Proposal Paper on Minimum Wage by Emily Chiappini

How is it that in today’s society of rising prices and rising costs of living, the only thing that isn’t rising is the minimum wage standard? The minimum wage rate has been the same for the past ten years while inflation has gone up, causing the real value of minimum wage to go down (Frequently). The minimum wage is a provision of the Fair Labor Standards Act, which was passed in 1938, setting the minimum wage at twenty-five cents per hour (Frequently). Increases in minimum wage are passed through Congress as amendments to the Fair Labor Standards Act (Frequently). While there is a federal minimum wage standard, many states have different standards. The majority of the states are currently at a minimum wage consistent with that of the federal wage, a smaller amount of states are at a rate above the federal rate, and an even smaller amount of states are at a rate lower than the federal minimum (Employment). The federal minimum wage is not a sufficient amount for people to live on. Even when one works a full-time minimum wage job, the earned income will not be substantial enough to allow one to survive comfortably. The government should raise the minimum wage so that people who are trying to make a living at that rate are not living in poverty. Minimum wage should be raised because its real value has decreased due to inflation, full time minimum wage workers are bringing home an income below the poverty level, and the minimum wage can be increased without increasing unemployment.

One reason the minimum wage standard should be raised is inflation. The minimum wage has not been increased since 1996-1997 - ten years ago (Frequently). “A minimum wage increase is needed to restore the minimum wage to historic levels,” meaning that when minimum wage is considered to be adjusted for inflation, it can be seen that the minimum wage was twenty-six percent lower in 2004 than it was in 1979 (Frequently). Another startling statistic is that the earnings of minimum wage workers are only thirty-three percent of the average hourly earnings of others who make up the American work force, establishing the lowest level seen since 1949 (Frequently). These statistics should be considered unacceptable. “Certainly, employers can pay a minimum wage equivalent to what their counterparts paid more than three decades ago” (Sklar). Granted, raising the minimum wage rate by a dollar or two would not restore the purchasing power that it held twenty-five years ago (Bernstein). However, raising the minimum wage by a dollar or two would be a step in the right direction and would help the struggling minimum wage worker over the course of time. The minimum wage standard has continued to lose value considering Congress has not increased it since 1996-1997, the second-longest stretch of inaction since 1938, when minimum wage was enacted (Frequently). Clearly, the minimum wage standard has not been keeping up with inflation in our society.

The minimum wage standard should also be increased because it is an inadequate amount of money for a person to make a living on. I first realized this three years ago when I had to do a math project entitled “Is Minimum Wage Enough?” The overwhelming findings were that it was not. The project entailed first-hand research. I collected information about the cost of utilities, groceries, and other expenses facing families every year. Everyone in the class researched different families, and everyone came to the same conclusion. Even back in 2002-2003, when prices were not as high as they are today, minimum wage, which hasn’t changed since then, was not enough to live on. Working a minimum wage job full time only amounts to $10, 712 a year in income, and even back in 2003, the poverty line for a family of three was $14,824 (Frequently). This makes it excruciatingly difficult for a single parent working full time at a minimum wage job to raise more than one child. Raising the minimum wage is only part of a much broader strategy to end poverty since many poor families rely on their low-paying jobs for income due to welfare reforms (Facts). While raising the minimum wage will not eliminate poverty, it will certainly make it easier for those who work at a minimum wage job, full time, to survive.

Contrary to popular belief, minimum wage can be raised without causing unemployment. Those who are opposed to raising the minimum wage rate, such as small businesses and retailers, argue that increasing the minimum wage rate will increase unemployment (Minimum). However, an Economic Policy Institute study, studies of the 1990-1991 federal minimum wage increase, and other such studies by prominent economists have found “no measurable negative impact on unemployment” with increases in minimum wage (Facts). Furthermore, the most recent increase in minimum wage in 1996-1997 saw lower unemployment rates and decreased poverty rates (Facts). Opponents of raising the minimum wage standard also claim that many of those making minimum wage are teenagers who are just breaking into the labor market (Minimum). However, seventy-two percent of those who would be affected by a raise in the minimum wage standard are adults age twenty and older (Facts). Those who oppose raising the minimum wage rate seem to be concerned only with how it will affect them rather than with how it will help those who now have to scrape the barrel to survive on a minimum wage income.

The minimum wage rate is too low, and the government should raise it to help those 7.3 million workers, or almost six percent of the work force, who are working full- time jobs with minimum wage pay. The minimum wage rate has a very low purchasing power because it has not been adjusted for inflation over the years. Those who are working full-time minimum wage jobs are making so little they are considered to be living in poverty, and even though opponents of raising the minimum wage claim that it will cause unemployment, multiple studies have shown that this is not the case. So where is the dilemma? Why has the government, which is full of seemingly intelligent people, not taken any action to help its citizens? The problem is not going to go away; in fact, unless something is done, the problem is only going to get worse, due to prices and standard rates of living continually going up. If the minimum wage does not go up, too many people will be left in dire situations. The government has done nothing long enough. Action needs to be taken; the minimum wage needs to be raised - now.

Works Cited

Bernstein, Aaron. “Minimum Wage: The States Get It.” Business Week online 29 Nov. 2004. 3 April 2006 <http://www.businessweek.com/magazine/content/04_48/b3910096_mz021.htm>.

“Employment Standards Administration Wage and Hour Division.” U.S. Department of Labor. 2006. U.S Department of Labor. 3 April 2006 <http://www.dol.gov/esa/minwage/america.htm#content>.

“Facts at a Glance.” Economic Policy Institute. 2006. The Economic Policy Institute. 3 April 2006 <http://www.epi.org/content.cfm/issueguides_minwage_minwagefacts>.

“Frequently Asked Questions.” Economic Policy Institute. 2006. The Economic Policy Institute. 3 April 2006 < http://www.epinet.org/content.cfm/issueguides_minwage_minwagefaq>.

“Minimum Wage.” Almanac of Policy Issues 1 Sept. 2002. 3 April 2006 <http://www.policyalmanac.org/economic/minimum_wage.shtml>.

Sklar, Holly. “Minimum Wage – It Just Doesn’t Add Up.” Common Dreams News Center 29 Aug. 2001. 3 April 2006 <http://www.commondreams.org/views01/0829-08.htm>.

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