Why raise the minimum wage?


“We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low. An important reason for the success of Costco’s business model is the attraction and retention of great employees. Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty. We support efforts to increase the federal minimum wage.”

Costco CEO Craig Jelinek, March 2013

The ongoing protests to raise the federal minimum wage to $15 an hour have started a lot of discussions among Americans. The so called ‘Fight for $15’ campaign is being financially supported by the Service Employees International Union and has staged protests in about 150 cities nationwide. Although the campaign was started in late 2012, it has just recently been getting media coverage as the wage gap has become a hot political issue. President Obama has even stated he supports a higher minimum wage so that these employees can provide for themselves and their families. Last Thursday (September 4th) was an important day for the movement as police began arresting protestors throughout the country, as they blocked traffic and escalated efforts to achieve their goal.

Currently the federal minimum wage is set at $7.25, and most fast food workers do not make more than this. This means that working a full time (40 hours a week) fast food job would only leave you with about $15,000 a year, and that’s before taxes are taken out. In the United States of America, there are currently ZERO states where a minimum wage worker can afford a two bedroom apartment working a 40 hour week.

This revisits the idea that people on social programs are lazy. Even if you worked a 40 hour week at McDonalds, you would still have to use government assistance in order to make ends meet. If the minimum wage had kept up with inflation for the past 40 years it would currently be set at $10.90. If minimum wage were at $10.10, like many want, that would be a raise for 16.7 million people and pull at least one million people out of poverty.

Many people are convinced that raising the minimum wage would result in an increase in the price of living, but this is just not the case as it does not take in to consideration purchasing power parity (PPP). When that is included it lets us adjust exchange rates to account for the difference in local prices.


Increasing the wages of workers means that they will then be spending more money and stimulating the economy. The Economic Policy Institute’s research shows that if the minimum wage were set to $10.10 there would be $30 billion in new economic activity and it would produce 140,000 more jobs are produces expand to keep up with consumer demand. Which brings us to the next fear about raising the minimum wage; that it would result in jobs lost. Economists overwhelmingly agree that there would be few jobs lost due to an increase in minimum wage. This would also be offset by the amount of jobs eventually created by raising the minimum wage. There is also an excellent case to be made that raising the minimum wage in turn creates more productive employees.

So what do you guys think? Let me know in the comments! I’m interested in counter arguments!




Categories: Congress, Democrats, GOP

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