The Maxim of Minimum Wage

Over five and a half years have passed since California raised the state minimum wage to $8.00 per hour. During that time, we have experienced the worst economic recession in decades. Rates of foreclosures, poverty and unemployment have spiked, and for Anteaters the cost of tuition has risen from $8,774.50 for the 2008/2009 academic year to $14,507.97 for the 2013/2014 academic year.

Some economists argue that the minimum wage was never intended to be a living wage, but for thousands of college students, seniors, single parents and even some family breadwinners across California, there are no jobs available besides the ones that pay the minimum wage.

Luckily for them (and society as a whole), the California legislature recently passed bill AB 10, a bill that will gradually raise the state minimum wage up to $10.00 per hour by 2016. This will effectively be the highest minimum wage in the nation, and supporters of the bill believe that the California model could help improve economic equality on a federal level where the minimum wage is currently $7.25 per hour.

Over two million employees in California could benefit from the new wage increase in the coming years. Although critics argue that it could cause higher rates of inflation, the reality of the situation is that lower-income families will now have greater purchasing power. Rather than leaving these workers to cope with the harmful combination of the rising costs of living and stagnant wages, minimum wage earners in California will have more disposable income.

An increase in consumer spending would be a win-win for our entire state’s economy. In status quo, many individuals who work full time for $8.00 an hour have to take on a second, or even a third job just to stay afloat.

When individuals can’t get by on an hourly wage that is well below the rate of inflation, they’re sometimes forced to turn to food stamps and other forms of taxpayer-funded welfare to maintain a decent standard of living for their families and themselves.

Despite the constant doom and gloom predictions from those who are against the increase, Hart Research Associates found in July of this year that a vast majority of the American public — 80 percent overall, and a surprising 62 percent of Republicans — support a higher minimum wage with annual adjustments to account for inflation.

The business sector also seems to favor this legislation. The Small Business Majority reported in April 2013 that 67 percent of the small business owners they surveyed actually support an increase in the federal minimum wage.

However, critics argue that raising the minimum wage would be devastating to the economy, citing Obamacare and diminished profit margins as the main causes.

The employer mandate of Obamacare is already leading to layoffs and lessened hours; critics of the minimum wage increase say this will only supercharge the problem.

Despite the potential for layoffs and fewer hours in employees’ work schedules, the benefits will ultimately outweigh the costs. We cannot afford the moral and economic consequences of paying workers substandard wages, which force them to rely on multiple jobs and governmental assistance just to make ends meet.

California’s plan to raise its minimum wage to $10.00 per hour by 2016 isn’t radical — it is common sense.

Several other states are already considering similar pieces of legislation and politicians at the federal level are also taking note.

While businesses understandably have their bottom lines to consider, paying their employees a decent wage will make them more productive and the United States, as a whole, will benefit.

 

Kelly Kehoe is a third-year international studies major and can be reached at kpkehoe@uci.edu.