Ever since its creation by the congress, who passed the Fair Labor Standards Act in 1938, the federal minimum wage guaranteed a certain amount of money and the entitlement for it to workers in the United States of America, but yet has always sparked debates and discussions whether or not it should be raised or being left as it is. According to the website history.com the federal minimum applies to U.S. workers who are employed by companies with revenues of at least $500,000, plus workers in hospitals, nursing homes, schools, government agencies, and those who are involved in interstate commerce in their jobs (Kiger, P. J, 2019).
One of the common if not the most important question when applying for a job is the question of salary, hourly wage or in other words how much does the job pay that he or she applied for, since everyone is looking out for themselves and the every need of their families.. This is also a reality most college students of the past, present and future are facing because not everyone can be supported by financial aid or their parents alone. So, no matter if someone is in college and already have a job or looking for a second type of employment to support your lifestyle, the question of how you get remunerated for your labor is always in the room.
For many people that only have minimal education or abilities due to age, work experience, or social status this question is a crucial one. Some states have a higher minimum wage than others while some of the fifty states in the US have the federal minimum wage of $ 7.25 an hour. At the same time companies struggle with the upkeep of the quality of their product due to employment turnover, poverty levels are rising, and government funding is increasing as well. Therefore, raising the federal minimum wage would be beneficial to employers, workers and the economy at the same time.
The first benefit would be a reduction of poverty, since it has become more and more difficult for low income families to pay bills and make ends meet throughout the years. They struggle and live from paycheck to paycheck. Every time they receive their income, choices such as which bill to pay first and which can or need to be paid later are sometimes less than easy. It has gotten so bad that now even religious figures get involved in the question on whether the minimum wage should be raised because it would help families in the US and the government to fight poverty.
According to an article of the American Press on amerigamagazine.org, US Catholic leaders such as Bishop Thomas Wenski, chair of the U.S. bishops’ Committee on Domestic Justice and Human Development, and Sister Donna Markham, President of Catholic Charities USA, stated that any full-time worker, that earns federal minimum wage, „is not capable of raising a child away from the state of poverty.” (America Press, Inc, 2015, Vol. 213, Issue 4) Being pastors and service providers, they notice the increasing adversity for little income families every year to keep their bills up to date. Lines of Pope John Paul II’s encyclical ‘Centesimus Annus” state that society and the administration have an obligation to promise pay levels that are acceptable for the upkeep of a worker and his family and guaranteeing adequate judicial actions’ to stop the exploitation of the most susceptible.
According to a graphic of a study outcome of a U.S. Congressional Budget Office in 2014 on the merits of raising the federal minimum wage from $ 7.25 to either a $9.00 over a two-year option, showed that 300,000 people would move above the poverty line and projected these numbers to triple to 900,000 with the $10.10 option over three years, which clearly speaks for a raise of the minimum wage. This would also result in increased earnings in between $9 billion and $31 billion for employees who work for the federal minimum.
The fact that it has gotten way tougher for workers on minimum wage to afford decent housing, while the prices on the renting market have exploded across the country is another good reason to push for an increase of the minimum wage. The National Low-Income Housing Coalition shows in its latest “Out of Reach’ report, how America’s housing disaster is distressing millions of renters. The report holds its focus on the Housing Wage, an estimation of the wage that must be earned by a full-time employee in order to afford adequate housing without spending more than 30% of his income.
A worker earning the federal minimum wage of $7.25 per hour would have to work nearly 127 hours per week for a two-bedroom apartment (nlihc.org, ‘About Out of Reach’, 2019). Sadly, this is not a single state problem because this happens in every city, region, and metro-area across the United States. A two-bedroom apartment in 2019 requires a median wage of $22.96, which means $15.71 higher than minimum wage. Additionally, a family of four with poverty level salary of $25,750 can pay for a monthly rent of a maximum of $644, while the national average of a one or two-bedroom apartment fluctuates between $944 and $1,194 a month. Taking those numbers into account, this family would have to overcome a deficit of $300 to $550 a month without having a second source of income or governmental help such as section 8. The issue of affording housing on minimum wage increases dramatically when we look at single paternities with only one income, led alone someone with a disability that is forced to work with an hourly wage of $7.25.
