Thoughts on Minimum Wage

I have been reading and thinking about the subject of minimum wage recently, and I thought it was time that I shared a few of my thoughts and worked out how I feel about the subject.

To begin with, I will state that I do recognize the need to have some protection in the law so that workers are not exploited.   Workers’ rights are very important to keep people safe and to protect them.   I also understand the philosophy behind the idea of a minimum wage — That we need to make sure that workers make enough to survive and are not forced to work multiple jobs just to have enough to feed and clothe and shelter themselves.   That is a great philosophy, and certainly a great goal.   But, the arguments against a minimum wage are also pretty convincing — that ensuring that employers have to pay a certain minimum wage detracts from the profitability of the business, so the business will need to make cuts elsewhere to remain afloat, or it could cause many smaller businesses to go under.

While I do believe a minimum wage is a good thing, I do not like the idea of a federal minimum wage.   From personal experience I know that the cost of living is drastically different in different parts of the country, and so a federally mandated minimum wage, in order to be enough for workers in one area, would be extremely high in other areas.   For example, I am currently living in Columbus, Ohio and our rent is about 650 a month for a two bedroom townhouse.   I am looking to move back to the Seattle area, and have been looking at apartments and homes in that area and cannot find anything with two bedrooms for less than 1000 a month — and those places do not have near the square footage that our current place does.   A minimum wage that I would need to survive and afford rent and food for my family for a month in Columbus would be nowhere near sufficient to live in Seattle.   While at the same time, if there was a federal minimum wage based on what would be needed to live in Seattle, it would be way more than is necessary to live in Columbus, and employers would find it hard to ensure that all workers were paid in that amount.

Which is the main argument against a minimum wage, as I have stated before.   I do believe that setting a minimum wage too high will have an ultimately negative effect on the local economy.   Rather than ensuring that workers have enough monthly income, it would force employers to pay more for the work provided than it is worth.   And to pay workers that wage, the business would need to make cuts or raise prices or find the revenue in other places.

Raising the minimum wage is also somewhat unfair to workers who have worked hard to advance themselves to earn the raises to make what the new minimum wage would be.   If the current minimum wage is 8.00 an hour, and I started working at that rate, and a few years later have worked my way up and earned raises so that I am now making 10.00 an hour, when the minimum wage gets raised to 10.00 an hour, I am now again making minimum wage.   But, of course, there have to be adjustments made to minimum wage, otherwise we would still have a minimum wage of $0.25, as it was set in 1938.   Obviously that worked then, but is nowhere near enough today.

So, a few thoughts I have had about this whole minimum wage issue, the first being what I said before, that I do not believe a federal minimum wage is the way to go.   Because the cost of living varies so much from state to state, minimum wage should be left to each state.   States can determine best what the needs of the citizens of their states are.   There are some programs that are best handled on a federal level, but there are also many programs that are best managed locally, by individual states.

I also think it would not be a bad idea to implement a structured, tiered minimum wage based on different factors, such as a college degree or dependants.   There could be a minimum wage set at a certain level, and if a person has an Associate’s degree then the minimum wage is a little bit more, if they have a Bachelor’s degree the minimum wage is set a little bit higher.   Also, if a person is only responsible for himself, the minimum wage would be set at a certain level, but if he has dependents, a wife and kids to support, the minimum wage would be set higher.   It would probably be best to have a base line and then have the increases be a percentage of that.

It could also be a good idea to have different minimum wages based on the industry of the job.   Different careers require different skills and even with the above mentioned levels of a minimum wage, those would have to be tailored to the industry the job is in.   You would not want a person who has an advanced college degree working the counter at a fast food place and demanding his higher wage for the same job a high school student can perform.

Minimum wage is a very important issue, as we do need to ensure that everybody who works makes enough so they do not starve or have to live in squalor.   But, at the same time there is something to be said for encouraging people to work harder to improve themselves, to advance themselves to better jobs so that they can make enough to support themselves well enough.   People should not just take any job and expect that someone pay them whatever they want to do it.   I will be honest, I do not believe that fast food jobs are meant to be careers, unless they choose to move into management, but I believe that management positions at fast food places do offer a raise in pay commensurate to the position.   If we raise the minimum wage for jobs like those, we do not encourage people to work on improving themselves to get the better jobs.

I would love to hear your thoughts on the subject, your suggestions to how we can improve minimum wage and make working fair for everyone.   I think that is the real solution — getting enough people together to share their ideas, open communication and cooperation and compromise to find the best solution for everyone.

One thought on “Thoughts on Minimum Wage

  1. I guess the question is what is a “liveable” amount of money? I honestly think a dog-eat-dog world is the best solution in this case, with an extremely low safety net of minimum wage, if you have it at all. You’ve mentioned some of the problems of minimum wage, and it definitely needs to be localized, not federalized, but even then, what do you do when many people aren’t employed full-time? Do you take what was once 40hr@$8 weeks and say that now a 32hr “new normal” should deserve $10/hr? Does a 16-year old really need $8/hour when they’d’ve been happy with $5/hr at McDonalds? But now teenagers can barely compete with adults for those jobs, which traditionally have worked well (despite claims of “exploitation”…which only seemed to come about when adults started working those jobs). There’s no way to draw a fair line, and any line hurts businesses directly. It also sparks the ongoing cycle of “you make more, so now we can charge more”, which begs for a higher minimum wage…

    A writeup on this was published by the (conservative) Cato Institute last year:

    Click to access PA701.pdf

    Granted, I also think that migrant workers aren’t “stealing” jobs from hard-working Americans; rather, they’re often working the jobs that lazy Americans don’t want. There’s no shortage of labor force, but there’s also no shortage of potential hiring. And $2/hr is better than not trying and just abusing the welfare system (some people do try, but too many do not). But enough of a tangent…

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