Minimum Wage, a History Lesson, and an All American Hug

Today I was reading an article about minimum wage and how they are thinking about raising it again on the MSN website. Then I read the comments listed below it, once again I was disturbed by how pseudo informed people seem to be. I say pseudo informed (my own made up description) as opposed to uninformed, because these people believe they are quite knowledgeable about a subject that they are in actuality only regurgitating that which they have heard. They make gross assumptions about how our own country works and state these propaganda style statements as fact. I see it all the time, in any of the blog forums I read regularly. It usually irks me, but I don’t feel the need to rant every ten minutes so I just go on to something else. This time I’m reading a pretty well written article about a topic that I have actually done extensive research on. I wrote, while in college (about 4 years ago), this long research paper comparing minimum wage and the living wage, where they came from and why. (I am not publishing the paper here, mostly because it is a really long, 13 pages, and therefore boring research paper, not what this blog is about) For record’s sake I got an A on said paper, so this doesn’t make me an expert, but I can tell you I understand it better than the people whose comments I read do. I did go back and get some references, and updated sources to check what I’m going to share here, mostly because I do not want anyone to take my word for it. I believe that this is my generation’s biggest failing (there are a lot, guys, but this one breeds others) we don’t arm ourselves with knowledge, we simply assume what we’ve been told really is fact, so read people, follow the links and learn.

Whew, sorry it got preachy there for a minute. So I’m going to summarize the article I read in as few words as possible. Essentially it was an article about the idea that our government is proposing another minimum wage increase, which then sparks the debate over minimum wage that has existed since the first one was enacted in 1933. (the minimum wage was $0.25 per hour, it was revoked as unconstitutional in 1935, then reinstated in 1938 FYI) The arguments regarding minimum wage haven’t really changed since then. The cons: it will hurt small business owners, government shouldn’t be that involved in our lives, if you establish a wage “floor” people will never “get off of it”, prices of goods and services will skyrocket, and my personal favorite, fewer jobs will exist because employers can’t afford the workers. (other cons exist but these are the biggies, and have been argued since the 1930s) The Pros: workers will not be as easily taken advantage of, fewer people will live in poverty, people who earn more money per hour will be able to spend more and help stimulate the economy. (same as with the cons, not the only arguments, but the biggies)

Now, a bit of a history lesson, FDR started minimum wage as part of the New Deal plan to help bring us out of the Great Depression. (as a side note this is also when Social Security, Medicaid/Medicare, and most of our existing welfare programs originated from) Everyone knows enough about the Great Depression for me to feel silly and insulting of your intelligence trying to describe it, I wasn’t alive, I have spoken to people who were, but I can’t tell anyone much more than they can read in a book about it, so we will be moving on.

To address what seem to be the main misunderstandings people have regarding minimum wage, first of all 2 things got this country out of the Depression, The New Deal and World War II. Well, we tried having a war this time, it did not help, but A for effort, guys! Maybe now we can focus on the other HALF of what helped this country before? When minimum wage was established studies were begun to see how it would affect small business owners, individuals, and the economy as a whole, guess what? Unemployment dropped from 13.9% to 9.4% in a few short years. Most businesses were, in fact, able to stay afloat. This particular argument returns at each raise of Federal minimum wage, did you know not once has there been an increase in small businesses going under/laying off workers immediately (with in 3 years) following a minimum wage increase? In fact, traditionally, minimum wage goes up, unemployment goes down, taxpayer’s welfare spending decreases (or there are shorter wait lists for services), and the economy enjoys a moment of recovery. I find it ridiculous that after decades of proving this we are still making the old arguments against minimum wage.

Now, why should we be increasing minimum wage now? Hello, highest unemployment rate since the Great Depression, people! Hard working Americans are unemployed and underemployed. People work 2 or 3 minimum wage jobs, not to support an extravagant lifestyle, but to keep a roof over their heads, a roof they could afford prior to 2009. This is where we get into living wage. In case you aren’t sure what that is exactly, it is an amount per hour, based on location, that a person would need to make to secure food, shelter, and utilities for an individual. In case you missed it, living wage does not account for children, clothing, medical costs, vehicle expenses, or even toiletries, as it was established (and the criteria for that has not changed ) in the 1930s when all of those things were established as “luxuries”. Living wage is adjusted for inflation, and local rental prices etc. In 1933 $0.25 per hour was the living wage (living wage also assumes you are working 40 hours per week at this rate and take no time off).  See where this is going? Minimum wage was to help people starting out in the work force to survive and establish themselves as they grew in a company and acquired more marketable skills, which is why living wage was calculated in the first place. Minimum wage was not meant to be an arbitrary number, it was meant to help people help themselves out of poverty and destitution.  The last time minimum wage was within spitting distance of the current (at the time) living wage was 1967. Today’s minimum wage, while it sounds like a huge increase ($0.25 to $7.50), is actually the furthest below the living wage (percentage-wise) that the minimum wage has ever been. So this means what? That’s right you would need to work 2 minimum wage jobs 40 hours per week each to hit living wage. Tell me about entitlement now, tell me about people whining and wanting the government to rescue them because they are “too lazy” to help themselves. (Obviously I get pissy about these kinds of ignorant comments, thus the long blog today)

So, do we want another Great Depression? Or are we ready to suck it up and help our fellow Americans?

Whew, now that it’s off my chest, feel free to comment, disagree, fact check me, etc. I am waiting to here what you think.

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