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Post # 8- Nick Djamalidinov
March 16, 2015 | Leave a Comment
Minimum wage is a polarizing issue that has been argued for years because one side believes it will help the poor while the other side believes it will not benefit the intended workers. I have personally wondered about the right course of action regarding minimum wage ever since a teacher told me that minimum wage benefits rich teenagers working part-time, a viewpoint emphasized by the article on heritage.org. I also understood from microeconomics class that price floors (or in this case minimum wage laws) are inefficient and will lead to shortages (or in this case, unemployment). This has made me very skeptical of minimum wage laws and the benefit they bring to the poor.
One of the first things that stood out to me was the assertion that the minimum wage workers are not poor. They are in fact usually middle class and have parents who make way above the poverty line. The article from Heritage.org said 65% of minimum wage workers are 150% above the poverty line and 23% are at or below it. This means that only 23% of minimum wage workers actually need them. It makes you wonder who you are really helping since 2.9% of the population makes $7.50 or less. It winds up helping like 1% of the population. Based on this, I became skeptical of minimum wage laws.
The NYtimes article pointed out how higher wages could increase more experienced workers which means that 23% could get displaced as higher income Americans might see their jobs as a viable option. The poor might actually get hurt as increased competition could drive some of them out of a job. Or another way this could impact the poor is through higher prices. The idea is that the businesses are going to have to make up the cost of increased wages somehow and price increases are the go to solution. And since the lower income Americans are more likely to shop at the stores that pay minimum wage, they get hurt again. Economically, it makes sense that businesses would be looking for some way to shoulder the costs because economics assumes we are obsessed with maximizing profit. But the article did say we do not actually know how the businesses will behave. I think economics is not always right because it makes a lot of assumptions and they could be wrong. This article overall showed me that it might be possible for minimum wage increases to not hurt the poor but economics is not on their side.
The Washington Post article’s main point from my view is the idea that the minimum wage is due for an increase due the weakening of purchasing power and minimum wages for 15 dollars are not so unfounded anymore. The U.S seems to be on the cusp of changing minimum wage laws and helping minimum wage workers make ends meet. I kinda find it strange that they would pay a burger flipper or a cashier 15 dollars. It seems really inefficient to me but I do like that minimum wage workers are demanding a more livable wage. The problem for me, again, goes back to who this minimum wage benefits. The NYtimes article’s estimate was a bit more generous and said 50% of minimum wage workers are suffering in poverty so 50% can get out of poverty. But I don’t like middle class kids getting paid 15 bucks an hour to do some low level job so that they can have extra money while their parents have middle class incomes.
But the Huffington Post did show that the minimum wage cannot keep up with the cost of living. A single parent with two kids making minimum wage cannot hope to cover the expenses. In that situation, I would fully agree with a wage increase. The Heritage article said the poor are not poor because they make low wages, they are poor because they do not work. I think unemployment should be the first issue to tackle if that is truly the case. I think job creation at a lower level would help increase poor people working and they could get back on their feet. I also liked the tax credit idea from the NYtimes article. That one guarantees that the right people get the benefit. I think after unemployment is tackled, then minimum wage should be focused on. As it stands right now, I am not in full agreement with increases in minimum wage.
