End Federal Subsidies: Raise the Minimum Wage

The federal minimum wage was a major economic talking point during the presidential campaign season. Hillary Clinton called for a $12 federal minimum wage, less than her opponent Bernie Sanders’ “Fight for $15” campaign. President-Elect Donald Trump, on the other hand, has said wages are too high and he would not raise the federal minimum wage of $7.25. Currently, minimum wage beyond the $7.25 minimum is handled by the states, and economists fail to agree on whether raising the federal minimum wage would increase unemployment.

Some consider the low minimum wages across the country “corporate welfare,” arguing that it is government support of private business. For example, a group study in 2014 showed that Walmart’s low-wage workers cost taxpayers $6.2 billion annually in public assistance programs. The amount of a living wage varies from state to state. In New Jersey, MIT estimates a living wage for a full-time worker is $12.64/hour, increasing to $25.38 if that worker is a parent.

The minimum wage in New Jersey remains substantially low compared to this figure at $8.38/hour. In 2017, it will increase a whopping six cents. Governor Christie vetoed a bill proposing a statewide minimum wage of $15/hour in August.

It is fairly rational that some are wary to increase the minimum wage that much. A minimum wage raise of $6 dollars is unprecedented in economic study, leading to the disagreement regarding it. However, some cities in America have already begun implementing a $15 wage, and it has resulted in economic prosperity.

Seattle raised its minimum wage to $15/ hour in April 2015. While some predicted an economic catastrophe, the results have been extremely promising. Despite what critics said, Seattle’s labor market has continued to thrive, with a job-growth rate triple the national average. City unemployment has hit a new cycle low of 3.4%, and a University of Washington study showed little to no evidence of job losses or business closings. In theory, many economists believe the increase gave workers more disposable income, which gave them an incentive to spend. In the long run, this created more spending and less saving, which is good news for the local economy.

The economics of a minimum wage has been a subject of ideological debate for decades. The question today becomes why do we continue to ignore data in places that have already taken the leap to $15/hour? There’s little evidence to support the belief that a minimum wage increase spikes unemployment.

Something these critics don’t realize is that all Americans suffer from others not getting paid a living wage. If their fellow citizens cannot afford to live or support a child, they will resort to government assistance. It’s time for us as a country to ask ourselves an important question – why are taxpayers subsidizing labor costs for corporations like Walmart and Home Depot, which profited a combined $26.2 billion in 2015?

Another common misconception is that the minimum wage mostly applies to teens working low hours to get some extra spending money. In our home state, this is far from the truth. 91% of workers making minimum wage are adults. 61% are working full time, and about half have graduated from or attended college. Nearly one in three is a parent, and 21% of New Jersey’s children have at least one low-paid working parent.

The disappointing reality is that egregious income inequality affects all of us in America, whether you know it or don’t. If you pay taxes, you are footing the bill for major corporations to pay minimum wage and increase profits. It’s not a coincidence that the family who owns Walmart owns more wealth than 40% of Americans combined, and the gap between the rich and the poor is drastically increasing. Everyday taxpayers are getting played. It is time for us to step off of our ideological high horse and care about the minimum wage, because it affects all of us.

SJR newspaper.

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