Abolish : the minimum wage hurts the impoverished and cripples the economy

Hunter Keaster

From sleeping on the floor to skipping meals, poverty is an issue many Americans know all too well. As many workers struggle to find work, some turn to the minimum wage as a beacon of hope; however, the minimum wage does the opposite of its intended effect by hurting those who are the most in need.

It is the best decision morally and economically for the United States to abolish the minimum wage. Doing so would create a better standard of living, promote new business and create more jobs for the impoverished and under-experienced.

The minimum wage makes jobs for teenagers extremely hard to find. Research from Ohio University found that a 10 percent increase in the minimum wage is associated with a 3.2 percent decrease in youth employment. This is primarily because employers are not motivated to hire under-experienced and under-educated workers when they have to pay them $7.25 per hour (though in California this is $12.00 per hour, and San Francisco $15.00 per hour). Not everybody’s work is worth $7.25 per hour, a low minimum wage should exist so that low-skill individuals can more easily be employed.

Additionally, many teens would be willing to get paid under the minimum wage as long as they gained experience from the job. This is why unpaid internships and volunteer work exists (barring charity). Instead of teenagers receiving no pay for their work, like at an unpaid internship, they would be able to get paid anywhere from $1 – $7 an hour. While $4 an hour isn’t much, it is a better alternative than nothing. Without a minimum wage, young people would be able to gain valuable experience while still getting paid (be it less than the minimum wage) for their work.

Although a minimum wage may put more money in workers’ pockets, it does not allow people to afford more of the goods and services available to them. Businesses understand that people have more disposable income with a minimum wage, so in response, they will charge more for their goods and services.

Researchers from the Federal Reserve Bank of Chicago found that for every 10 percent increase of the minimum wage, prices would raise approximately 0.7 percent. As the minimum wage rises, businesses can (and in many cases have to) charge more for the same product, thus the minimum wage doesn’t actually increase spending ability among workers.

What the minimum wage does succeed in doing is stifling small businesses and crippling the economy.

For many small business owners, profit margins are already paper thin, and when they are federally mandated to make them even thinner, they often have to go out of business (or not take the risk of opening up another one). Research authored by the University of California, Berkeley, and Stanford University faculty members found that over 90 percent of startup businesses fail. With entrepreneurship being a difficult field, it gets worse when the government forces businesses out of the market.

Morally speaking, why should the government have any place in prescribing a value to anyone’s hard labor? America’s foundational ideals were freedom and liberty, but where is the freedom in telling someone what their labor is worth?

The fabric that holds society together is based upon the concept of the uninterrupted (at least by the government) trade of thoughts, goods and labor. The government should not force an employee to work for a specific wage, this would be considered indentured servitude. Likewise, an employer should not be forced to pay a specific wage because this interrupts the consensual relationship between employee and employer.

A common misconception is that without a minimum wage big corporations would take advantage of their workers and pay them close to nothing. But an important detail often overlooked is the fact that work is voluntary. If one feels that he or she is being taken advantage of, they can quit.

On the other side of the spectrum, if a company pays too little no one will want to work for them and they will be forced — by the market, not the government — to raise their wage.

Many claim that the minimum wage gives workers “bargaining power” (putting the workers on a level playing field with their employer); however what truly grants “bargaining power” is the alternatives found within a free market. If one business pays their employees too little, competition in the market will offer higher wages so they can have a stronger workforce.

While I acknowledge that the United States has one of the most robust economies in the world, this is not by virtue of the minimum wage. Italy, who has the eighth highest GDP in the world, operates without a minimum wage. Italy is able to prosper because they have labor laws and a vast social security system that protects its citizens. Similarly, the U.S. has an extensive Social Safety Net that protects those in need, making the minimum wage unnecessary at best.

In order to grow jobs, grow the economy and remain morally consistent, it is in the best interest of the U.S. to abolish the minimum wage. The minimum wage forces low-skill individuals out of the labor market, hinders small businesses and is morally reprehensible.

If you want the best for America and the poor, abolish the minimum wage.

Raise : fair pay is sexy

Angus Hsieh

My introduction to the American minimum wage started when I got a job at Taco Bell during junior year.

I wanted a job for two reasons: to earn money (obviously), and to learn about a new facet of the world, that is, the fast food industry. Throughout my life as a customer, I’ve always felt a peculiar curiosity towards people’s perspective from the other side of the register.

