In Support of Raising the Minimum Wage

As Republicans in several U.S. states are either lowering the minimum wage or attempting to lower it, the support for raising the minimum wage keeps increasing. This is a common sense proposal with the potential to make a concrete improvement in the lives of many millions of people, and yet the federal minimum wage was only last increased back in 2009. In 2017, it is still at a disappointing $7.25 an hour, and that’s while analysis has appeared stating how a basic apartment is unaffordable in almost the entire country at that level. With that in mind, it’s sensible to look at the history of how wages were decades ago.

The minimum wage peaked all the way back in 1968. As with some other important socioeconomic measures, it’s been pretty much downhill since neoliberal programs began to be enacted a lot more in the late 1970s. There’s the key to an explanation from one striking graph in particular:


Real wages have largely been stagnant, even as productivity growth has improved substantially. The fight for a $15 minimum wage is hardly radical when it’s considered that the minimum wage today would be about $20 an hour if the minimum wage had kept pace with productivity growth rates since 1968. It would be even higher than that if the minimum wage was also adjusted with inflation. The low wage workers in world history’s richest country are then faced with this astounding reality – that the minimum wage should be around 3 times higher than it is now.

The lower economic classes have obviously not benefited a whole lot from the gains in productivity over the past several decades. Productivity gains here mainly encompass workers becoming better at their jobs and more technological growth and automation leading to higher levels of efficiency. This is noted with another astonishing statistic: From 1977 to 2007, nearly 60 percent of all U.S. national income increases went to the top 1 percent. A lot of that income capture is because of the top 1 percent gaining wealth at the expense of underpaid workers, and thus if the minimum wage had been higher, there would be less drastic income inequality.

The argument commonly made for keeping the minimum wage at a terribly inadequate level is an increase in unemployment. Besides illogical and cruel in theory, this argument fails in practice. Vermont has one of the highest minimum wages in the U.S., at over $10.00 an hour, with one of the lowest unemployment rates among U.S. states. The minimum wage isn’t the entire reason for this, but it’s one of numerous examples that disproves the argument from free market ideologues. There are already states with no minimum wage and they have among the highest unemployment rates in the nation. Still, the arguments to either lower the federal minimum wage or abolish it keep appearing, in what is a situation more sad than funny.

There’s a note of caution for setting a minimum wage much higher than it should be, of course. A minimum wage of $35 today would actually lead to a lot more unemployment, but it’s not as if an increase like that will happen anyway. Beyond such a relatively high increase, the unemployment caused by a higher minimum wage is minimal, if there is any at all. Even if there is minor unemployment, there will be many more people who benefited significantly from a sensible minimum wage increase. There may actually be a reduction in unemployment from certain minimum wage increases, as – surprise surprise – more workers will be motivated (incentivized in economics terms) to search for and acquire jobs.

Average workers with more money from a higher minimum wage will obviously spend some of it. When they do, businesses will get more money, and some of that will go towards hiring more workers. This is related to a term in economics known as aggregate demand, and it’s also a driver of economic growth.

The pay of CEOs has exploded and no one really talks about that being a contributor to more unemployment. If average workers aren’t getting the money from higher wages, that money is going somewhere else. Namely, it’s probably following the trend of upwards redistribution to the wealthy. The wealthy will probably put much of their increase in income into the stock market, which has continued to do phenomenally well over the years, despite general economic stagnation or weakness for the vast majority. It’s then noted that the top 1 percent in the U.S. already owns about 40% of the stock market, and everyone sees how well that’s working out for the broader economy. The stock market was supposed to be used as an engine of productive investment, but it’s become largely an engine of corporate exploitation and dangerous casino capitalism.

The minimum wage would be over $10 if it had kept pace with inflation alone over the last several decades. Considering the productivity gains since the 1970s and the added costs of living, workers deserve a higher wage than that. The federal minimum wage should therefore at least be around $12 an hour now, with a plan to increase it to $15 over the next few years. Instead of wasting billions of dollars on the bloated military budget, money could be infused to particularly weak segments of the U.S. to help sustain a higher minimum wage.

In conclusion here, raising the minimum wage to a sensible level is truly a common sense proposal that would considerably improve millions of lives. It’s long been time for more people to seriously organize and see this initiative be established.