One of President Barack Obama’s biggest initiatives lately has been his quest to raise the federal minimum wage. He argued in the State of the Union Address in January that “no one who works full time should ever have to raise a family in poverty,” and called on Congress to raise the federal wage floor to $10.10 an hour.
It’s no surprise that surveys conducted by CBS News, Quinnipiac University and the Pew Research Center/USA Today show that three in four Americans support increasing the minimum wage. On the surface, it sounds like a great idea. When you take a closer look, however, a wage hike would cause far more harm than good.
I’m no economics whiz, but it’s not hard to understand that when a company raises the price of something, consumers buy less of it. Labor is no exception. If the federal minimum wage climbed to $10.10, employers would have to pay nearly 40 percent more each hour for every minimum wage worker they employ. Over a 40 hour work week, it equates to an extra $114 per employee. For large corporations that employ hundreds or even thousands of workers, that could quickly add up to millions of additional dollars dedicated to payroll expenses. For small businesses with fewer employees but tighter operating budgets, it’s even worse. The higher dollar amount quickly loses its luster when hours and jobs are cut to compensate for the costs.
Obama portrays the increase as a way to help families in poverty, which is a bit misleading. According to the White House’s own charts, only 26 percent of the estimated 19 million Americans who have kids stand to directly benefit from a rise in minimum wage. The other 74 percent are either married without kids, unmarried without children, or teenagers.
Furthermore, more than half of minimum wage earners are from a household that brings home more than $35,000 a year, placing them well over the 2013 federal poverty threshold ($23,550 for a family of four).
According to the Bureau of Labor Statistics, the total civilian labor force in 2012 numbered over 154 million. That means, at the very most, approximately 5 percent of workers fit Obama’s description of “a family with two kids” that lives in poverty making minimum wage. An increase in the wage would benefit far more couples without children, singles, and teenagers than families.
In a perfect world, all these employees would make enough to live comfortably, but we have to face the facts; most minimum wage jobs are that way for a reason – either they’re not very hard to do, or a lot of people are willing to do them. I worked for minimum wage at a pizza restaurant in high school, and as nice as a raise would have been, I wouldn’t have deserved one. Pretty much anyone could have done the work I did, and if I decided not to show up, my boss could have replaced me within days.
Even at the current minimum wage of $7.25, it was hard for that restaurant to afford its labor costs. Hourly employees were rarely scheduled for more than 20 hours per week, and never 40. As soon as the phone stopped ringing after a rush, anyone that wasn’t absolutely crucial to keeping the restaurant open was sent home. If the minimum wage was to rise, inflating operational costs with no revenue gains to offset them, the general manager of the restaurant would be forced to cut back employees hours even further.
It’s a shame that some people barely scrape by on minimum wage jobs, but there’s no quick fix. We would be better off encouraging our laborers to develop skills and broaden their experience in an effort to move up the chain and earn a higher wage, rather than hand them one at the expense of the businesses that sign their paychecks.
It would be foolish for our country, and our president, to proceed with this plan based on nice ideas when, in reality, it simply isn’t feasible.
Mike Stanton is a sophomore in mass communications. Please send comments to [email protected]