Raising the Minimum Wage - the Fight For and Against

Ah, the minimum wage.  How the arguments get heated from both the right and the left.  I was having a conversation with a friend the other day about the minimum wage.  I asked why it would be such a problem for people to have a few extra dollars per hour.  He rattled off a laundry list of conservative arguments: Companies wouldn't want to hire any more people; inflation would raise more; the economy would get weaker; we need to let the free market decide on the wages.

When I was debating the pros and cons with this friend, I noted that the minimum wage hasn't risen since 2009.  Back then, food costs were lower, gas prices were lower, and energy costs were half of what they are today.  He told me it would behoove us more to lower the cost of living as opposed to raising the standard wage.  

This argument perplexed me.  The cost of living is something based on supply and demand.  The more one demands the supply, the higher the cost of the supply becomes.  When one has a city, like New York, where people are competing with tens of millions of other people to get that one thing they need, or the energy they must have to power their AC/heat/computer/lights/etc., the cost cannot artificially go down unless the government spends money, or the company producing the product lowers their price.  If a company's sole design is to make profits, why would it drop the price of a scarce commodity when it's in demand?  That would be opposed to the logic of the free market.  If a company is making money on the supply they have, and they raise the prices to increase profits - yet do not increase the wages paid to employees making the supply - then the employees have a harder time buying the supply demanded.  They then have to cut out other things in their lives to afford the necessary supply.  If the company's product is unnecessary, then chances are even their own employees will stop buying their product because of the high cost and low wage.

Case in point: MacDonald's in 2006 charged between 4.99 and 5.99 for value meals.  The costs now are between 5.29 and 7.29 on average.  Yet, the wages of the employees have not changed, despite the fact that average MacDonald's employees are in their 20's - 30's and have been working there at least 9 months (where the company once set the first raise benchmark).  In order to make money, the company - rather than pay its employees more - reduced the cost of production by purchasing cheaper, less healthy food.  They kept the wages the same, and have increased profits by more than 3 times what they once were.

MacDonald's is only one example of how a company gets around raising their employee wages to make more money by spending less.  But the fact remains that the minimum wage is 30% lower than what it should be if it were doing as it should and adjusting for inflation.  I have my own theories on why people refuse to increase the minimum wage - but I think the flood of misinformation helps.  Here are some facts from a site dedicated to restoring the minimum wage.  It's pretty biased towards the raise, but it makes some good arguments.

The fact of the matter is, with more people able to afford their daily necessities, more companies would be making more money.  If gas prices are on the rise because of inflation, and we can grudgingly accept paying $3.59-$4.29 per gallon of gasoline so big oil can keep making big money, why can we not accept the idea of federally enforcing a minimum wage standard that makes those companies pay enough to help the workers afford the gasoline they need to get to work?

The big businesses would not suffer, but they are the ones making the largest of arguments.  It would be the small business that suffers from a raise in the minimum wage.  An NPR report looked at both the pros and cons of raising the minimum wage, and found that most of the companies negatively affected were small businesses.  These businesses would have long-term employees demanding more, which would mean the people running the business would have to take a pay cut to afford such employee benefits.  This is a good argument against the minimum wage - but only because it shows factual evidence as opposed to ideology.

Another flawed argument is the idea that it would cause inflation to raise.  However, inflation and the value of the dollar - being relatively opposed - are not affected by how much people make of the already created dollar, but by how much people borrow, or loan, from the banks.  In a fractal reserve system, money is first lent to from the central bank to the commercial banks.  The commercial banks then hold a fraction of the original deposit and loan out the rest - when the other banks deposit the loan in the commercial bank, the commercial bank treats it as a new deposit, not the same money they lent out.  This practice is followed by the other banks who loan money out to consumers. So, in essence, as new mortgages are bought by consumers, and sold by banks, and new loans are given to businesses so they can pay their bills and suppliers, deposits are made and inflation increases.  This is done so in a Fibonacci sequence coil that continues to spiral endlessly with the relatively small amount of money it originally took from the central bank.  In the end, because we can't pay for what we want when we want, and we get loans to buy those things we want (or convince ourselves we need), whether through credit cards or banking industries, inflation occurs regardless of how much we get paid.  It would be sound reasoning to think we could stem the tide of inflation by increasing the pay of workers so they could afford more without borrowing, and so businesses could earn more so they wouldn't have to borrow to pay bills.  Increasing the minimum wage will not increase inflation as much as banks, credit card companies, or retail businesses and restaurants already do.  The amount of money they'd receive would be a drop in the bucket compared to the flood waters of inflation pouring over us.    

