The United States minimum wage currently sits at $7.25 per hour. Adjusted for inflation, the minimum wage in 1968 would today be worth $10.58 per hour. While running for president in 2008, Barack Obama promised to raise the minimum wage to $9.50 per hour by 2011 and to set it to rise with inflation. Adjusted for inflation, the $9.50 minimum wage proposed for 2011 would now be $9.72 per hour this year and roughly $10.00 per hour in 2013.
Here are a few of the reasons why raising the minimum wage is so important and should be pushed even by people that it does not affect.
Raising the minimum wage is an effective form of economic stimulus. The Economic Policy Institute has concluded that raising the minimum wage by a single dollar equates to $2,300 of additional spending by that wage earner's household. All told, they conclude raising the minimum wage to $9.50 per hour would increase spending into the economy by $60 billion. This equates to a .4% increase in GDP and in all probability would lead to the creation of 100,000-250,000 jobs per year. While this in-and-of itself would not accelerate the United States out of its lethargic recovery, it should be a part of a comprehensive plan including the Surface Transportation bill, the American Jobs Act, and others.
Raising the minimum wage would have profound effects on families. As I stated earlier, the minimum wage in 1968 adjusted for inflation would be $10.58 per hour. Between 1968 and today, wages have stagnated and more people are working in lower wage professions. Adjusted for inflation, full-time minimum wage earners have lost roughly $6,000 of income since 1968 until the present, and for a two full-time worker household the loss would be $12,000. I see this everyday in the school in which I teach. Children of parents that I know are working without coats, without adequate care, with absentee parents working multiple jobs, living in cold houses, without food at the end of the month, etc... It is very difficult for adults to hold marriages and families together in such circumstances. At the very minimum, it must be stressful for the parents and even more stressful for children. While it is clear that a student under stress has a very difficult time learning, this will affect that child's future far beyond the economic inability to go to college. It damages our society and our economy permanently.
It damages our endeavor to build a better economy and society in other ways as well. With increasing numbers of people working low wage or minimum wage jobs, it is no wonder they will increasingly vote against tax increases that would help to build a better society. Teachers, firefighters, law enforcement, nurses and other public sector employees in particular should pay attention. A full-time minimum wage earner working 2000 hours a year makes roughly $14,500. If that same earner made the minimum wage they did in 1968, that earner would be making around $21,000 per year. It is understandable that an individual who has seen their income decline in such a fashion, who is having great difficulty providing for themselves or others, would vote against hiring more teachers, firefighters, cops and other public employees. It is also understandable that these people are sometimes envious and even hostile towards public employees and the benefits they receive. While public employees' wages have not increased in any substantial way, minimum wage earners' have lost 1/3 of their pay. If public employees wish better for themselves, their professions or the society they help to create, they should push for a 2013 minimum wage increase to the $10.00 level the president prescribed.
Raising the minimum wage would also have significant effects on the US budget deficit. In addition to the hundreds of thousands of tax paying jobs created, raising the minimum wage would affect the budget deficit in other ways. Some households with one or two minimum wage earners would be pushed into higher tax brackets and would pay more into the federal coffers. Further, the safety net would be significantly less stressed and its price would be reduced. The Earned Income Tax Credit adds money to workers income in the form of a refund given through the IRS. A full-time worker's EITC benefit plateaus around $13,500-$16,500 of income and varies from $500-$5,700 depending on the number of children in the household. Raising the minimum wage would lower the amount payed to the full-time worker through the EITC by pushing these workers from the plateau stage to the phase-out stage of incomes. Further, TANF assistance would also be reduced due to a lessening of necessity. Medicaid budgets, which have swelled in recent years and are currently hampering state budgets and causing cutbacks in all areas, would be reduced as many current working beneficiaries would be bumped out of eligibility. This would surely help both the state and federal budgets. In addition to the hundreds of thousands of new jobs which will lower the burden of the unemployed on the safety net, raising the minimum wage would increasingly incentivize work over unemployment insurance, food stamps, etc... It is clear that the cost of the entire welfare safety net would be reduced significantly.
In terms of the state of the economy, the state and local budget deficits, the effects on low income workers, their families, and society as a whole, raising the minimum wage to the level prescribed by the president in 2008, roughly $10.00 per hour in 2013, would be highly beneficial. The moral reasons to raise the minimum wage are often discussed during congressional debate. I hope Democrats stress the other benefits as well.