The Promise of More: Why We Should Raise the Minimum Wage

President Obama's proposal to index minimum wage to inflation would be good for America’s economy — and its hardest workers

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In this year’s State of the Union address, President Obama outlined a plan to gradually raise the minimum wage from $7.25 to $9/hour. Raising the minimum wage has always been contentious, but necessary — conservatives should remember that in 2007, President Bush signed a 41% minimum wage hike into law, while Obama’s is just under 25%. Yet this is a political fight we shouldn’t have to have. The poor — mostly women and minorities — make too little. And the more radical aspect of Obama’s plan could fix that for good. The president has proposed indexing minimum wage, meaning that it would increase each year as the cost of living slowly climbs, free from the whims of partisan bickering.

Our federal minimum wage began in 1938, when President Franklin Roosevelt signed the Fair Labor Standards Act, which also limited the work-week to 44 hours, provided guaranteed overtime and placed limits on child labor. The minimum wage was set at 25 cents an hour (about $4.10 today). Its purpose was simple: guarantee that Americans who went to work received a wage they could live on. And the hope was that higher wages for workers would mean more consumer spending, thus strengthening the U.S. economy. Since its enactment, the benefits of a minimum wage have been well established.

(MORE: A Brief History of the Minimum Wage)

Three years before the Fair Labor Standards Act, Roosevelt signed into law legislation that he is perhaps more famous for: the Social Security Act. Those who receive Social Security today know well the importance of cost of living adjustments. While the first beneficiaries no doubt appreciated their checks when they arrived in 1940, each year they saw those checks remain the same as goods around them increased in price. In 1950 Congress acted, raising Social Security payments; they did so again in 1952 — resulting in an almost twofold increase in benefits. But for decades seniors didn’t know if they would have less money to spend the following year (or if they would have enough to live on).

In 1972 Congress decided that it was cruel to submit the paychecks of seniors to the fickle whims of Washington politics; since then, seniors have enjoyed cost of living adjustments to their Social Security checks. Low-wage workers enjoy no such benefit, unless they live in one of 10 states that index their minimum wage. All others must live with the near-guarantee that they will have less money in future years because the minimum wage is locked in place. We must replace this certainty of less with the promise of more.

It is important to consider how much people earning the minimum wage actually make. At present, a minimum wage earner working 40 hours a week without ever taking a vacation will make $15,080 a year. Obama’s proposed increase would mean an additional $3,640. Most minimum wage workers are adults, not teens, and most work for large corporations, not mom-and-pop stores. This means there are hard-working parents who are employed full-time at places that make billions in profits and often receive considerable tax breaks. And yet these parents still don’t earn enough to live above the poverty line.

(MORE: Working on Holidays: The New Class Divide?)

How have we gotten to a place where people can work tirelessly and still not make ends meet? In large part it’s the result of political ambivalence to the conditions of poverty and the wages of our lowest paid workers. As the minimum wage has remained flat, productivity has increased, and so too have corporate profits. If the minimum wage of the 1960s had increased with productivity, it would stand at around $15/hour. If it increased with inflation, it would be more than $10/hour.

While the economic arguments for raising the minimum wage are important, we should also not forget to think about the morality of our economy. We all derive not just wages from our labors, but purpose, meaning and a sense that we are part of something greater than ourselves: by supporting our family, helping our co-workers, and participating in the shared enterprise of community. Yes, the minimum wage should be higher. But it’s not just because it’s good for the economy and will help raise the wages of even non-minimum wage workers. It’s because there is a value to work that is deeper than money. And we cheapen that value if at the end of working a long day, our fellow Americans still live in poverty, with little hope of escape, and no promise of just a little bit more next year.

MORE: Have We Become Too Obsessed with the Rich?

25 comments
caecilia
caecilia

Is the Government really putting more money into our pocket, or just trying to justify higher taxes?

geary2400
geary2400

We should raise minimum wage to $20 an hour. That way everyone in America will be rich.

danperr
danperr

If you want to increase  youth unemployment, you should make it illegal for a business to hire them at less than $9.00 per hour -whether the young want to work for less or not.  That is the position of those who believe we should raise the rate.

The trick is not to look at the large corporations but the entrepreneurs on the margin, i.e. the ones barely making a profit - or perhaps even losing money.  

From Professor Shane:  http://smallbiztrends.com/2012/12/start-up-failure-rates-the-definitive-numbers.html

"The typical new business started in the United States is no longer in operation five years after being founded. That’s true whether statisticians at the BLS or Census are doing the measuring and it’s true whether you measure new establishments or new firms."

