Do not raise the minimum wage

On January 10, 2007, Democrats in the House of Representatives proposed to raise the minimum wage from $5.15 an hour to $7.25 an hour, and this plan would be put into effect over the next two years. One major reason they are pushing this raise of the minimum wage is to boost people out of poverty. This plan is a terrible idea for America’s workers, and will only lead to negative consequences.

While looking at the Democrats’ plan, look at the facts. They claim that this will support women and minorities. Looking at statistics (which come from The Heritage Foundation, which calculated the numbers from the Bureau of Labor Statistics), the majority of persons working at minimum wage are young people, usually in school, in the age range of 16 to 24 years old. Workers under the age of 25 are normally not the sole provider for their households, and have not finished schooling. Additionally, the average family income is $64,000 per year with 65 percent having incomes over twice the poverty line (which stands at approximately $20,000 for a 4-person household).

Looking at the older workers, that is, workers over the age 25, the numbers are much more interesting. The average family income for the age group over 25 is $33,600, a number above the poverty line. Fifty-six percent of those over 25 work part-time jobs, and 43 percent of the over-25 workers are married. Moreover, the proportion of single parents working full time for minimum wage compared to the workforce is lower than all hourly workers (6.1% as opposed to 6.3%). Hiking the minimum wage will simply not boost single-parent households out of poverty, and will only affect the smaller number of single-parent households.

Furthermore, looking not at percentages but “real” numbers, one can see that only a small percentage of workers earn the federal minimum wage. In 2005, for example, only 1.9 million Americans reported earning $5.15 or less per hour. Using another way to calculate earnings, a way that included tips, only 1.3 million Americans earned minimum wage or less per hour, which amounts to only 1.1 percent of the total working population.

The differences in cost-of-living across the country also make a federal minimum wage hard to set. $5.15 cannot support a person living in New York, but it is likely supports workers in a more rural area. Also, one must factor in that a low-paying job is an entry to the job market for many people. Practically no one wants to stay at minimum wage for his or her entire life; but one needs experience and marketable skills to get a higher paying job.

The wage at which an employee is paid should not be dictated by 536 people in Washington, DC. Rather, it should be decided between an employer and his or her potential employee. The free-market is almost always sure to pay the correct wage for a certain task, and will adjust to meet the proper equilibrium. If an employer wants to pay his employees $1.09, it is very likely that the employer will be hard pressed to find someone willing to work for $1.09. Contrary to what some Congressional members think, the “common man” is perfectly able to decide how much he or she realistically ought to be paid.

It is true that 23 percent of minimum wage earners of age over 25 are living in poverty, and that is a travesty. However, rich, mainly white, liberals in Congress that earn a six-figure salary should not try to soothe their consciences by forcing a minimum wage hike on small businesses. Rather, they should aim at solving the true root problems of poverty: lack of education, and bad family structure.