This week, there have been protests in Oregon for increasing the minimum wage from $9.25 an hour, to $15 an hour, the main argument being that $9.25 an hour isn’t enough money to live on. A lot of people are happy about this idea, but a lot of people are not.
This isn’t a new debate. Economists have been arguing about the pros and cons of a minimum wage since…I don’t know, since the concept has been around, probably.
I read an article this morning that argued the the $15/hr supporters were ungrateful and lazy. I didn’t take it seriously at first but after reading the comments under the article and the amount of likes it got on Facebook, I realized that this is something that quite a few people genuinely believe.
Whatever you believe, you should be informed, so here are my two cents, as someone who has both studied economics and worked in retail.
1. Minimum wage is a social safety net, not the work of the economy.
Minimum wage was made to ensure that people who work will make enough money to support themselves. Minimum wage is supposed to be the lowest income a person can make and still make rent, feed themselves, clothe themselves, pay the bills, and provide for their family. Not glamorously: they’re not going to be going out to eat or getting the new iPhone or taking tropical vacations, but if they live simply, they are still able to live.
Sadly, minimum wage is not that. The cost of living is way higher than what a minimum wage of $9.25 an hour will provide for. If you’re a teenager looking to save up for a car, $9.25 is plenty. You could live just fine without any income. But if you are supporting yourself, you can’t live on just one minimum wage job. You end up having to get two or three, and even then you’ll probably need food stamps.
2. The “Fast food jobs aren’t worth $15 an hour” argument.
No, no they aren’t. But that isn’t really the point. Minimum wage has nothing to do with what jobs are worth. It’s about making sure people can support themselves with the amount of money they earn.
3. The “But economics!” argument.
Trust me, you don’t want to live in a society run by unguided economics. Economics is amoral–it’s a social science–and its only goal is perfect efficiency. Social programs are not efficient. If society was run purely on economic principles, there would be no minimum wage, no child labor laws, no retirement.
The most efficient way for companies to run would be to offer some jobs that only pay $0.01 an hour, and to have their workers work until they physically can’t anymore, at which point they would get rid of them and hire new, young workers.
That’s a dystopia. Humans value things like rights and dignity. We know that sometimes you have to sacrifice efficiency for social and ethical reasons.
4. The “Minimum wage jobs are temporary and therefore shouldn’t be comfortable” argument.
There probably aren’t many people who aspire to a lifelong career as a minimum wage employee, but there’s a difference between “comfortable” and “a liveable wage.” There’s a difference between being able to afford a fancy new car and being able to afford an apartment in a safe neighborhood.
5. The rising prices argument.
Prices will rise whether or not minimum wage increases because of inflation. You can’t choose not to provide a liveable wage because the price of milk will increase. Besides, there will be less people buying milk if they don’t have money to buy food. As I read somewhere, keeping a large portion of the population in poverty isn’t good for society.
6. The rising unemployment argument.
This is the most convincing of the arguments against raising minimum wage, in my opinion. As minimum wage increases, so does unemployment because employers are forced to hire less people. This means that more people will not have jobs and will have to depend on government help.
But on the other hand, people trying to live on a minimum wage still need help from the government because while they’re working, they still aren’t making enough to support themselves.
If the government were to make $15 an hour the new minimum wage, there would be some bad backlash, I’m sure. Unemployment would probably spike, prices would increase, people would be unhappy. But the way I see it, the current level of minimum wage isn’t liveable. It will have to be adjusted eventually and the yearly adjustment for inflation isn’t going to cut it. Whether $15 an hour is what it would need to be raised to, I don’t know. But it does need to be raised.
A potential problem might be that, at one point, the social safety net that is the minimum wage was economically feasible, and that it may be becoming less so.
If that safety net can’t be sustained economically, then it isn’t a social effort that is feasible.
I don’t know that is the case, but it is a potential you seem to seem to have overlooked.
I do disagree with your efficiency statement. For all that it /is/ really crappy, the economic ideal isn’t paying workers nothing and replacing them instantly. Even in the harshest and least regulated places, that extreme isn’t evident. Workers who are trained are valuable, and they can take that training elsewhere- there /are/ ways that the logic of the system rewards treating employees well in some ways. I’m not arguing for that cold ideal, just pointing out that your argument is reductio ad absurdum.
The main place I think my opinion differs from yours is how charity and social wellness should be achieved (I think).
In my world view, I place a large portion of the world’s social responsibility on the individual and private ventures, not the government.
It is a false dichotomy to say that either the government helps poor people, or they aren’t helped. I would argue that the individual, and the individual with the help of private businesses (, churches, and non-profits, etc.) should be the primary avenue of care for those in need.
You make some great points. I agree that a safety net needs to be economically feasible, otherwise it will be impossible to maintain. I also see where my efficiency statement might have been extreme to the level of ridiculousness. I’m all for efficiency. I was mainly trying to bring the point across that human rights isn’t technically an economic issue. And yes, the government can’t be the only one responsible for social wellness. However it’s achieved, I think society should have measures in place to make sure people don’t fall into abject level poverty. The tricky part, I suppose, is deciding who does what.
Agreed, on several counts.
Thanks for the thoughtful reply. 🙂