I’ve worked for minimum wage. Many times. Selling programs. Frying chicken. Janitor. Factory worker. Ice cream scooper.
In each case, I saved the money and put it toward college and grad school. What I lacked, I borrowed in loans. With my degree, I eventually got a good job and paid those loans back.
Had they increased the minimum wage by 40% — as many are proposing now — I would have had more money.
But I would have gone to college anyway. I’d have borrowed what I needed. It wouldn’t have lifted me “out of poverty.”
And therein lies the problem.
Actually just one of the problems.
The minimum wage debate is the equivalent of stretch pants. It takes on the shape of the user. President Barack Obama says raising it will lift people out of poverty. Big Business says it will cost folks their jobs. Small Business says it will close them down.
And poor people say, “Bring it on!”
Then again, research shows that poor people, surprisingly, are less affected than you think. Because a huge percentage of poor Americans aren’t working at all.
Now, before we dissect who is right or wrong, let us agree to throw studies out the window. Because you can find a study to make every argument in this debate.
Case in point: The White House’s Council of Economic Advisers did a briefing this year that said raising the minimum wage from $7.25 to $10.10 an hour could be done with no job loss. Hurray!
Then the Congressional Budget Office released a nonpartisan report that said such a move would result in 500,000 fewer jobs. Boo!
Two reports. Same government. Get it?
Poor people need more jobs
In such cases, it’s best to try common sense. Common sense tells you that $7.25 an hour doesn’t get you much these days. Common sense also tells you that businesses, especially big chains like McDonald’s, are in it for profit. And if you chop their profit by raising labor costs, they are not going to sit there and sigh, “Oh, well.”
They are going to 1) raise prices to regain that profit or 2) lay off workers to do it. The first will result in higher costs for those who eat there — including many poor people. The second will create unemployment.
Multiply this by a zillion examples and you see that while some will be making more, others may make nothing and pay higher prices. Even the government’s own Congressional Budget Office study (I know, it’s a study, but you’re going to want something besides my logic) says the increase to $10.10 an hour would lift 900,000 Americans out of poverty, but cause 500,000 to lose their jobs.
No matter where you stand, that’s bad math.
Now, let’s use common sense on who benefits from minimum wage hikes. A perception is that all minimum wage workers are industrious single moms trying to run a household or earnest but low-educated men working 40 hours to put food on the family table. The facts don’t bear this out.
Many minimum wage workers are more like I was. More than half are under 24. Most are white. Nearly 50% work in food prep or serving. And two out of three are part-time.
A recent Forbes article by an economics professor, Jeffrey Dorfman, said it well: “The reality is that families in poverty very rarely have a full-time worker in the family; in fact, only 7% of the time. … People are not in poverty because the minimum wage is too low. … People are in poverty because they are not working or not working enough. They need jobs.”
Ironically, some suggest that raising the minimum wage to $15 an hour (as certain U.S. cities are trying) actually would attract more workers living above the poverty line, thus nudging out the very poor such a hike was designed to help.
Better treatment for all workers
Now, having said that, let’s apply common sense to how minimum wage workers are treated. Recent walkouts at fast-food chains are protesting not just wages, but practices such as making employees sign for no hours guaranteed, but availability whenever called. That’s unfair. A low wage should not mean low treatment.
The government could do something about that. It could also make sure the minimum wage rises with inflation. And it could increase the Earned Income Tax Credit, which is tied to how much you earn and your family size, so that the benefits go to the people who truly need it.
Common sense says a family of four should live above the poverty line if a member has a full-time job. But common sense also says in today’s world, it’s almost a luxury to have one breadwinner per family.
Common sense says higher wages put more money in the economy — but not if jobs are lost because of it. Common sense says the marketplace sets its own rules; yet we all know businesses are greedy by nature.
All of this would be solved if multinational corporations got together and said, “You know, we make enough. We can trim our profits for the common good.”
Wake me up when that happens. Until then, this argument will go on, stretching to fit whoever is making it.