Boosting the federal minimum pay could also function as a huge productivity and quality work boost for companies and their laborers since it is a sheer necessity to provide good quality in decent quantity output if a business wants to be successful in selling their product in this day of age. Hence it would reduce the employee turnover in order to save cost for reemploying and retraining of new personal as well. Frustrated employees like to refer to this matter with the phrase “You get what you pay for” and decide whether what they are earning is enough for the labor they provide and might end up seeking other employment that pays them the wanted and needed salary in order to support their daily needs, or if they stay but do less quality work for what they earn.
Nevertheless, there is light on the horizon because companies started to raise their minimum wages for jobs despite of claims that it would lead to a raise in unemployment as they rectify their pay raises with the outcome. One of the most striking examples when it comes to raising minimum wage is Bank of America, who raised its minimum wage to $20 an hour over a two-year period. The increase will happen in installments starting on on May 1, 2019, the minimum hourly wage will increase to $17, until the amount of $21 is reached in 2021. According to Sheri Bronstein, chief human resources officer at Bank of America stated that” We are raising our minimum wage because we believe that to best serve our customers and clients, we need the best teams” and “Saying thank you, celebrating great work, and sharing our success further demonstrate our commitment to being a great place to work:” (Global Banking News, 2019) As being a international financial organization, Bank of America has nearly 4,300 retail financial centers and nearly 16,000 ATMs which only underline their success with raising their minimum wage.
Nevertheless, the most important aspect of raising the minimum wage, which would be the reduction of government welfare funding, since many people with low or minimum wage income require quite the amount of help as well. According to a report of EPI (Economy Politics Institute) Analyst David Cooper raising earnings for low-wage staff would unmistakably decrease net spending on public support. Many people, who live in the United States rely on governmental help and public assistance programs to help funding their existence since they cannot survive on bare minimum alone and help their basic needs.
Expenses such as day-care, housing, and healthcare are the centerpieces of assistance the government offers for numerous low-income families who are forced to ask for support to make it to the end of the month. Raising the federally established minimum wage from $ 7.25 to $12 an hour by 2020 would reduce public assistance spending by 20 billion dollars a year and by raising the wage by just $1.17 the number of workers that could be taken off governmental support would be approx. 1 million and the amount of money that could be saved from these programs would be $5.2 billion for every $1 the minimum wage would be raised (Cooper, ‘Balancing paychecks and public assistance’, 2016).
Companies and some government officials might see a problem in numbers of 100,000 through 500,000 workers that would lose their jobs as in the two options mentioned prior and therefore fear a decline of the quality of their product due to their budget limitation for salaries and that this modification would also raise redundancy, but this lost would happen in a two to three-year span where budgets could be adjusted, and new jobs could be created over time, so that companies could adjust their budgets and more people could be employed to decent salary conditions. Many also may beg to differ, the issue of high rent prices does not strike minimum wage earners alone. Occupations like food service workers, personal care aides, home health aides, and medical assistants, whose income is projected to nurture the most by 2026 earn not enough to afford modest housing. However, individuals who only earn low minimum wage are affected the most by this, since their pay is less than what the priorly stated occupations are projected to earn in the first place.
After adding all facts together raising the minimum wage would be a benefactor to employees, companies and economy alike due to a tremendous reduction in poverty across people in the US, raising worker productivity, upkeep of product quality, and reduction of the employment turnover frequency, enable poor families to afford housing in all states, and reduce administration welfare spending despite the opposing views who claim that raising it would result in more unemployment, a decline of quality of their product due to their budget limitation and that the housing prices don’t affect minimum wage earners alone.
- Bank of America to increase minimum wage. (2019, April 10). Global Banking News.
- Retrieved from https://link.gale.com/apps/doc/A581887812/EAIM? u=edirect_gvrl&sid=EAIM&xid=0ead27e
- Bishops support minimum wage hike. (2015, August 17). America, 213(4), 10. Retrieved
- Cooper, D. (2016, February 3). Balancing paychecks and public assistance. Retrieved January
- 7, 2020, from https://www.epi.org/publication/wages-and-transfers/.
- Kiger, P. J. (2019, October 18). Minimum Wage in America: A Timeline. Retrieved January
- 7, 2020, from https://www.history.com/news/minimum-wage-america-timeline.
- National Low-Income Housing Coalition – About Out of Reach. (n.d.). Retrieved January 7
- 2020, from https://reports.nlihc.org/oor/about.
- Potential Effects of Minimum Wage Hike. (2014). In Tribune Content Agency Graphics.
- Retrieved from https://link.gale.com/apps/doc/CT3294261322/EAIM? u=edirect_gvrl&sid=EAIM&xid=f3888836