Increasing the minimum wage will be condemning more of our youth to jail and a life in the criminal justice system.
The minimum wage is the starting wage for people just entering the work force: usually the young just out of high school. Generally an associate moves to up the pay scale from minimum wage after a training period. After a couple of years most are shift managers or store managers.
“No one can support a family only on a minimum wage” is the most persuasive argument for increasing the minimum wage. Many do not consider the government benefit programs for low income families that boast the minimum wage from $7.25/hour to over $17.00/hour. Programs include Medicaid, the National School Lunch Program, food stamps, and the Earned Income Tax Credit.
The Benefits of Work
The greatest benefit to having a job is learning the skills and self discipline it takes to be employed. It is learning to work with others to get things done. It is learning to respect others and learning to do things that earn you respect. It is becoming part of a work community. This is especially true for young people just entering the work force. It is important that they they get a job so they can get on the right track to becoming a contributing member of society.
The work force has been shrinking since the recession began in 2007: Eighteen year-old job seekers are now twenty-four. Many have never been hired. Their job applications and resume’s are thin on experience. Eighty-five percent of the under twenty group were employed in 2007, only seventy-five percent in 2013. Many have gone down other paths. Some are self-employed. Some are living in their parents basement on food stamps. Some are having babies and living on welfare. Some are in jail or involved in illegal activities.
The problem is recognized. Midnight basketball was once proposed as a solution. Community centers, basketball courts, and public recreation centers have been built to keep kids off the streets. But nothing works like a J.O.B. Undisciplined adolescents learn to take directions from a manager who is not nearly a cool as they are. They learn to show up on time appropriately dressed. They learn to cooperate with others to get things done. They learn responsibility. They learn the value of money. They have money for themselves and money to contribute to their family. They are not on the streets.
A Family on Minimum Wage
Let’s look at a family of four earning minimum wage @$7.25 per hour (Federal Minimum Wage 2013). A mother and father with two kids in school. The father works 2000 hours (50 weeks@ 40 hours per week) at $7.25 per hour or 14,500 per year. They pay $800.00 per month for rent and utilities.
According to the linked food stamp calculator, this family should get $654 a month (654 x 12= 7,848 per year) in food stamps. The public school also provides free breakfast @$1.50 and lunch @$3.25 (180 days @ $4.25 per day x 2 = $1,530.00 per school year). Medical assistance is also provided for uninsured children through Medicaid @$1,700 per year per child (2 x $1700 =$3,400). $1,700 is the average government cost per individual.
There is the earned income tax credit. They are sent a check from the government for $6,961 when they file their taxes according to the linked H&R Block estimator. The total yearly government benefits of $19,735 are greater than than the amount they earned A minimum wage worker filing joint tax return with his wife and two kids receives $19,735 in benefits + 14,500 in income. That’s $34,239 per year or $2,853.25 per month, after taxes.
The Effects of a Raising the Minimum Wage
Those who keep their jobs or are hired at the higher minimum wage get a pay raise. Those further up the pay scale may also see raises as the increase ripples through the company. Almost everyone else loses.
The minimum wage is worse than a tax on a businesses. Taxes are on profits, the minimum wage acts as a tax on hiring. Fewer will be hired. Some will be let go. Unemployment is increased. More kids will go to jail.
Companies competing against companies that manufacture in other countries, become less competitive. They may go out of business or expansion will be slowed. Employment is decreased.Unemployment is increased. More kids will go to jail.
There is increased incentive to hire off the books. When workers are paid cash under the table, they are not be eligible for E.I.T.C., Social Security, Workman’s Comp, or unemployment insurance.
There will be added incentive for companies to buy equipment that makes workers more efficient. Fewer workers will be needed to perform the same work. Example: Caesar Chavez led strikes and boycotts for higher wages for lettuce pickers. He was successful short term. The industry responded. Giant harvesters were developed that allowed ten workers to do the work of a hundred. Far fewer workers are needed. The bottom line: Unemployment is increased. More kids go to jail.