On Wednesday, Vickie Savvides went through a very thorough background of the minimum wage, its history, and opposing arguments.

So, the minimum wage is a government mandated price floor on hourly wages of legal employees. There is a federal government minimum and local state minimums, which are generally higher than or equal to the federal wage because the rule is that employees have a right to the higher wage. These terms are defined by the Fair Labor Standards Act and enforced by the Dept. of Labor. The battle between increasing versus decreasing minimum wage stems from contrasting studies from the 80s and 90s arguing about whether a minimum wage hurts teens and unskilled workers by limiting jobs. This traditionalist view was not backed up by numbers, however, and from an economic perspective, higher price floors force businesses to become more efficient. Factors that influence minimum wage trends include location, industry, time of year, and the size of the workforce. ie. fast food workers make more than the average minimum wage earner. And despite common misperceptions, most minimum wage workers are not teenagers working part time jobs; the majority are 25+year old people with high school diplomas in the service industry .

Currently, politicians leaning left and towards social progression advocate a higher minimum wage designed both to protect employees from high turnover rates and to incentivize employees to work harder. It will also help decrease the growing wage inequality gap between the rich and the poor that is contributing to the shrinking middle class. From an economics standpoint, having more money increases standards of life, provided inflation does not immediately contribute to increased costs of goods (a long term effect). Opponents of a higher minimum wage take a different stance, that of the small business. Having the government mandate certain expenses may make hiring unaffordable, which ultimately reduces jobs in the economy. This hurts the economy and stunts upward mobility. Besides, a federal minimum wage is completely arbitrary, based on a old study on the cost of a basket of necessary consumer goods; it doesn’t take into account the varying regional costs of living. ie. apartment in NYC vs. farmstead in Ohio. Minimum wage should be sustainable for a head of household supporting a family, but it’s not. If legislators can find the right balance between the two sides of the employee and small business owner, and adjust it over time, that would be perfect. Corporations or franchises paying their workers more is a different story, and generally speaking, should be able to pay more with only a marginal increase in operating expenses.

Vickie also touched on an alternative solution of expanding the Earned Income Tax Credit program, where low to moderate income earners receive a refundable tax credit and perhaps a refund, depending on the numbers of hours workers and need. This puts more money back into the economy and encourages savings. There is an increased risk of fraud, but other than that, her proposed solution has merit and positive real-life implications.