The National Minimum Wage has been set in place now since 2008 at $7.25. I have, thankfully, never held a job at this wage, but have hovered closely in most of my work history.
More and more have been pushing now for a wage increase of up to $15 per hour, a wage I have never been paid; the most viable options are targeting a wage of $9 to $10 per hour. President Obama, while campaigning in 2008, explained the need for an increase, but the United States has yet to see one.
I agree that this wage is far from a living wage, but raising it is unfeasible.
Some of the most vocal proponents argue for an increase in the fast food industry. Unfortunately, this is not attainable because most fast food restaurants are already operating on slim profit margins; financial disclosures from most large-scale franchises place the margin at 2-3%.
Many large retailers, notably Wal-Mart, have also been singled out with recent strikes and boycotts of the corporation. Once again we see a business that simply cannot afford to pay higher wages.
Before Americans point their fingers at these large corporations for choosing to underpay workers; we must not forget the organizational structure of these firms. A CEO ready to pitch away profits surely will not be in their position for long.
This system is a byproduct of the United States being a capitalist system. Furthermore, we are one of biggest proponents of the idea that shareholders, not stakeholders, own corporations.
Many state that since companies will not raise wages naturally we should raise the mandated $7.25 per hour wage. This would undoubtedly yield a negative response from corporations. Many stores would be forced to shut down, or corporations would make large investments in technological advancements in hopes of minimizing payroll hours.
In short, we would see a decrease in labor hours needed from these minimum wage positions. This decrease will hit the poor the hardest, as the rich are paid nowhere near minimum wage. The Bureau of Labor Statistics released, for October 2013, that the leisure and hospitality industry is suffering an unemployment rate of 8.8%.
This is 1.5% whole points, or 17% overall, above the overall reported rate. Furthermore, leisure and hospitality yield the highest percent unemployed only after construction and agriculture, which make economic sense. The problem with this being that many of the minimum wage jobs are focused in this already weak center for jobs.
The biggest problem overall is the threat of inflation. The United States is already perusing aggressive monetary policy, which will most likely lead to inflation when their aggressive policy comes to an end. The idea that giving these minimum-wage workers more cash and that the price level will stay consistent is an elementary view.
If the wage saw a mandated increase these workers would have more money and would, in effect, compete for more goods than previous; the overall price level would increase. Although inflation will not match the exact increase, overall the drag on the overall economy would be quite painful.
Although it is easy to say workers deserve a “living wage”, which I agree, we must find an effective way. Simply placing the blame on corporations is ineffective and will never lead to change. We must accept that charity or government, dependent on opinion, must step in to help these workers, not business.
In a capitalistic society corporations are supposed to be as efficient as possible and paying minimum wage is just a byproduct. In fact, if our $7.25 minimum wage were actually eliminated some workers would possibly be paid less, but more would be employed.
The government, in my opinion, must stop cutting welfare and capital investments. The consistent blame of poverty on business should be placed solely on government itself.