The Fight for 15. American Minimum Wage is Up for a Promotion. 7/24/15

Samuel Prince

Twitter @phisammajamma

“If you don’t work, you don’t eat.” This rustic phrase is indicative of trading a fair day’s work for a fair day’s pay. Prior to the 20st century nine to five economy, trading a day’s wages for a day’s pay consisted of earning enough income to support an entire family. Granted the quality of life was much less, one person could typically achieve this. Fast forward to the 21st century, and many people who work a full time job cannot earn enough income to provide for their dependents.

That people cannot provide for their dependents is not as apparent as it had been in the past. Since the Great Depression of 1932, the government has become more organized in their effort to pick up the slack where the economy tails off. No longer do we see the soup kitchen lines that wrap around the block, or food pantries that have an abundance of weekly patrons. The visual effect of our current economic status is not apparent due in part to the creation of the food stamp, and sub sequentially the EBT card. To that point, economists say that our current economic state of affairs is worse than the post 1932 Wall Street Crash depression.

Enter, the Fight for 15 minimum wage campaign. All around the country workers are petitioning the government, requesting they pick up the slack where the economy leaves off via regulation. The Fight for 15 campaign should be applauded for their efforts. Currently they are petitioning the Wage Board of New York to raise the state’s minimum wage to 15 dollars. Andrew Cuomo, the New York State Governor has been a persistent voice to this end, attempting to have proposals passed that would increase the minimum wage. While I do admire their efforts, I have begun to question the premise of the minimum wage.

Frist, a minimum wage is often looked at as the minimum amount a person can be compensated for their services. This view rests on the idea that employers typically undervalue their employees, and as a result the employer must be regulated so undervaluing does not occur. Quite contrary, minimum wage can also be interpreted as the maximum amount an employee must at least be compensated for doing a job. What this contrarian perspective implies is that essentially everyone can be paid and kept at the minimum wage, and this does occur in some organizations. The problem is that the government is setting a value on employees and regulating the market, therefore; in creating a floor they have also created a ceiling. Through regulation the government has forced the private sector to subsidize employment. In layman’s terms the government is saying, “You can hire this person but you have to hire them at this amount”.

Yes, the minimum wage helps some people, but it also adversely affects others. Remember in high school or college when the professor would give a test and students would score a numerical grade in the 60’s (typically an alphabetic D), but that somehow worked out to a B? However, on the same test another student scores a grade in the 80’s (typically an alphabetic B), but that somehow also worked out to be a B!? That professor is grading on a bell curve and a minimum wage has the same effect.

It is true that the minimum wage will benefit those who may not possess the skills to otherwise earn a higher wage. Those are people who score in the 60’s but earn an alphabetical B. However, it is also true that the minimum wage adversely affects those whom do possess the skills to earn that specific wage and do not earn more. The powers that be are wrong when they assume that higher skilled people always earn a better wage, because the bell curve by design closes the gap between the skilled and the less skilled. Higher skilled employees will simply be asked to do more than lower skilled employees even though they earn the same income. Have you ever worked a job where you were asked to do more than your co-worker, but you both earned the same income?

Secondly, the value of the dollar is continually eroding. As inflation continues to rise, our dollar has less and less buying power. According to the inflation calculator, in the last ten years (or since 2005) inflation has increased a cumulative percentage of 21.1%. As a result of this inflation increase it would cost a consumer $18.17 in 2015, as oppose to $15.00 in 2005 to purchase the same item. This is an increase of $3.17. Within that same time period, the minimum wage did not increase at an equivalent rate, therefore; a minimum wage worker’s buying powered diminished. Unless the Wage Board decided to annually increase the minimum wage on par with the inflation, a worker’s buying power will continually decrease. Considering that Governor Cuomo’s attempts to increase the minimum wage have been repeatedly rejected, is it plausible to think that the Wage Board will adjust policy to accomplish this? If not, then how would that wage be livable?

The issue is that when people think about money, they often think in the present, however; the value of things always changes. To set a minimum wage without a solid plan to compensate for the economy’s expansion or compression, is to create a policy with failure built within. As a nation, the conversation regarding minimum wage will continue to circulate without a resolution, because a minimum wage hike is a Band-Aid solution to the real issue of the cost of living.

So, how should we compensate workers? First, the government should not be allowed to set the market for labor. Market power should be shifted from the government to the people. An individual’s set of skills and knowledge should determine their compensation. The more skilled an individual is the more power they should have to command the wage they earn.

Think of the residual effects of such a shift in power. No longer would people be able to get by as a result of them reaching for the low hanging fruit on the tree of life. Each individual would have to dedicate themselves to increasing their knowledge in order to advance. Adults would have to continue to grow within their craft or trade. It would be necessary for children to dedicate themselves to their studies, and as a result the high school and college dropout rates would decrease. Businesses will grow and operate more efficiency, as the quality of worker increases. The working population will begin to take more risks, and we will enter into an era of small business creation and innovation that this nation hasn’t experienced in years. This future is achievable. It is a future without chains, a future without minimum wage.


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