Economics Essay : Minimum Wage

In the 1960s, a minimum wage job would keep a family of three afloat. Today, a minimum wage earner has to work a day and a half just to pay for a full tank of gas. This proves just how much a minimum wage raise is long overdue. The minimum wage should be high enough so that no standard family with a full-time worker falls below the poverty line. The current wage has not kept up with inflation and has been outpaced by the recent economic growth and productivity rates. It is not enough to afford housing or essentials goods and sets a worker with two kids well below the poverty line. Increasing the minimum wage would lift millions out of poverty, boost the economy's growth, allow for a healthier population, reduce income inequality and reduce welfare spending.

Economists have long recognized that boosting purchasing power by putting money in people's pockets for consumer spending has positive ripple effects on the entire economy. Therefore, the impact of increasing the minimum wage would present as a boost in growth for the overall economy, as minimum-wage workers would spend their new earnings immediately, generating a positive impact on GDP and kick-starting a virtuous cycle of greater demand for goods and services, job growth, and increased productivity that will offset any consequent cost increase. Not to mention that a raise would boost employee morale, which translates into more tangible benefits, such as increased employee retention and reduced hiring and training costs.

On the other hand, studies show that increasing the minimum wage would reduce premature deaths by allowing for a healthier population and improve the overall quality of life by minimizing crime and high school drop-outs. Policies that reduce poverty and raise the wages of low-income people can be expected to improve overall health and reduce health inequities significantly, therefore reducing the government's spending on welfare programs. It allows teens to work fewer hours for the same amount of pay, giving them more time to study and reducing the likelihood of dropping out of high school. Not to mention how offering higher wages to low-income individuals can reduce crime by providing viable and sustainable employment.

The minimum wage is so low that a full-time worker cannot afford to feed her family and must rely on programs, such as the Supplemental Nutrition Assistance Program, to make ends meet. Raising the minimum wage, so families are economically more self-sufficient would help reduce the federal budget deficit by lowering spending on public assistance programs and increasing tax revenue, saving billions of dollars over just ten years. When employers don't pay people enough to survive, those workers are compelled to seek government assistance, meaning taxpayers subsidize the corporations. If low-income workers earned more money, their dependence on and eligibility for government benefits would decrease.

When looking at the bigger picture, who the minimum wage impacts, who would benefit from raising it, how it currently compares with inflation and its long-term effects on the economy, one thing is clear: An increase at the national level is overdue. Increasing the minimum wage would lift millions out of poverty, raising and allowing for a better quality of life. The pandemic has made this move even more urgent, as millions have slipped into poverty over the past year, and 11 percent of adults are now facing food insecurity. Even more, historically marginalized people and essential or front-line workers who have kept the economy running at significant risk to their health and families would benefit disproportionately from the bump. The decision is so imminent that it has bi-partisan support, with most Americans in favor, especially those living in poverty or facing economic discrimination. When the benefits outweigh the potential disadvantages, the right decision is evident. Raising the minimum wage does not take from growth; it adds to it.