A New Economic Study Proves Why We Need To Raise The Minimum Wage

minimum wageIf you believe conservative pundits and politicians, you probably believe that the poorest Americans are where they are not because we should raise the minimum wage, but because they’re lazy and don’t want to work. There’s hardly a day that goes by when you don’t hear the talking heads at Fox News parrot the tired old clichés about how America became great because of hard work and we’re falling apart as a country, immigrants are taking our jobs, and liberals want to give all your money to black lazy people in the form of welfare and food stamps.

Our country is failing in many ways, but it isn’t because of a lack of hard work. America’s continual problem with poverty isn’t due to laziness, it’s because we aren’t paying the working poor enough. Now a new study from the Economic Policy Institute confirms what people like Bernie Sanders and Elizabeth Warren have been saying for years – we need to raise the minimum wage and pay American workers more. Here’s the conclusion of their study, which you can read in its entirety at the link below.

That the poverty rate has remained stubbornly elevated over the last three-and-a-half decades is simply a symptom of an increasingly unequal economy, marked by nearly stagnant hourly wages for the vast majority of the American workforce. The elevated poverty rates we have seen since the 1980s are not the sad outcome of inevitable and irreversible changes in the economy, but of policy choices that have weakened the position of low- and moderate-wage workers while putting more leverage in the hands of those with the most economic power.

Despite the importance of expanding the tax-and-transfer system to reduce poverty and boost incomes for low- and moderate-income Americans, if nothing is done to change the policies that have led to elevated unemployment and increasing wage inequality, income inequality and poverty will continue rising. This logically flows from the fact that if increased inequality continues to suppress hourly wage growth for the low-wage workforce, we will need more tax credits and more transfers each year to simply keep after-tax income inequality stable—let alone reversing the upward income and wage redistribution of recent decades. (Source)

The increasing economic disparity in the United States isn’t because the minimum wage is keeping companies from hiring more people, something I’ve actually heard some conservatives say. It’s not because we haven’t given enough tax breaks to the wealthiest people in this country, a tired old message Republicans have been selling us since the beginning of the Reagan years. Our economic situation comes from the fact that too many Americans are making too little, and despite what conservatives are saying, businesses have no reason to hire workers if people can’t afford to buy their products.

Raising the minimum wage alone won’t fix the problems our economy is having and it won’t lift everyone out of poverty, but it is still an important step. Yesterday, Los Angeles joined Seattle and San Francisco in voting to raise the minimum wage to $15 an hour by the year 2020 and other major cities are considering doing the same. The minimum wage currently has not been properly adjusted for inflation and hasn’t been in years. In 1968, adjusted for inflation, the minimum wage was worth nearly 50 percent more than it is today.

Conservatives will argue, with some merit, that raising the minimum wage overnight will cause a lot of economic issues, but it won’t be a problem if it is raised over a gradual period in order to allow the market to absorb this change. More money in the hands of more Americans isn’t going to happen via trickle-down economics. If giving more tax breaks to the richest people actually helped create jobs that paid well, we wouldn’t be having this conversation right now.


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  • strayaway

    I support local initiatives to raise the minimum wage although there should be a student age exemption so students can find starting jobs and not be so dependent on loans. Higher minimum wages would initially mean higher incomes for those at the bottom but would have the eventual benefits of higher productivity through automation. There would be less incentive to hire illegal aliens to work for lower wages. Other factors being equal, employers might as well hire someone fluent in English. Higher incomes would reduce social welfare assistance expenses. That would result in less government spending. Some government workers could consequently be let go saving even more tax money. Tax revenues would be increased.

    The article contends that “America’s continual problem with poverty (is) because we aren’t paying the working poor enough”. If that is the case, then why not raise the minimum wage much higher or send everyone money to spend? Two glaring omissions with regard to solving the poverty problem are that for decades, we have been exporting jobs because of corporate written treaties. Senators Warren and Sanders, among others, are fighting Obama’s TPP heist to prevent further erosion of US jobs. Higher minimum wages must also be protected by legislation to prevent a faster exodus of low paid manufacturing jobs from going abroad.

    The other glaring omission is excessive legal and illegal immigration pitting lower paid foreign workers against higher paid US workers. We already have high unemployment levels among unskilled US workers. When higher minimum wages eventually displace workers with e.g. ATMs, self service, self ordering, computerized check outs, etc., unemployment among unskilled workers will only soar higher. It is a bad idea to, at the same time as unskilled jobs are being eliminated, be adding to our unskilled labor pool.

    • BobJThompson

      *Warning all points are my opinion*
      With the trend of automation taking common low wage low skill jobs, I don’t see the ability (even if employees get trained) for high skill jobs to step in to take all the people who need jobs. Not everyone is capable of working high skill jobs. Even if they can get the proper degree needed for it.
      This would lead to a LOT of people going without based on how our society is structured today. No safety net. No job. No ability to get any job. Crime would skyrocket. Businesses aren’t just going to hire the dirty poors just to be nice. Nice isn’t how the business world works these days.
      Eventually we will need something like the universal basic income. So that even if you can’t work you aren’t panhandling in the street next to 13 vacant apartments. All human beings deserve to be treated with respect and dignity. It’s time to work toward making that our goal.

      • strayaway

        Your scenario of more unemployed unskilled workers does seem probable. Yet our politicians are paid to export our jobs and bring in cheaper foreign labor to worsen the situation.

        I’m not sure though where the money would come from to have large numbers of people sitting around collecting the dole. Although healthier and more human than allowing homelessness and hunger, we can’t expect a permanent underclass sitting round amusing themselves as all wanting to better themselves. Since the elimination of a lot of unskilled jobs through technology is inevitable, even without exporting more jobs and importing more workers, perhaps something more creative could be accomplished. For instance, required job training and/or education or WPA type work could be required in return for benefits. Some of this could be funded by import taxes or employer taxes on foreign citizens.

      • BobJThompson

        Job training amounts to squat without jobs though. People want to advance themselves. Not just live at the bare minimum.

        I fear the day when and if this country has one third of the population or more of working age adults scrambling to find a way to live. I’m usually not a fan of binary thinking, but in this case either we find a way to allow everyone to live in dignity or everyone will find their own (likely violent) dignity.

      • strayaway

        Some of the job training could be directed toward employment in robot or electronic kiosk manufacturing if those jobs aren’t allowed to be all shipped abroad too. Indian reservation where there isn’t a lot of employment but no one is homeless have problems with alcohol. The dole doesn’t seem good for people’s spirits. as the baby boom gets old, there will be a need for more nursing care workers. There is that.

  • BobJThompson

    If you fire too many people you suffer the repercussions. If business and government doesn’t pull their heads out of their bums, we will be looking at a lot of desperate starving and broke people. No consumers are bad for business. No money = no consumers.

    But hey those record breaking quarterly profits need to happen forever. It’s the only way to keep that great and almighty economy happy.