Upward mobility, rising above our station in birth, is rooted in people having access to better education, improved social factors and, yes, better money.
In theory, minimum-wage jobs are for unskilled or uneducated workers where they gain new experience and step to better – and better-paying – jobs.
But socioeconomic trends have eroded opportunities in the middle – with much of the middle running as fast as they can just to stay in place. As such, there is hardly any room for lower-income workers to get off the ground.
Raising the wage floor appeals to our humanitarian side. But there also has to be pragmatic number-crunching: Where is the tipping point, where the costs of paying people for a better way of life outweigh the benefits?
To combat the country’s yawning levels of economic inequality, President Barack Obama wants to increase the minimum wage from $7.25 to $9 an hour. That’s not a huge amount, but it’s not chicken feed, either. The president’s proposal would raise the annual income by $3,500 for a full-time minimum-wage worker. The $9 threshold would give the minimum-wage worker more purchase power than they have had in three decades, accounting for inflation, but still lower than the peaks reached in the 1960s and 1970s.
Debate on both sides of the aisle is filled with largely anecdotal projections on how an increase would affect the plodding economy.
Supply and demand proponents will say increased wages lead to a higher binding price floor on labor, which will increase the amount of labor that goes unused. Prices would soar as well, sapping the improved purchase power of those minimum-wage workers fortunate enough to keep their jobs.
Worker advocates contend low-income workers, traditionally averse to saving, would take the extra money and reinvest it into the marketplace, supercharging the economy. A study by the Economic Policy Institute found that increasing the minimum wage to $10.10, as proposed by the Fair Minimum Wage Act of 2013, would lift the wages of approximately 30 percent of South Carolina workers, create 2,200 jobs and add $526 million to the state’s economy over three years.
This much, though, is all but certain. The faces of low-paying jobs are changing. It is no longer the 16-year-old working for gas money. Whether it is the fallout from the Great Recession or a snapshot of decreased mobility, according to Department of Labor statistics, more than 64 percent of minimum-wage workers are adult women. Nearly 35 percent have completed some college or holds an associate’s degree. The average fast food worker is 29 years old.
It is true companies maximize profits when they minimize costs, a rudimentary economic principle of the free market. But there are also the costs that the private sector’s lowered wages levies on taxpayers supporting expanded Medicaid and federal cash assistance programs.
According to a report by the Center on Budget and Policy Priorities, the number of households that have earnings while getting food stamps has been rising for more than a decade, and has more than tripled – from about 2 million in 2000 to about 6.4 million in 2011.
Costco, Trader Joe’s, Stride Rite and even Henry Ford himself have used higher wages as means to increase worker productivity and retain employees, but on the whole, we worry many companies won’t act in good faith without government interference.
There are options around increasing minimum wage that should be explored such as requiring companies to subsidize taxpayers’ costs of their employees who are forced to supplement their lower wages by leaning on the government’s dole. Expanding the earned income tax credit to help the working poor is another option.
There is no single panacea. But low-income workers in this country deserve a better way of life. They need optimism, an egalitarian hope for a brighter future, those fundamentals that fuel commerce.
That’s the American dream, right?
Costs will be incurred.
How much is hard to say at this point.
But the bigger question is: Can we afford not to do something?