CONTEMPORARY CONNECTION [The Minimum Wage Debate]
An estimated 4.5 million workers, or approximately 4 percent of the U.S. workforce, received an increase in their wages when the minimum wage climbed to $7.25 in 2009. Minimum wage laws are controversial. Strong arguments are made on either side of the argument as to whether an increase in the minimum wage helps or hurts workers. Let’s look at both sides of the debate.
Proponents argue that wages tend to lag behind the cost of living, and an increase in wages helps to reverse a decline in real wages for low-wage workers. Before the most recent increase, the minimum wage had not been adjusted in nearly ten years. Young people and women seem to be the most affected. Half of those in minimum wage jobs are under the age of twenty-five and nearly 75 percent are employed in jobs in the service industry. About 3 percent of women who earn hourly wages reported earning wages at or less than the federal minimum compared to about 1 percent of men.
In the United States, the threshold poverty level for a family of two is $14,710. Someone who earns minimum wage will earn approximately $15,080 (40 hours X 52 weeks X $7.25), so a family of two with one wage earner is barely above the poverty level. The average minimum wage worker is responsible for over half (54 percent) of household income, and over half of the 4.4 million minimum wage workers belong to families that have household incomes under $35,000 a year. Opponents of increasing the minimum wage cite the problems of increasing costs to employers. They note that in a globally competitive marketplace, every cent added to the cost of doing business drives up the overall costs to the organization—and ultimately erodes competitive opportunities. Increased wage requirements may also result in less demand for workers, ultimately hurting the hourly workers the hike in wages was designed to help.
Although the U.S. minimum wage rate is not the highest among industrialized nations, it is significantly higher than many countries that compete with the United States for goods and services. In addition, states and even cities have the right to increase the minimum wage in their locations based on market demands. Furthermore, many opponents of the increase cite that the issue is not about wages but about education. There is a direct correlation between one's education level and one’s wages. A better-educated, higher-skilled worker is more valuable to organizations, and thus market mechanisms increase what an organization is willing to pay for that individuals service.