The question of whether or not the federal minimum wage is fair is one that has been tossed around quite a bit in the last several years. The resurgence of this question has largely been due to political scenes heating up and major layoffs leading more people to obtain minimum wage jobs but it’s a topic that has been debated since the first minimum wage was put into place in 1938, guaranteeing workers 25 cents per hour. Though the federal minimum wage has increased significantly over the years to the $7.25 per hour rate it is now, the hard questions about minimum wage still remain. Chief among them is whether or not the $7.25 per hour employers are required to pay their employees is actually fair.
What $7.25 will get you
To put it in perspective, an adult working full time at a minimum wage job would make $58 per day. Over one year, this employee will earn a salary of $15,080, which isn’t even a drop in the bucket of the average costs of living in most American cities. Realistically, an adult with a family couldn’t possibly pay rent or a mortgage, own a car, pay bills, buy groceries, take care of basic medical needs and have anything of significance left over at the end of the month. In fact, most families in this predicament aren’t even able to make ends meet.
While you may read this and automatically think that we are practically robbing our minimum wage workers and something must be done, the unfortunate fact is that even raising the minimum wage won’t make much of a splash. For instance, if minimum wage was raised $2 per hour, which would be significant by just about any standards, a family of as few as three would still be under the federal poverty line. No one would argue that a family living in poverty wouldn’t benefit from an additional $4,000 or so every year, but in the grand scheme of things, this is barely a baby step toward addressing the poverty issue in America.
What minimum wage means for employers
Minimum wage not only sets a standard of what employers must pay their employees but also establishes market value of employees’ time. Viewing the situation strictly from an employer’s point of view, raising minimum wage could have a severe impact on their bottom line. Using the same example as above, if minimum wage was raised $2 per hour and a company employed just 50 people, labor costs would go up more than $200,000 per year. For a small business, that’s a significant increase.
The good and the bad
The issue of fair minimum wage has many, many aspects to consider and no clear answer. If you ask to general population, you’ll get a much different question than if you ask a board room full of executives. Similarly, the answer varies just as much between politicians and economists. The fact is that poverty is a real problem and workers’ time is worth something, but with an increased minimum wage will come some unintended consequences such as higher-priced goods from employers who pass along the extra labor expense to you. Some go so far as to say that without a minimum wage, the market would balance itself and find a point of equality where employers and workers are satisfied, while others say that without a minimum wage our economy wouldn’t be at all reminiscent of how we know it to be today.
Do you believe the federal minimum wage is fair? Either way, what other consequences, both good and bad, do you think employers will experience with minimum wage requirements in the future? Let us know in the comments section below.
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