Raising the Minimum Wage
How many of you wish you were paid more? The truth is many of us will say, “I’d like that.” And it is safe to say that almost everyone making minimum wage would say, “I’d really like that.”
If you’re in that group of minimum-wage earners, there’s a good thing happening – the Democrats in the House of Representatives have proposed a bill to raise the federal minimum wage from $7.25 to $10.00. It has also been put forward in the same bill that the minimum wage should be increased on a regular basis in order to keep up with inflation. According to the Minimum Wage Act of 1968, the current wage should be at least $10.56 right now in order to keep up with the past rate of inflation – with federal wages staying at $7.25 it is no wonder the rich keep getting richer and the poor keep getting poorer. Due to the stagnant federal minimum wages that have not kept up with inflation there has been a “30% less” gap in purchasing power – purchasing power, meaning the amount of goods or services that can be purchased with a unit of currency.
Increasing minimum wage would increase the income of 30 million Americans. That’s more than 20% of the US workforce. For starters, a $1 hike in the rate increases spending by approximately $2,800 a year in households with minimum wage workers. More money in the hands of lower-income Americans leads to more consumption, investment, and jobs, which then also leads to an improving economy. In fact, one of the best ways to get the economy doing well again is to put more money into the pockets of low-income families, who will immediately spend the extra money on small businesses in their community.
Two-thirds of the American public is currently supporting the proposal, including President Obama. In fact, Obama’s quote was, “let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty.” Even if wages were increased to $9.00, that would still leave some workers making only roughly $18,000 a year, which is still below poverty level for a family of four, let alone a single individual. As of now, about 3.8 million workers are earning the minimum wage or below. And keep in mind; these federal statistics do not include other workers who are paid at a fixed weekly amount, such as landscapers and maids.
Virginia may very well be on its way to these increases with a former Virginia Senator, Jim Webb, co-sponsoring increases in the minimum wage.
Maryland, on the other hand, may not be seeing this hike anytime soon. In March of 2013, a bill was put on the table to increase minimum wages to $10 an hour and quickly died with a majority voting against it 8-3. Senator James Mathias Jr. stated that increases in wages would drastically increase the amount of layoffs and cause many businesses to close down.
Below are states that have already increased wages as of January 1, 2013, and the current minimum wage after the last increase:
Arizona – $7.80
Colorado – $7.78
Florida – $7.79
Missouri – $7.35
Montana – $7.80
Ohio – $7.85
Oregon – $8.95
Rhode Island – $7.75
Vermont – $8.60
Washington – $9.19
While many of us think increasing the minimum wage is an appealing proposal, many businesses do not. Increasing minimum wage could indeed lead many small business owners to lay off workers, or, potentially even go out of business. In order to make ends meet, smaller businesses may increase their prices, passing along the increased costs of labor, services, and materials. This leads us all to the big question, if prices do go up are we willing to spend more for these services and products? Are we really willing to support increases in wages when it negatively impacts our spending power?