Increasing to the United States Minimum Wage: An Ethical Discussion

Transcription

1 Increasing to the United States Minimum Wage: An Ethical Discussion by: Christopher L. Schilling Section I: Introduction It is my claim the federal minimum wage is not only beneficial to American workers, but periodic increases to the minimum wage is an effective way to combat poverty. Since 1938, workers in the United States have benefited from a federal law that require employers to pay a minimum wage to all those who are on their payroll. While the current federal minimum wage is $7.25 an hour on the federal level, all employers in the United States must pay this amount or higher for labor. While the federal rate is the bare minimum employers in the United States have to pay workers, some states have higher minimum wage requirements for businesses in their states. Currently, the state with the highest minimum wage rate is the state of Washington which is at $8.55 an hour. (WSD, 2010) While employers are required to pay a minimum wage by federal law, there is a great debate of whether or not the federal minimum wage is actually beneficial to American workers and the American economy and if periodic minimum wage increases are a good idea. There are also discussions of whether or not if the minimum wage is actually effective in fighting poverty in the United States. For this assignment, I will attempt to make my case of why I not only think the federal minimum wage is effective, but also why minimum wage increases are beneficial for American labor workers. Before I begin to make my argument, I first would like to discuss the history behind the federal minimum wage law in the United States.

2 Section II: History of the Minimum Wage Despite the federal minimum wage law first being introduced to the United States in 1938, the concept of setting a standard for what employers are required to pay their employees did not originate in the United States. Originating in Australia and New Zealand in the 1890s, the idea was to protect workers and came out of bitter strikes in those two countries. (Fitzpatrick, 2009) And in 1912, the state of Massachusetts adopted this idea and introduced a statewide minimum wage to protect particularly, women and children workers. However, following the Great Depression in the United States in 1930s, a large majority of American workers found their selves out of work or faced with employers cutting their wages due to a stalled economy. (Fitzpatrick, 2009) This made it especially more difficult for Americans who were struggling to support their families as they now were being paid less for the same amount of work and the same amount of hours they were putting into their jobs before. Despite with the election of President Franklin Delano Roosevelt in 1932 and his New Deal which brought fourth the FDIC, Social Security, and other programs that not only protected but helped Americans from the financial hardships, no one was addressing American workers who were being faced with having their take home pay being cut. But that began to change during the 1936 Presidential Election when on a campaign stop, President Roosevelt received a note from a young girl who wrote about how her take home pay went from $11 dollars a week down to only $4 a week within a few months. (Fitzpatrick, 2009) Moved by this letter, Roosevelt made a campaign promise to protect American workers. And in 1938, Congress passed the Fair Labor Standards Act of 1938 which not only set a federal minimum wage, but also guaranteed time and a half for certain jobs and also prohibited most employment of minors in the United States. Today, 72 years later, American workers are still guaranteed a minimum hourly pay for most labor jobs by the federal government. However, the argument still exists of whether or not the

3 minimum wage does more damage to the United States economy and if it really benefits American workers. In the next section, I will explain my reasoning of why I consider these arguments invalidated and why I believe the United States Congress should not repeal this bill law that has protected American workers for over three generations. Section III: My Arguments in Favor of the Minimum Wage In New York City, stands the Statue of Liberty on Liberty Island. Standing at 305 feet tall, the encryption on the base of the statue reads, "Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore." This statue, which was the first thing millions of immigrants (including my own ancestors) saw when they came to the United States, represents the principals and values this great country stands for. The opportunity for not only freedom of speech and freedom of religion, but also the idea that through hard work and vision, any man or woman can truly live their dream and go from nothing to creating companies that have a profound impact on generations to come. But while our American constitution grants every man and woman the opportunity for not only freedom but also the opportunity to be successful in what ever their passions may desire, we know too well of stories about corporations that take advantage of those who are work for them through unfair business practices, poor treatment of employees, and unethical environmental practices. And while these things do happen, I strongly believe its the role of the federal government to not only intervene in these instances, but to hold all businesses accountable for the welfare of their employees, the environment, and their contribution to society. While many would argue its not the role of the government to intervene in the private business sector, I would argue its the role of the government to intervene when employees are being treated unfairly and to make sure employees are being paid fairly for the work they are doing and the time they spent doing it. I will now outline my three arguments of why I believe their should be a federal minimum wage.

