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Minimum Wage is Not the Problem

Minimum wage is a start, but it is not a living wage nor can anyone live the American dream on minimum wage.
Minimum wage is a start, but it is not a living wage nor can anyone live the American dream on minimum wage.
Photo by Andrew Burton/Getty Images

Recently, growing momentum from protestors seeking living wages has pushed our political system to act on the need for improved economic equality. Unfortunately, Washington is once again seeking the most obvious, and least effective, solutions. Even a number of Republicans now support Democratic calls to raise the minimum wage as others support setting the Federal minimum wage to a living wage of fifteen dollars per hour. Unfortunately, the inability of individuals to move beyond minimum wage work is only one symptom of our diseased economy.

Clearly, the economy is not providing for the needs of the American People when one in six rely on food stamps, among other social programs, with work force participation already below 65 percent and falling even as corporations see record profits, productivity has continued to increase, and the wealthiest of Americans continually see significant growth in their incomes as the rest experience stagnation. Quite frankly, the economy is not distributing our national resources in the most efficient or effective manner, thus public policy must recalibrate the workings of our economic machine.

That said, fifteen dollars per hour is the starting salary of many entry-level master's degree positions for certain fields, which is problematic as that education has many costs. Increasing the minimum wage will, therefore, squeeze the Middle Class and accelerate the creation of a two-tiered economy where there is the working class and the rich with large segments of our population desperately hoping government assistance will not give out. Minimum wage was designed to prevent employer abuse, not ensure income equality or drive economic expansion. Consequently, the real issue is not the minimum wage, but rather, the lack of upward mobility for those who are stuck in the minimum wage, or near-minimum wage, trap.

Many opponents of increasing minimum wage argue an increased minimum wage will destroy many fast food jobs by increasing payroll costs to prohibitive levels, making automation relatively cheaper, and depriving franchise owners of any profit. Side stepping the question of whether or not this would be a bad thing, fifteen dollars per hour would probably make the economic model of fast food and other businesses nonviable. Assembly-line industries like fast food are designed to embrace automation and decrease human error by "dumbing down" the production process instead of promoting the retention of workers, broadly utilizing employee potential, and, more importantly, developing employee skills (human resources). This means these jobs are designed to maintain stagnant wages, as they are not career building nor skill building jobs. Unfortunately, there are far too many of these jobs while many others simply do not offer much wage growth potential.

If people are not developing marketable skills through their jobs, i.e. the fruits of mentoring and on-the-job-training, they must seek out schooling to learn those skills. Unfortunately, constant reschooling comes at great cost for individuals and society due to the cost of schooling and the cost of time spent on studying instead of working while there is no guarantee educated individuals can find employers to hire them for their skills, training, degree/certification, or experience once they leave school as there are not enough living wage jobs for everyone while financing and developing a business out of school is not usually possible. Furthermore, the constant increase in the cost of living as our economy exerts increasing downward pressure on incomes is even more problematic. Accordingly, the problem with our economy is that it fails to distribute wealth as we need it to do.

Driving this degenerative dynamic is a myriad of bad government policies, not too low of a minimum wage. Starting with globalization, the national economy should be built on servicing the needs of its People with excess production exported to other nations. Through the embrace of free trade policies where the taxation of local production increases the competitive edge of tax free imported goods and creates a lower bidder economy where demand for increased wages can be avoided to the point necessities can no longer be locally produced, the world economy has become over-reliant on exports. Because everyone relies on the same goods, they rely on the same set of raw goods/commodities instead of locally plentiful goods, thus limited global supplies are sure to translate into increased prices at some point as we see with goods like oil.

Aside from driving production out of the US by making foreign goods temporarily cheaper through a lack of taxation, encouraging the over-reliance of a narrow set of limited commodities like oil, and catering to global economic concerns, bad internal policies and practices also hurt workers. In America, the capital gains tax favors financial capital over labor and intellectual capital. There has also been a tendency to undermine representative groups like unions to the point workers no longer have the leverage they need to balance worker interests with employer interests. In addition, regulations and government expenditures are too often geared toward special interests, thus they are inefficient and ripe with corruption.

Unfortunately, all of these and other issues must be addressed before our economy will start distributing wealth in an efficient manner. Instead, politicians take the easy way out and push for an artificial increase in minimum wage. At this point, an increased minimum only makes the American economy an unattractive environment for businesses without addressing the root causes of increasing economic disparity. Instead of embracing this haphazard socialist approach to achieving a living wage, populous capitalism geared toward balancing the interests of all Americans must be embraced. The minimum wage is not the problem; it is the inability of the majority of people to work their way up to a living wage in a reasonable time frame while having the opportunity through stable, viable finances to grow beyond a entry level Middle Class lifestyle.