Even a majority of Republican voters demand better minimum wage (62%).  In a Huffington Post aggregate story, there was proof showing that less people, if the minimum wage were increased, would require the need of SNAP assistance because they would end up making enough to cover their food costs.

It frustrates me to see so many people quietly comply to pay higher prices for necessities such as food, water, gas, and energy, yet argue so fervently against higher wages for the people working for the suppliers of those necessities.  The most remarkable thing is that most of the people arguing against it are doing so because they do not believe people deserve a 'raise' simply because it's the legal standard.  They believe that the people should go out and get a better job, or earn it through hard-work; that minimum wage jobs are there to spur people to get better jobs.  I'm sure they would if there were better jobs available.

However, according to Bureau of Labor Statistics, the jobs that pay well are on the decline, while Retail (which includes restaurants) continues to show increased employment.  This is because the jobs that would normally have under-educated or less education requirements are on the decline.  Manufacturing jobs are no longer as plentiful because they are being outsourced to China.  This leaves retail, fast food, service and restaurant industries taking up the slack.  If those jobs only pay minimum wage, and make sure to keep the employee under full-time hours, then the employee receives no benefits, a low wage, and will have to remain on SNAP assistance and continue to be seen a 'burden' for society.

Another factor going into the inability to find a 'better' job is that most of the people working those underpaid positions do not have the resources to find better jobs.  Unless they receive hand-outs from friends or family, they can not afford a computer and the Internet with all the other services for which they have to pay.  They pay for rent, they pay for utilities, food, gas, and what their kids might need if they have them.  Most of the times, they are only able to afford just enough to keep going to their low-wage job, and pray day in and day out for the one break they need to find a better position in life - so they can join the median income yearly wage earners(I linked the wage in 2011). It's either that, or they become drug dealers/gang members/criminals in their poverty income neighborhood, self-employed and offering services to others at a discounted rate to do good business, or get discovered by some random talent agent from American Idol when/if their minimum wage job gives them time off.

I think it's funny the people who have found their 'better' job feel they keep their positions because of their hard work - when a majority of Americans are only working hard enough to not get fired.  I think it's a bit hypocritical that people who understand the struggle of finding a good job argue that people who are complaining about minimum wage should just be quiet and find a better job.  It reflects the notion that poor people are not poor because of their circumstances, but because they are lazy.  If they were truly lazy, they would be living off of someone's couch, arguing that they should not have to clean up after themselves, should not have to find a job, or should not have to contribute to their household for whatever reason they can find.  I know lazy people - some of them work, some of them don't.  But the real indicator is that they are really too lazy to care about this argument.  If people arguing for a minimum wage increase were truly just too lazy to find another job, we would not be hearing from them.

Sometimes, the people arguing have been looking for better jobs for years, and have not been able to find them or gain interviews because of their lack of experience or education in the field.  Many can not get the education because the job that pays their bills will not allow them to gain it - or give them the time or extra gas money to attend classes. Yet, the argument goes - if you don't like the wage, get off your ass and find a better job.  People argue that minimum wage should not be increased, but rather people should start doing their jobs and earning their higher wages.  Yet, wages have been stagnating across the board while profits and productivity increase.  So, if people can't get better wages through earning a raise, why should they care about doing a good a job?

I think the real problem here is that a few people have had a few bad experiences at places where people get paid minimum wage, then rail and rail about why minimum wage should not be raised because those people weren't doing their job.  I propose a question to those people: If you were in the middle of trying to find a better job, had a position at a retail store/restaurant/hotel/fast-food chain, how serious would you take your job if everyone treated you like you were just a lazy person who didn't want to find something better?  How would you treat the people who treated you with disrespect?  How would you respond to the people who decided to get angry because they thought you weren't being patient enough to answer their 36 questions (many of them the same questions) about a single product only to change their minds and decide on something else? What response would you have when someone threw a temper tantrum because they didn't get what they wanted when they wanted it?  What kind of action would you take when someone complained about your customer service skills despite your every attempt to please them, and you got written up?  Would you appreciate the customers more or less?