4 Argument I: Sets A Standard For America's Working Poor For about five years, I used to work for a local grocery store as a stock clerk. While the minimum wage at the time was $5.15 an hour, our store started employees at $5.50 an hour. While this wasn't much of an increase, it set a bar for what I expected my supervisor to pay me for every hour I worked in the store. While I worked long hours in the grocery store, I did not have to worry about my supervisor paying me less for the same work I was doing because business slowed down. Nor did I have to worry about the possibility of him cutting our wages in order to pay for a vacation he wanted to take that summer. I as the employee had a standard of what I expected to be paid and he was held by federal law a standard of what to pay me for my work. I believe the minimum wage sets a pay standard for American workers who are often the poorest in this country, a guarantee of what they are to be paid. This guarantee, backed by law from the United States federal government, guarantees workers they will not be paid less for any reason. (Filion, 2009) Some critics may argue that if employees are going to be paid less, they have the opportunity to work for someone else. I would argue that this may not be the case if there isn't any work in the area to be found. And also for many of people its hard to make enough money to live off of day to day. If you think about it, someone working 40 hours per week at $5.15 an hour will make about $800 per month after taxes.(messerli, 2010) Just rent alone will be your whole paycheck if you live in high-cost areas of the country like New York and Los Angeles. Adding in utilities, food, insurance, car payments, credit cards, and on and on. How can someone survive on anything less? I believe a minimum wage gives business a reasonable floor that should be paid for the labor of others, whether skilled or unskilled. To draw a conclusion to this argument, I believe its important to give American labor workers who are often the poorest in the country, a guarantee of what they are expected to be paid without fear

5 of businesses manipulating their pay. But I also believe its important to give American labors a standard to move up and make more money to benefit themselves and their families through their hard work and commitment. Argument II: Minimum Wage Equals Less Unemployment In 1992, two gentlemen by the name of David Card and Alan Krueger decided to do an experiment. At the time, Pennsylvania and New Jersey had a minimum wage of $4.25 per hour. (Card & Krueger, 1992) However, after New Jersey increased their minimum wage to $5.05 per hour, Card and Krueger wanted to see if New Jersey's raise in the minimum wage affected employment in New Jersey. So before New Jersey raised the minimum wage, the surveyed employment numbers at local fast food restaurants in Western New Jersey and in Eastern Pennsylvania. (Card & Krueger, 1992) The purpose behind this was to have a controlled variable from the same community to see if their hypothesis was validated. After collecting the numbers, from both sections in Western New Jersey and Eastern Pennsylvania before the increase, these men decided to do the survey again later that year after the increase took place. To their surprise, employment at the fast food chains in Western New Jersey increased in comparison to the Eastern Pennsylvania restaurants. This lead Card and Krueger to believe the minimum wage increased equaled to less unemployment. As our country finds itself in one of the most difficult economic crisis since the Great Depression, many critics believe the minimum wage is raising unemployment. I would argue that not only would the minimum wage motivate people by a guaranteed income of what they can expect to be paid every hour, but it also would motivates more people to take jobs they would have not considered doing before because they pay is higher. This would allow workers to earn more money which they will indeed spend purchasing items from local businesses. And it will decrease the cost of governmental social welfare programs while also increasing money in the local economy thus leading to more of a job demand and more capital for businesses and employees.

