When President Barack Obama gave his State of the Union address on Feb. 12, he made it explicitly clear that, “in the wealthiest nation on earth, no one who works full-time should have to live in poverty.” He then went on to propose an increase of the federal minimum wage to $9 per hour.
An increase in the minimum wage is long overdue. A recent report by the Associated Press shows that four out of five American adults struggle with near-poverty and joblessness at some point in their lives due to “an increasingly globalized U.S. economy, the widening gap between rich and poor, and the loss of good-paying manufacturing jobs.” An increase in minimum wage would help fight poverty and effectively raise the income of more than 28 million American workers, placing spending power back in their hands.
As of 2009, the federal minimum wage is $7.25 per hour. This means that if a person making minimum wage is the sole source of income for a family of four, his or her annual salary is only 65 percent of the necessary amount to meet the family’s very basic needs. In other words, that family is living in poverty. And this scenario is for a household that’s lucky enough to have a working family member in a struggling economy.
In 2012, 3.6 million hourly workers were paid at or below the federal minimum wage. Notably, minimum wage varies from state to state, and according to a 2012 National Low Income Housing Coalition report, in no state can a minimum wage worker working 40 hours per week afford a two-bedroom housing unit. In Hawaii, a person would have to work a staggering (and literally impossible) 175 hours per week to afford a unit with two bedrooms. In Massachusetts, it would be 114 hours per week.
Additionally, in 2012, six percent of women who were paid hourly wages were making at or below the federal minimum wage, as compared with three percent of men. This is an important statistic to keep in mind, as more and more women are becoming the primary (or sole) source of income in their households.
The threat of living in poverty is very real, but could be at least partially combated if corporations were required to pay their employers a wage that supports the cost of living. Seems like very simple logic, but McDonald’s claims to have a better idea. Recently, McDonald’s teamed up with Visa to outline a financial budget for their low-wage workers.
Right off the bat, the plan is absurdly misguided in that it assumes that its employees have a second job. Among some of the other ridiculous assumptions are a $27-a-day budget for gas and groceries, and a $20 health insurance plan. Who would have thought that a $91 billion dollar company could be so out of touch with their minimum wage workers?
Besides helping fight poverty, raising the minimum wage puts more money in people’s pockets. Since minimum wage has not kept up with inflation, the United States’ population has far less purchasing power than it used to. By raising minimum wage, working people will have more money to put back into the economy, instead of the ultra-rich keeping money out of the economy by pouring it into financial investments. Essentially, raising the minimum wage is good for minimum wage workers and stimulates the economy, which benefits everyone in the end.
Opponents of a hike in the federal minimum wage usually use the argument that it would lead to massive job loss. In fact, studies have shown this is not the case. In a March 2011 report, the Center for Economic Policy Research concluded that raising the federal minimum wage would actually result in more jobs.
As for the small businesses that are supposedly bound to be crushed by an increase in federal minimum wage, multiple studies have shown that small businesses in states with a higher minimum wage have had consistently better economic performance than those in states with lower minimum wages.
It would be naive to think that raising the minimum wage is the ultimate problem solver for America’s economy, but it’s a simple, yet huge, step in the right direction. Millions of lives— and livelihoods— would be greatly improved if we had a federal minimum wage that kept up with the cost of living. Millions of hard-working, full-time American employees are living on paychecks that barely cover their basic needs. A $2 raise in the minimum wage is the least we could do.
Jillian Correira is a Collegian columnist and can be reached at firstname.lastname@example.org.