It is time to raise the minimum wage. I did not come to this conclusion easily, as each side of the issue makes compelling arguments. It would be great if we could look to the leading economists for clear guidance, but frankly, they have become too partisan, damaging their credibility. But when you look at the facts objectively and consider the big picture, an increase is the right thing to do.
Companies need people to operate their businesses. While more and more tasks are being automated and outsourced, people are still badly needed. Many job openings remain unfilled. Part of the argument for immigration reform stems from this shortage — but we’ll tackle that issue another time.
Well-run organizations understand that if they are able to recruit, retain and motivate their employees, they will be at a competitive advantage. When you take care of your employees, they become loyal and they produce. People can be the differentiator.
Gap Inc. announced it would raise its minimum pay to $9 per hour, above the federal minimum wage. In the announcement, Chief Executive Officer Glenn Murphy said, “Our decision to invest in front-line employees will directly support our business, and is one we expect to deliver a return many times over.” The Gap gets it.
But the Gap is a huge organization, with tremendous resources, much more than the Dock Square shopkeeper or the restaurant owner in Ogunquit may have. When you’re struggling to survive, any cost increase can be hard. And that is the argument against raising the minimum wage. Employers will be forced to either absorb the hit or cut workers and reduce hours. And if that’s the case, why do this if the real purpose of raising wages is to restore some kind of income equality?
In 1968, the year I entered the world of work, the minimum wage was $1.60 per hour. If that number had been indexed for inflation, today’s minimum wage would be $10.50 per hour. It is $7.25 on the federal level and $7.50 in Maine. While costs have increased, wages have severely lagged.
Raising the minimum wage to the proposed $10.10 per hour will increase the wages for 16.5 million Americans. The move is expected to move hundreds of thousands out of poverty. Lower wage workers, those who live paycheck to paycheck and who will benefit the most from this, will likely spend most of that money, infusing additional dollars into the economy and giving it a badly needed boost. That’s the argument for an increase.
Those who oppose a wage increase cite the Congressional Budget Office (CBO) report that states that a minimum wage increase could result in a loss of 500,000 jobs. With unemployment at an unreasonably high rate now, why exacerbate the problem? Unfortunately, this argument does not hold water. The CBO report said job loss could be as high as one million or as little as zero, and they could not be certain. Not a strong position. And we know from history that minimum wage increases have had little or no effect on unemployment. Companies still need employees.
Finally, there is the argument that the government should not be dictating what you must pay your workers. While few of us like to be told how to run our businesses, we are already compelled to obey employment laws, tax laws and a myriad of other regulations, including an existing minimum wage.
Paying workers a decent wage makes good business sense. The starting wage is often the top factor candidates consider before applying for a new job and it is the main reason workers make for quitting a job. Smart businesses understand this and pay well above the minimum wage. The Gap’s decision to move now, rather than being told to, was a business decision, not a social one. But that brings us to my final point.
Raising the minimum wage is, in part, a social issue. It gets to the core of who we are as Americans. We pride ourselves in taking care of our neighbors. We have always required and lived by minimum acceptable standards of living. We demand the cars we buy to be safe, the restaurants we eat in to be clean, and our military to be there to protect us. We don’t tolerate discrimination and we expect everyone to behave civilly. And we want our neighbors to be paid a decent wage — a wage that will bring them above the poverty level.
I am not advocating a handout or an increase in welfare benefits. All I’m suggesting is if people work hard, they should receive a fair pay. It’s good for the economy; it’s good for business; and it’s good for society. It is time for Congress and the President to act. Raise the minimum wage.
Feel free to Comment below. I’d like to hear your opinion.