Economy will drop if wages rise

James Keller, Media Editor

As demonstrated by the recent presidential debates, one of the major social, ethical, and economic dilemmas Americans face is whether or not it is feasible to raise the federal minimum wage. Minimum wage is defined by Investopedia as “The lowest wage per hour that a worker may be paid, as mandated by federal law.” Minimum wage is not meant to be a “livable wage,” but a way to prevent abuse by employers. Raising minimum wage is not a viable solution to poverty and will merely cause various economic calamities.

One primary argument presented regarding minimum wage is that it is not a livable wage. However, the minimum wage is not meant to be a “livable wage.” A “livable wage” is not something that can be determined for a country that has areas of various economic development. Someone in Raton, Colorado requires far less to live on than someone who lives in New York City. A livable wage for someone in New York is substantially higher than someone in Raton.

Historically, the federal minimum wage was created in 1938 under the Fair Labor Standards Act. The minimum wage was set at $0.25 and “has been raised 22 separate times–most recently, in July 2009, to $7.25 an hour,” according to the Center for Poverty Research, University of California.

Simply put, the minimum wage was created to protect workers from tight-fisted and unethical employers who had no shame in overworking and underpaying their employees.

While the era of American sweatshops may be gone, low-cost labor is still a critical component of the economy. Teenagers, myself included, do not need to make a livable wage. According to National Public Radio, “Americans ages 18-34 are more likely to live with their parents than in any other living situation.” About 50 percent of minimum wage workers are people under age 25, according to the United States Bureau of Labor Statistics.

For people who are in high school, paying rent and buying groceries is statistically not likely. Minimum wage jobs provide students with an opportunity to help make car payments, go to dinner with friends, or afford miscellaneous purchases.
On a similar note, people working a minimum wage job are generally not completing any highly skilled tasks. Elevating the minimum wage to $10.10 an hour means that someone working as a foreign car mechanic, like myself, is making the same amount of money as somebody who is working at a local fast food restaurant. Raising minimum wage merely devalues the labor of those who have spent years educating themselves for a more complex job.

Raising the minimum wage on a federal level would mean that the monetary value of a specialized job currently with a higher hourly rate would be equal to somebody doing a relatively basic job.

Why should somebody doing a complex job stay in that career path when they can make just as much money doing something far less taxing or complicated for the same amount of money?

From a strictly economic standpoint, raising the minimum wage will not necessarily improve the quality of life for those living on a state’s minimum wage.

If a small business owner is forced to pay their part-time employees more, a few things can happen. Prices of products may increase, the number of people able to be employed by the business may lower, workers could not work as many hours, or the owner’s profit margin might be cut.

While large corporations with massive profit margins can afford to pay employees an extra $7.75 an hour, businesses with a handful of employees and a profit margin that barely puts bread on the owner’s table may not be able to sustain the higher price of labor.

James Keller is a Media Editor for The Patriot and