Why Do We Need Higher Wages?

The Minimum Wage Is Just Too Low Today

Adjusted for inflation, the American minimum wage was over $10.50 in 1968. Today it has dropped by one-third to just $7.25.

Meanwhile, the productivity of American workers has doubled during those forty-five years, and the minimum wage would be $22.00 per hour if it had grown at the same rate.

Raising the minimum wage to $12.00 per hour would only represent a rise of 11% over forty-five years, and that’s a very reasonable request.

Workers Can’t Survive On the Minimum Wage

It’s impossible to survive in America on a minimum wage job.

The government knows this and supplements the incomes of low-wage workers with $250 BILLION each year in social welfare spending—Food Stamps, EITC checks, Medicaid, housing subsidies.

Since businesses don’t pay their workers a reasonable wage, they’ve forced the taxpayers to make up the difference, socializing their costs to the rest of society and getting an annual BAILOUT from the government.

Raising the minimum wage to $12.00 per hour would require businesses to pay their own workers and save the taxpayers tens of billions of dollars each year by automatically cutting social welfare spending.

Any Increase in Prices would Be Very Small

Walmart is America’s largest low-wage employer and hundreds of thousands of Walmart workers earn an average of less than $9.00 per hour.

If every Walmart worker earned at least $12.00 per hour, Walmart could cover the costs by a one-time price rise of just 1.1%. The average Walmart shopper would only pay an extra $12.50 per year and never notice it.

If every fast-food worker earned at least $12.00 per hour, raising the price of a cheeseburger by less than a dime would cover the costs.

If every agricultural field worker earned at least $12.00 per hour, raising the price of American-grown food by less than two percent would cover the costs.

Meanwhile, taxpayers would save many tens of billions of dollars each year in lower social welfare expenditures.

The Rise in Consumer Spending Would Help Revive the Economy

A $12.00 minimum wage would raise the incomes of over 40% of all American wage-workers and the average gain would be about $5,000 per year, $10,000 for a two-wage couple.

A married couple holding full-time minimum wage jobs would earn $50,000 per year, giving them a decent income and allowing them to avoid government dependency.

A $12.00 minimum wage would boost the total income of America’s lower-wage workers by over $150 billion each year. Those are the families that spend every dollar they earn and their additional pay would immediately flow into the consumer economy. A hike in the minimum wage would be a large annual economic stimulus program, but one funded entirely by the private sector.

Many of those extra dollars would return to the minimum wage employers such as Walmart and fast-food restaurants, boosting their sales and helping them to cover those higher costs.

There Would Be Minimal Job Loss for American Workers

The overwhelming majority of American low-wage workers are in the non-tradeable service sector, and their jobs are safe from foreign competition or automation.

Since labor costs would be going up nationwide, businesses could raise their prices by a small amount to cover much or most of their additional costs. Workers would keep their jobs but be paid much higher wages.

Any job losses would tend to be concentrated at the lowest wage levels, and those jobs are disproportionately held by the most recently arrived illegal immigrants. A much higher minimum wage would help to enforce existing immigration laws and make hiring illegal workers less profitable for businesses. If recent illegal immigrants lost their jobs, many of them would go home again.

Since the increased consumer spending would boost the economy, American workers who lost their jobs at one business could get a better job somewhere else. If Walmart sales boomed, a worker who lost her $8.25 per hour job at a restaurant could get a $12.00 per hour job at Walmart.

The Huge Wealth Gap in American Society Would Be Reduced

Today, the top 1% in America have as much wealth as the bottom 95% and this is a dangerous situation.

Countries with huge wealth gaps tend to become more and more politically unstable.

Raising the minimum wage to $12.00 per hour would not solve this problem, but at least it would be a step in the right direction.