found that a resounding 69% of Americans are in favor of raising the national minimum wage. Yes, even Republicans. From the current rate of $7.25 per hour 29% of those surveyed would like to see the rate hiked to $10.10, 16% prefer something higher and 22% think a rate between $7.25 and $10.10 seems fair. A new poll from Quinnipiac University
It’s all but impossible to get 69% of America to agree on anything. The question is why we’re still even having a conversation about whether or not the rate should be hiked as opposed to what the base hourly rate should be. According to Zach Karabell of Envestnet.com the conversation hasn’t advanced largely because it’s much easier to score political points making a basic “Either / or” argument than it is to delve into the economic implications of making such changes.
In the attached video Karabell makes the case that America has a problem with wealth distribution at every level, not just the extremes. Less than 5% of workers make minimum wage in the US. In the context of our national wealth it’s all too easy to want to improve the lives of this relatively small group but as a practical matter the increase being discussed would do more to assuage our national wealth guilt than it would to change our society as a whole. “It’s an easy thing to say we’re paying people too little so we should raise (the minimum wage) to $10 an hour. That’s an appealing argument if you feel like it’s going to do something to address the larger issue. The problem is it doesn’t do a whole lot,” Karabell says.
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For someone working 40 hours a week 50 weeks a year a pay bump from $7.25 to $10.10 would boost their annual take home pay from $14,500 to $20,200. According to the US Department of Health and Human Services that would be enough to lift households with fewer than four people above the poverty line but not to the degree that it would mark a massive lifestyle change.
According to the BLS 73.9 million Americans 16 and over are paid by the hour. Of those 1.7 million are paid exactly minimum wage and 2.2 million were paid less than minimum wage by the hour not counting gratuities. Only 2% of full-time workers being paid by the hour are making minimum wage or less. The productivity being thrown away by debating whether or not we should do something favored by nearly 70% of the voting public greatly outweighs the actual cost of raising the wage itself.
So why are we wasting so much time pretending there’s a huge number of Americans opposed to lifting the less fortunate out of poverty? Because the conversation we should be having is complicated. “Money doesn’t come from nowhere,” explains Karabell. If we want to do something meaningful to elevate not just hourly workers making minimum wage, but rather the lowest economic strata of the country as a whole we’re going to have to either cap salaries on the high end or raise taxes across the board. Suffice it to say capped salaries and higher taxes make for a less stirring stump speech than paying a living wage in the abstract.
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The country needs to advance the debate beyond nudging minimum wages higher or lower. The hard question to answer is whether or not the yawning pay chasm between the high and low ends of the wage spectrum is creating a drag on the country’s productivity as a whole. In other words, is the economic pie as a whole reduced because low end wages are insufficient to lift most families out of poverty or are we better off letting the poor fend for themselves?
Since we’re not ready to have that conversation look for more of the same old rhetoric about the concerned souls who opposed poverty and the largely fictional group of Americans who’d rather see hourly workers starve.
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