6 Argument III: A Higher Minimum Wage Makes For A Stronger Economy It doesn't take an economist to figure out the idea that if people have money they will most likely spent it. This is particularly true of those in the middle and lower economic classes. If they make a little extra money, they are more likely to spend it than those who are of in higher economic brackets. According to the Economic Policy Institute, in addition to increasing the wages of affected workers, increasing the minimum wage is also an effective way to boost spending and stimulate the economy. (Shierholz, 2009) They cite a recent study by economists at the federal reserve Bank of Chicago which (Aaronson, 2008) finds increasing the federal minimum wage by $1 an hour would result in an increase in spending by affected families of $800 per quarter. The authors of this article continues to say that with additional spending that far exceeds the $300 per quarter most families would expect from an increase in the minimum, money would go largely to collateralize debts to finance durable goods purchases, especially automobiles. And raising the minimum wage just won't help stimulate the federal economy, but local economy as well. States that often have a higher minimum wage than the federal minimum wage have greater small businesses growth than states that stay with the federal government's minimum wage laws. (FPI, 2006) Argument IV: The Current Minimum-Wage Level Could Fight Poverty (If High Enough) When President Roosevelt created the minimum wage in 1938, the intention of the program was so that individuals who made minimum wage could live off of this base level of income. However, while data shows the minimum wage increased with the adjustment of inflation over the years, since the 1970s, the minimum wage income has steadily declined. In taking to consideration with adjusted inflation, in 1968, an individual working a minimum wage job would be earning $10.04 cents an hour. Today, in 2010, an individual working a minimum wage job

7 only earns $7.25 an hour. With the price increase of almost everything since the 1968, its almost virtually impossible for anyone to live off of $7.25 an hour let alone raise a family. (Folbre, 2010) The minimum wage was created the purpose of helping people go live off of for a family, not just for themselves. Now its impossible to do both and this is why I believe the current research which shows minimum wage as being ineffective in fighting poverty as being invalidated. Section IV: Opponent Arguments Against Minimum Wage It would only be fair for me to discuss valid arguments from those who oppose the 1938 law that created minimum wage in the United States. For this next section, I will discuss some valid points to take into consideration of why having a minimum wage in the United States is not fair to American workers and to businesses and economies. Argument I: Minimum Wage Hurts Small Businesses While large companies such as Wal Mart, Best Buy, Hilton Hotels, or Safeway Grocery can afford to pay employees minimum wage, smaller businesses and privately owned companies often struggle to pay employees the minimum amount per hour they are required by the federal government. This in turn makes small businesses unable to compete with larger business than can win over the smaller businesses because they don't have to raise prices as high to make up for this difference. (EPI Online, 2010) Argument II: Minimum Wage Often Leads to Decreased Work Hours Often, if companies are forced to pay workers a minimum wage, they will find other ways to cut expenditures when it comes to their employees. And they will do this is through by offering decreased work hours. While employees may be eligible for full time employment and the benefits that can only come through by working full time, the reduction of hours to part time status hurts employees from getting these benefits and making a decent wage. (Neumark, 1999) Argument III: Minimum Wage is not an effective tool to fight poverty According to United States Census data taken in 2000, only 16.5 percent of those working

8 minimum wage jobs are raising families. The remaining 83.5 percent are teenagers living with working parents, adults living alone, or dual-earner married couples. This leads many to believe that the minimum wage is not the best method at fighting poverty because its not targeting particularly families that live in poverty. (Neumark, 1999) One must take into consideration that there are many valid opposing points that explain as to why the federal minimum wage is not effective at not only not addressing poverty in the United States, but also helping American workers. For all the data that seems to exist which gives valid reasons as why having a federal minimum wage is effective to combating poverty and making the playing field more fairer for American workers, there is also research pointing to why its not as effective in this purpose. Section V: Taking the opposing arguments in account, why I am in favor if a minimum wage With every argument, there is always going to be a counter argument and research to back up the opposing arguments claim. In concerns of the opposing view that the federal minimum wage is not effective at combating poverty and benefiting American workers, I say this argument is validated. However, I believe there are considerations we need to understand as to why there needs to be a minimum wage. The first and foremost argument why the opposing arguments are not compelling for me is their data is not effective because the current minimum wage levels are not high enough as where they are supposed to be in order to fight against poverty. As I mentioned during my arguments, the minimum wage level is supposed to be set a standard so where an individual is able to not only support themselves, but also a family. Since the 1970s, Americans living off of minimum wage are making considerably less than what people made when the level was at the corrected level adjusted for inflation. Therefore, the opposing arguments that claim the minimum wage is not effective in fighting poverty are correct because the minimum wage is not at the level is should be at in today' economy where its supposed to be fighting poverty.