When I began working, the first observation that took me by surprise wasn’t the “fake meat” that everyone accuses Taco Bell of selling, even if everyone still eats it. No –– what stunned me was how determined and dedicated every employee was to doing their part.

You’ve never seen someone assemble an entire seven-layer burrito in under 30 seconds until you’ve met Carlos, an immigrant from El Salvador, a husband and a father of two who has to also work a second job outside of Taco Bell in order to provide for his family. In one hour, I witnessed Carlos do everything from cooking, frying, to dish-washing.

Taco Bell had to have made over $400 in that hour from the long line of cars and customers inside the restaurant. What did Carlos earn? $10.50. And that’s thanks to California’s minimum wage law signed in 2016. But in many other places in the country, that same amount of work will only earn you a mere $7.25, barely enough to buy a medium 1 topping pizza.

There were two main takeaways from my first day at work: one, Americans consume far too much fast food, and two, minimum wage workers are grossly underpaid for the work they do.

As a teenager, being paid $7 an hour versus $15 isn’t a huge difference. Perhaps it means I’ll have less money per month to spend on eating out with friends, or buying superfluous things like a 500-piece bag of googly eyes on Amazon.com (yes, I did this). But for the majority of employees at Taco Bell and businesses nationwide who are mothers, fathers, students in deep debt, this difference could mean not being able to put food on the table for their children or pay the month’s rent to keep a roof over their heads.

There’s something ethically wrong with the idea that someone working full time (40+ hours per week) at the current minimum wage, would only be making $15,000 a year before taxes. And that’s assuming they don’t take any vacation days, never gets sick, works on holidays. At $1200 a month to cover housing, food, clothing, and transportation expenses, these workers would still poor enough to qualify for food stamps and Medicaid in most states. One problem with minimum wage is that people tend to associate it with “jobs” that teenagers and college students work part-time to earn extra money. The reality for many adults, primarily people with families, is that these jobs are their careers which they depend their livelihoods on.

There’s been an ongoing trend for businesses, both big and small, to voluntarily pay their employees far above the minimum wage. One of them is In-N-Out Burger, where I currently work. In-N-Out embodies the philosophy that in order to deliver their customers the best quality product and service, they must first take care of their employees. They do this by offering a starting wage of $14.50 ( higher in other locations), healthcare (including vision and dental) and vast opportunities for promotions. The result –– from my own experiences and observations –– is that people are much happier when they show up to work, because they are making a comfortable, livable wage. A large number of our associates stay with the company for many years, sometimes even decades.

This, however, is not the case for most businesses across the country. Many still operate under the federal $7.25 per hour with no benefits for their employees.

Full disclaimer: I’m not an economist, nor will I pretend to be. I’m familiar with the arguments against raising the minimum wage, it will cause job loss, increase prices of products and hurt small businesses. But with each of these claims, there are corresponding studies in the economic literature which compellingly rebut the arguments.

For example, the article “Why Does the Minimum Wage Have No Discernible Effect on Employment?” by the Center for Economic and Policy Research points out two recent studies that have been ongoing since the 1990’s which show that increases in the minimum wage actually helped expand the number of jobs. One main reason they cite for this is due to the reduction in labor turnover, which significantly saves costs for the employer.

A research paper by the University of Massachusetts Amherst economist Arin Dube argues that there is an inverse relationship between minimum wage and poverty. By raising the minimum wage by just 10 percent, it would effectively reduce the people living in poverty by 2.4 percent.

Another article by Upjohn Institute analyzes the implementations of increasing the minimum wage and found that prices of goods tend to not be largely affected when the minimum wage is raised in increments over time. Lastly, in a opinion survey published by Small Business Majority, more than 60 percent of small business owners support a minimum wage increase.

Why am I mentioning these studies with information you barely skimmed over? The more you read into the minimum wage debate, the more you’ll start to see that information on the effects of minimum wage often contradict each other. Economists on both sides of the argument will try to prove that raising the minimum wage either will or won’t improve the overall economy.

There is no definitive answer to this issue, at least economically speaking. I do not know what would be the best choice for the economy, I do not have the complete scope of knowledge or expertise.

I do, however, confidently know one thing. As someone who has seen the reality of labor under the minimum wage and met the individuals who suffer under it, raising the minimum wage is an action of conscience.

Perhaps I can’t offer my opinion of a solution in an economic sense, but I do wholeheartedly believe that increasing the current sham of a wage would be a step in the right direction.

Especially for Carlos.