Pro/Con: Raising the minimum wage
Pro: The case for a minimum wage hike
Lately, the minimum wage has been the subject of an interesting debate in not only Pennsylvania, but in states around the country. Although the federal minimum wage stands at $7.25 per hour, President Obama has encouraged states to raise it to $9. In response, some state legislatures have increased their minimum wage. Currently, 21 states mandate higher minimum wages than the federal minimum wage. The average wage of these 21 states is $8.09. Pennsylvania state representative Patty Kim, a Democrat from Dauphin County, introduced legislation (House Bill 1896) to raise the minimum hourly wage from $7.25 to $10.10. This proposed legislation has created quite a stir.
In Pennsylvania, a minimum wage employee working full time with no days off earns $15,080 per year. At first glance, some may see this as a decent salary, but this is only 82% of the federal HHS Poverty Guidelines for a family of three. These guidelines are the traditional measure of minimum wage adequacy. After taxes, the average minimum wage worker makes around $1,000 per month. When typical expenses are taken into account — rent/mortgage payments, utilities, insurance, vehicle-related costs, credit card payments, and so on — not much remains to provide for one’s family.
I believe we can responsibly raise the minimum wage without inflicting harm upon the economy and businesses. Raising the minimum wage would initiate a positive domino effect. Employees, taxpayers, businesses, and the community as a whole would benefit. I understand that an increase in salary would not eliminate poverty, but it would reduce the financial problems for low-wage employees and their families. Millions of people would gain an extra few thousand dollars a year to place towards their cost of living and reinvestment in the local economy. Workers would most likely spend more at local businesses, increasing business. Not only will businesses benefit from the increased sales, but also experience fewer personnel problems. Increasing wages have shown to reduce absenteeism, the turnover rate, and increase morale, all leading to elevated productivity and lower costs for training and recruitment. Additionally, these employees will rely less on social service agency assistance programs while helping to build the local tax base. Also, in contrast to government assistance programs, a minimum wage increase will help workers without adding to the tax bill.
A modest increase of the hourly minimum wage would help Pennsylvania to grow. I am confident that we as a state would benefit and continue to be a competitively progressive state.
—David Scalzo Jr
Con: Raising the minimum wage and the unintended consequences
All great politicians attempt to create laws that will help the poor and middle class — or do they? President Obama is certainly one of those politicians who sees his popularity dropping and immediately looks for the opportunity to become the “good guy” once again. The trick up his sleeve this time is focusing on the minimum wage and the inequality of the working class. Sure, it sounds great on the surface, getting a raise from $7.35/hour to $10.10/hour. Who wouldn’t like an almost $3.00-an-hour raise. But let’s look at the unintended consequences.
As a small business owner for almost 18 years, one begins to look at things more realistically and question things that may not be immediately obvious. When I first heard of the attempt to raise the minimum wage, many aspects of the measure came to mind. Where does government locate the constitutional right to tell business owners what they should pay their employees? That compensation should be based on an individual’s skills and expertise. If the employee doesn’t feel he or she is being treated fairly, they should simply leave and find a new job. I did it several times in my own life. Wow, this is starting to sound like free enterprise. If I’m not careful, I might be accused of being a Tea Party guy — or even a Libertarian.
Now, let’s look at the truth of raising the minimum wage. Will it really help the poor? The job market will shrink for unskilled labor, because employers will now have to cut jobs and hours just to attempt to remain profitable. Truly motivated employees looking for advancement may find themselves stalled as a result of their employer’s shrinking profits. In the final analysis, everybody gets paid the same, no matter what effort they put in. Sounds a bit like spreading the wealth, Mr. Obama. What Obama also fails to mention are the effects that raising the minimum wage will have on the cost of goods. Suddenly, the individual in the working class who wants to take his family out for a treat at a local restaurant will no longer find it affordable. Simply put, prices would rise on all the essentials, from food to gas to clothing, and everything in between. That raise in minimum wage isn’t so beneficial after all.
What will truly help the poor? Cut taxes on everyone. Let’s say, back to the rate of the 1950s, transitioning from a current taxation of some 20 percent to single-digit taxation. A quick calculation will indicate that the minimum wage employee just saved a dollar an hour or more, putting more dollars in his pocket. Lower taxes place more money in the hands of the job producers, which fosters job creation, giving unskilled labor the opportunity for advancement and self-reliance. The cost of goods remain more consistent and affordable for the poor, who may no longer be poor thanks to the entire beneficial cascade. Mr. Obama, this is what you call free enterprise, something your know little about and don’t seem to care to know about.
Trust me, Mr. Obama, a truly free marketplace works and it benefits all of us There is no other system known to man that will elevate an individual out of poverty and into success as efficiently as free enterprise. That being said, Mr. President, unleash America and let her get back to work.