In 2011, 46 million people were said to be living below the poverty line in the United States.
Yet, as of March 15, House Republicans overwhelmingly voted against a motion to increase the Federal minimum wage from $7.25 an hour to $9 an hour.
The $9 rate still doesn’t account properly for inflation, meaning we do not have a livable minimum wage in this country.
As it stands now, the White House estimates at least 15 million workers would directly benefit from a higher minimum wage — that is 15 million people who may struggle to make ends meet, 15 million who deserve the chance to make a living wage. It’s a population the size of the Greater Los Angeles Area that could see an increase in standard of living, just by raising the federal minimum wage.
Critics opposed to the legislation often warn of a potential negative impact on our economy, that jobs will be lost, prices will go up and small businesses will suffer. However, a significant body of economic research suggests those fears are unwarranted.
In a report from the Center for Economic Policy and Research, researchers found that modest increases in minimum wage have little to no effect on employment. Many of the previous wage hikes actually brought increases in employment.
Research also found that a higher minimum wage reduces employee turnover. It costs more for employers to train new workers often, than if they are able to keep an experienced and satisfied staff. Employees who earn a decent wage tend to be more productive, which in return benefits the employer.
Although it is possible that companies could pass off the burden to consumers, economists expect that a wage hike would have a minimal impact on inflation. Minimum wage workers are not a huge cost to employers, their earnings accounting for little more than 1% of the national economy, especially when corporate profits are at a record high.
In fact, increasing the minimum wage tends to compress the wage distribution in this country.
The report noted that an increase in minimum wage reduced the gap between rich and poor. This would come at a time when the distribution of money in this country is so skewed in favor of the super-rich, that 80 percent of Americans only have seven percent of the wealth.
As for the small businesses, they will also benefit from a minimum wage increase, contrary to what many might think.
The Fiscal Policy Institute, a research and education organization, found that small businesses grew at faster rates in states that raised their minimum wage than in states who kept a lower minimum wage.
By no means is a minimum wage hike the end-all solution to our nation’s economic problems. It will not end poverty, it will not erase the debt, but passing a motion to raise the federal minimum wage is not a bad thing. The evidence shows that its impact would largely be positive.
We need higher minimum wage in this country, because those who make minimum wage know that those extra dollars could mean a huge difference in their lives.