The higher wages paid by business start-ups under the higher minimum wage rate will just cause the business failure rate to go up -and, especially youth unemployment, to go right up with it.  You must reject the law of supply and demand to take a position that the higher rate will not raise youth unemployment..




Latrissa37
Latrissa37

Increasing the minimum wage will be a great asset. I have a BS in Business, Small Business Management & Entrepreneurship. I do not complain about making money. Nowadays, some money is better than no money. I decided to go back to school after my children became of age. Statistics say that some women should get married before having children. Biblically, that is correct. However, we were all born sinners and this is the reason for Jesus dying for us. I DO NOT regret my children at all. I can sit back and wait for the government to take care of me, but that is not me. I was raised by a single mother (a strong one at that) and refuse to fall a victim to the system. All I am saying is that how does a 4-year degree get you a job making .75 cents more than minimum wage. My degree sounded great when I decided what I wanted to do, however; had no idea it would be hard trying to find a job in my field. Since that can not happen, I will focus on my entrepreneurship (own and operate my childcare center) part of my degree while working. On the other hand, how can I even start helping myself if I am getting paid less? So I say increase the minimum wage so people can really stop working from paycheck to paycheck and still do not have enough to cover their way of living. 

caffine_cigs
caffine_cigs

Population/resource burdens birth/nurture/fuel inflation. Econ 101~ @TIME @shamuskhan @TIMEIdeas

bibleverse1
bibleverse1 like.author.displayName 1 Like

We need to raise minimum wage in China.

tonyadenisemath
tonyadenisemath

@TIME @shamuskhan @TIMEIdeas hu what ru kidding me why not raise minimum wage this not in the 1960s

LaddieSchnaiber
LaddieSchnaiber

@TIME @shamuskhan @TIMEIdeas And less people would starve.

ReneeSimkich1
ReneeSimkich1 like.author.displayName 1 Like

Times are tough for seniors and their primary caregivers.  Get free senior care advice/ access to senior care resources at Gericarefinder.com

mlyande
mlyande

@TIME @shamuskhan @timeideas theyre always talkin bout this but here we are still. itll never get to $15 anhour

Rinnababs
Rinnababs

@TIME @shamuskhan @TIMEIdeas you raise minimum wage gives the government to tax you more and raise prices on everything else

SMcgurl
SMcgurl like.author.displayName 1 Like

@TIME @shamuskhan @timeideas I would like to see some back up to the claims that more adults than teens work at min wage! Percentage wise?

MiguelIturbide
MiguelIturbide like.author.displayName 1 Like

@TIME @shamuskhan @TIMEIdeas Excelent. His proposal is the same like the former Spanish PM Zapatero. Wasn't he a socialist?

GopTaliban
GopTaliban

@TIME @shamuskhan @TIMEIdeas For far too long the power of the Purse has gone to the 1% & Corporations leaving Workers,at their mercy

Mo_Donnelly
Mo_Donnelly

@TIME @shamuskhan @TIMEIdeas We need to raise the #MinimumWage because it is the #RightThingToDo.

comeonnow
comeonnow

Say we raise the Min wage for a McDonald Worker to $9.  Now the people making $9 now will say I need a raise because I'm doing more and deserve more.  They get a raise to $12, then the $12 people want a raise... Now I as a consumet don't want to pay $10 for a burger so I won't go there.  How does that help the economy?

benjaminbaby
benjaminbaby

since 2007 the minimum has been raised twice from $5.85 to $7.25 a 24% increase, the author fails to mention Mr. O has already raised it once, and look at employment, since it primarily effects entry level positions guess what, companies find ways to not hire but automate, the question becomes would you rather have an job at minimum wage or no job at all? Since it has an overweight impact on entry level jobs millions of young people fail to aquire the basic skils to become productive adults in our economy as companys find ways to not hire at higher hourly rates making future employment that much more difficult, Germany, the most robust economy in Europe has no minimum wage laws, if the raising of minimum wage is so beneficial to the economy why not raise it to $50 an hour?l

zeltar2013
zeltar2013 like.author.displayName 1 Like

@TIME @shamuskhan @TIMEIdeas Opinion: Why does Time's content mirror the Obama agenda?

LesDH
LesDH like.author.displayName 1 Like

@TIME @shamuskhan @TIMEIdeas all people in poverty aren't unemployed. Some work 2 or 3 jobs to stay a float. Give these poor people hope!

sunmola4real
sunmola4real

@TIME @shamuskhan @TIMEIdeas to improve workers live