minimum wage

In a country like the contemporary United States, which has plenty of available workers, the primary determinant of wages is the demand for labor rather than the needs of the employee. Still, it seems reasonable to me that a person who works a full-time job should be able to have a certain standard of living. If economic forces tend to push wages lower than that standard, the appropriate response is a political one: the minimum wage.

Conservatives typically argue against the entire idea of a minimum wage on the grounds that it interferes with the market and the liberty of contract; they claim to oppose raising it to any particular level because such an action is likely to cost jobs. Liberals, on the other hand, tend to focus on the fact that the minimum wage that we have ($7.25/hour is the federal minimum; many states or cities have higher ones) has lost a lot of purchasing power to inflation.

All of these arguments, in my option, skirt the real issue: what standard of living do we think is minimally acceptable for a working American? When looked at that way, it is hard to justify the current wage. Someone who works full-time at the federal minimum wage would earn a little over $15,000/year. That does not seem like enough to get a college education, raise a family, own a home or do any of the things that, in my view, a full-time worker has a right to be able to expect to do.

I don't know exactly what that standard of living should be, but off the top of my head it seems like something close to twice the federal minimum. So I was glad to see that Chicago will be raising its minimum wage to $13/hour, and to read in the New York Times about activist Terrance Wise and his campaign Fight for 15, which advocates increasing the prevailing wage in the fast food industry to $15/hour.

I do not necessarily discount the idea that significant increases in the minimum wage would negatively affect both low-margin businesses and low-wage workers themselves. (If low-wage employers cut back on hiring, many would find themselves out or work and wishing that they had that previous, poorly-paying job. As for the owners, I think McDonald's and Yum! Brands can take that hit without too much trouble. But in fast food, those increased wages are not borne by them but by the individual franchise owners, who are often squeezed pretty hard by their corporate overlords.) But I think that these objections avoid the real issue. If we, as a society, think that workers deserve a certain standard of living, then the disappearance of jobs that don't provide that standard is really is no loss at all. As an alternative, we might decide that full-time workers should have a shot at the American dream, but for some reason we value those low-paying jobs. (Perhaps we like cheap hamburgers, say, or low-paying work experience for teenagers.) In that case, it would be incumbent on us to beef up (no pun intended!) our social safety net to ensure that full-time work does provide the standard that we want it to. To be clear, though, the latter scenario has us subsidizing low-wage employers under the guise of helping workers, and it makes taxpayers bear the costs that should be borne by businesses and consumers. But if we are unwilling to do anything to address the current situation, let's at least have the honesty to admit that we simply don't believe that everyone who "works hard and plays by the rules" (in Bill Clinton's phrase) deserves a shot at a decent life.