9 My second argument from the opposing side is the minimum wage hurts small businesses. While it is true that small business may find themselves not able to pay as much as large corporations, consider this idea; if there was truly no minimum wage and a small business could only pay individuals three dollars an hour while a larger company could pay be eight dollars an hour, wouldn't it hurt the small businesses anyway if people only worked for the companies that could afford to pay them? Again, those who are opposing minimum wage need to look at the entire picture before drawing to their arguments. Finally, the most important argument I have to counter the opposing viewpoint of why I believe the minimum wage is worthwhile is because I believe we here in the United States have a moral obligation to help anyone who desires to earn income in a fair manner without corporations taking advantage of workers. As I said before, the United States is a country where anyone can achieve their dreams. The United States was the home to many immigrants who came to this country with barely anything and through their hard work they build companies and created inventions that no one could do anywhere else in the world. However, while I support a free market society and I support capitalism, I believe its the role of the government to protect any American worker from corporations that try to take advantage of their workers by not paying them the adequate amount of money for their pay or having them work in unsafe and poor conditions. This is why I believe its a moral issue not jut for Christians who follow scripture and the message of Jesus Christ, but also for all Americans to make sure our federal government holds businesses accountable to guarantee their employees are making an amount of money that individuals can not only support themselves, but also their families. This is what I believe this country is all about, offering fair opportunities for anyone to support their selves and their families by working hard and by being treated fairly by their employers so that anyone who lives in this country or comes to this country can truly achieve their greatest visions.

10 Bibliography Aaronson, Daniel, Sumit Agarwal, and Eric French The Spending and Debt Response to Minimum Wage Hikes. Working Paper Chicago, Ill.: Federal Reserve Bank of Chicago. Card, David, and Alan Krueger. Minimum Wages and Employment Reply: A Case Study of the Fast- Food Industry in New Jersey and Pennsylvania. THE AMERICAN ECONOMIC REVIEW (1992): page nr. (accessed December ). Fitzpatrick, Laura. The Minimum Wage. TIME, Jul. 24, (accessed December 9, 2010). Kai Filion, Minimum Wage Issue Guide, Economic Policy Institute (July 21, 2009): page nr., December 1, 2010). Folbre, Nancy. Along the Minimum-Wage Battle Front. Let Justice Roll. (accessed December 1, 2010). FPI. States with Minimum Wages above the Federal Level Have Had Faster Small Business and Retail Job Growt. Fiscal Policy Institute (2006): page nr. (accessed December 9, 2010). Messerli, Joe. Could the Minimum Wage Be Abolished (i.e. Reduced to $0.00)? Balanced Politics. Entry posted October 10, (accessed December 9, 2010).

11 EPIOnline. Minimum Wage. Employment Policies Institute. (accessed December 10, 2010). Minimum Wage. Washington State Department of Labor and Industries. (accessed December 1, 2010). Neumark, David, Mark Schweitzer, and William Wascher. The Effects of Minimum Wages Throughout the Wage Distribution. Working Paper (December 1999): page nr. (accessed December 10, 2010). Shierholz, Heidi, Fix It and Forget It Index the Minimum Wage to Growth in Average Wages. Economic Policy Institute (December 17, 2009): page nr. (accessed December )