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Blog Post#8 (Class 14) – Cheng Dong
March 15, 2015 | Leave a Comment
Class 14: Living Wage – Does Raising Minimum Wage Help?
While many minimum wage workers strive for the government to raise their minimum wage, it is hard to imagine how many of them gave a deeper thought about the long lasting consequences behind their actions. It is very likely that a general raise in minimum income won’t help raise the poor’s living standards, but instead lower it due to loss of jobs and increased burdens to live. That is why perhaps we should look at the other direction, instead of raising minimum income in general we instead take a more specific look at different individual situations and decide on a proper assistance. Mayor Blasio’s plan to raise minimum wage to combat poverty and income inequality is an ideal, but the reality is that we need plans that actually gets the money to the needed and raising minimum wage won’t be enough.
Raising the minimum wage can only help a very limited amount of the poor and is likely to hurt some people not even in poverty. The situation of Mayor Blasio’s minimum wage plan depicted in the reading by Kevin Short of The Huffington Post is one in which the ideal result occurs. That is, the poor families actually has a job and the employers can afford to keep them with a higher wage. However, the problems depicted by Christina Romer of New York Times and James Sherk of The Heritage Foundation are much closer to the reality that we are facing today. The first issue is that many workers earning minimum income isn’t in poverty. A great number of minimum wage workers are not the primary income of their families, and live in middle income families. The real people in poverty does not need a raise, they need a job that they can earn any sort of wage at all. Asides from not fully helping the targeted group, raising minimum wage can also hurt workers from both below and above the poverty line. The issue concern the reactions of employers towards the new minimum wage, specifically laying people off and raising the price of the products. The readings only talks about the effects on the people earning minimum wage, but it concerns more people than that. Imagine a worker earning $10 an hour, higher than the present minimum wage but lower than the new one in planning. The raised minimum wage would cause his wage to increase as well, thus increasing the burden for the employer and possibly getting this worker laid off. The idea is that raising minimum wage could not only hurt workers earning minimum wage now, but also impact workers who earns above minimum wage and is living at a relatively good standard. The same goes for the issue of product price raising, as that affects every consumer of these goods, adding burden to live in the society as a whole. That is why I agree with the readings that combating poverty with minimum wage is not that best course of action, and a more specific to individual approach should be taken.
The first method to help instead of raising minimum wage is rather simple, to create more works. As we have said just now, the problem for many living in poverty is not they don’t have enough wage, but that they don’t have a job at all. If more jobs are created, then raising the minimum wage could hit the target it’s meant to hit as more people in poverty has employment and is affected by the raise in the minimum wage. An alternative method we can use is the individualization of minimum wage. Using a series of factors, such as family size, family composition, average family income, and average living wage of the area, we can determine whether this person require a higher level of minimum wage. This way, those that has less demand for their wage, such as students working more for social experience than money, won’t be increasing the burden on employers, and the increase in wage for those that actually needs higher minimum wage won’t be too much of a burden. If employers are still unwilling to comply, then a government subsidy for each high minimum wage employee might convince them to do so. This method is much like the divide in income tax described in the readings, only difference is that one aims at taking less while the other aims at giving more. In general, we can’t simply raise minimum wage for everyone, as a more individualistic approach for each citizen should be implemented to deal with the problem.
Despite the fact that I am convinced of the negative effects that raising minimum wage could have for workers, I would like to know more about the history of minimum wage. If these effects are real then why did we ever have minimum wage in the first place? Let’s say that the minimum wage was first put in place for the sake of fairness against employer exploits of employees, but that does not explain the reason that it rose later on. Why did minimum wage experience several rises (one quite recently) despite the negative effects? What does the historical data say about the reactions of the economy to rising minimum wage? These are all good questions that the reader can look into for more information on their decisions to whether support or go against the opinions voiced in these readings.
While raising the minimum wage might seems to be a good strategy to help the poor and close the income gap, unseen consequences cast a shadow of uncertainty on its effects. As the problems of not effectively aiding the targeted audience and causing negative reactions from the market that actually hurts the targeted workers, more doubt has risen towards minimum wage. However, it must have a good reason to have existed in the first place and risen for numerous time in the past. Whatever the case might be, more considerations must be in place before adjusting it in any ways.
