One of the biggest employment debates in the United States right now is whether or not the minimum wage should be raised. Critics are mostly divided in a binary way on this, with the critics saying it’ll lead to job losses as companies can’t afford to hike up minimum wage, and supporters saying a) companies can’t afford not to raise the minimum wage, and b) it’ll lead to an increase of jobs. With such a sharply divided issue, who’s right?
Washington First Raises Minimum Wage in 1998
About 15 years ago, Washington raised its minimum wage amid cries of fear and despair for the state’s economic future. People were worried that such a move would be disastrous for job growth, but Washington ignored them and went ahead with it anyway.
Since then, Washington’s steadily increased its minimum wage to $9.32, which has made it the highest in the United States. And as for those concerns that their job market would tank? Bloomberg wrote an article that Washington has reported the following:
The annual job growth rate is 0.8 percent
An annual job growth rate 0.3 percent higher than the rest of the country as a whole
The luxury of raising wages at restaurants and bars by 21 percent
A poverty rate that’s been lower than the rest of the country as a whole, and for the last seven years
An unemployment rate lower than the national rate for the last five years
What Others Think
There’s the typical response, but that can wait for a second. The LA Times has reported on a poll conducted by Bloomberg in which 69% of respondents said they’d support boosting the minimum wage to $10.10 now to 2017 (28% weren’t in favor). However, their agreement came with a proviso: they supported the raise until told that it could increase poverty and unemployment.
But one thing is missing from this argument: unemployment, and consequently poverty, will rise, but only at first and then there’ll be the rise that occurred in Washington. Raising the minimum wage will attract more skilled, efficient workers who, in turn, will attract more customers. And when more customers come, profits will increase. At first, there would be a downturn but once other companies get on board, the wage will level off and workers will be paid more en masse.
Other Benefits to Raising the Minimum Wage
Although the idea that women are still working for 77 cents on a man’s dollar is hotly debated as untrue, it would close the gender gap because more women typically work in minimum wage jobs than men.
As well, it would work towards stabilizing the economy, which would mean a stronger country overall if more people are able to afford life’s necessities. If a greater portion is able to do so, then the need for social programs like SNAP and Medicaid would need less money funneled into them. For example, SNAP recipients in Minnesota receive the lowest monthly average at $116.25, and bumping up their minimum wage would result in an extra $456/month in wages. But the minimum wage wouldn’t be raised to $10.10 right away, giving employers a chance to work in the increase and employees a chance to funnel more money into the economy.
And if that still fails, then we can look to Australia as a prime example.