hour (when an employer’s annual gross receipt is below $305,000). If you look at Wyoming, the minimum wage can be as low as $5.15 per hour, if the worker’s employer is not subject to the Fair Labor Standards Act. These differences show a varied structure for the minimum wage that begs the questions...how much should the minimum wage really be and what quality of life should the minimum wage afford? Instead of arguing over dollar amounts, perhaps the conversation should focus on the quality of life. Here is what I propose.

The minimum wage should provide enough for a person to obtain affordable housing (rent and/or mortgage), access to fresh and healthy food options, receive adequate healthcare, and begin to have some savings. These are just a few of many necessities that everyone needs, regardless of their income. As many of these factors are intersectional, it’s quite common to see a stark dichotomy; people either have easy access, or difficult access to these necessities, based on their income. How much one earns determines where one can live, the amount of resources their neighborhood can provide, and how much to budget on food and personal needs. A higher earning worker will have an easier experience affording basic necessities along with their personal expenses, as opposed to a lower wage earner who needs to budget more cautiously. 

A good model to look at is MIT’s Living Wage Calculator, which analyzes all fifty states and 383 counties to determine the amount of hourly earnings needed to afford typical expenses. According to the calculator, a single person in New York City without children would need to earn $21.77 an hour ($45,285 pre-tax and $35,717 post tax). For a person living in NYC, housing, food, and transportation are probably the most important expenses. The calculator lists yearly expenses for housing to be $19,980 ($1665 per month), food at $3690 ($307.50 per month), and transportation at $4332 ($361 per month). New York City’s minimum wage of $15 an hour guarantees $31,200 (pre-tax). Let’s compare this to a much different part of the country. A single person without children in Greene County, Alabama (the state’s least populated county) would need to earn $12.81 an hour ($26,642 pre-tax and $21,554 post tax). The calculator lists yearly expenses for housing to be $5688 ($474 per month), food at $3177 ($264.75 per month), and transportation at $5113 ($426.08 per month). The state’s minimum wage of $7.25 an hour only guarantees $15,080 (pre-tax). This gives an idea of how far behind and out-of-touch the federal minimum wage is with the reality of today’s cost of living. When it comes to minimum wage earners with families and children, the reality is more dire. The current minimum wage subjects people to barely survive and continually budget out of desperation. The cost of living continues to rise, and minimum wage earners increasingly have less and less to survive.

Surely, a minimum wage increase will have a ripple effect throughout the institutions that form the economy. The distribution and circulation of money will change from how it’s administered today. A doubling of the current minimum wage of $7.25 - drastic in the sense that it would not be a gradual rise - would be easier to implement, had it gradually increased over time from 2009 (the last time a federal minimum wage policy was enacted). It’s not the case that minimum wage earners are unmotivated and don’t want more, as some may think. Not only can minimum wage jobs be demanding, but every person has a different situation. Whether or not a minimum wage worker has a family or in school significantly compounds their decisions to work and provide. The minimum wage should be understood as a baseline for support, rather than the lowest paying jobs. This nuanced approach would allow people to think critically about how the government should approach the current issue. It is definitely possible for the United States to have a $15 minimum wage or even a liveable wage. While it may be challenging to incentivize businesses (small and large) to support, there’s definitely room for discussion to support both employees and employers. This can include policies, such as adjusting the tax rates of businesses and providing a stimulus security program (should a small business not be able to pay workers the minimum wage). There’s also the possibility that some states and cities would even increase their minimum wage above the federal limit, as we see today. That would be working more towards having a liveable wage. 

The minimum wage debate has been prolonged too long with not enough progress. The federal government needs to be responsible in protecting minimum-wage workers at all times. The most vulnerable people when it comes to job employment need to have some form of security. Without a minimum wage increase, low wage earners would likely face more difficulties in everyday life. Despite getting through a pandemic, now is the time to address longstanding, systemic issues, such as income inequality; we can start by recreating the concept of the minimum wage.