Wednesday, August 12, 2009

The Latest Minimum Wage Increase Still not High

The federal minimum wage rose from $6.55 an hour to $7.25 in last month. An estimated 2.8 million employees got a minimum wage raise. Another 1.6 million whose hourly pay hovers around $7.25 also got a boost as employers adjust their pay scales to the new minimum.

After inflation, the latest minimum wage increase is still no higher than it was in the early 1980s, and it is 17 percent lower than its peak in 1968. That means that no matter how hard they work, many low-wage workers keep falling behind. To some extend, the latest increase will slow down the decline in living standards.

The minimum wage also sets a floor by which other wages are set. Keeping it low keeps wages lower than they would be otherwise, especially for jobs that are just above the minimum-wage level. According to the Department of labor, 50 percent occupations expected to add the most jobs through 2016 are “very low paying,” up to a maximum of about $22,000 a year. The jobs covers retail sales and home health.

Barack Obama proposed lifting the the minimum wage to $9.50 an hour by 2011 during the presidential campaign to adjust for inflation. The minimum wage of $9.50 an hour would be restored to its historical highs — about 50 percent of the average wage.

In America, low-paid jobs are a fact of working life. Unlike so many of the nation’s higher-paying jobs, they are not going away. One of the big challenges of our time is to ensure that for some workers, they are a stepping stone to better jobs and that for all workers; they are safe and fairly compensated.


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Garvin Smith said...

Workers get paid according to how society values what they produce. Society places a relatively high value on sports players, and a relatively low value on lawn care workers (for example). Thus sports players earn high salaries, and lawn care workers earn low wages. Artificially mandating that one group receive more money than society values their production distorts the market in terms of wages, employment, spending and consumption, and reduces freedom.
If $7.25 is an improvement in the minimum wage, why not $10? If $10, why not $20?
Furthermore, if I am an unskilled 16 year-old, I face a delimma: I can't get a job without experience, and I can't get experience without a job. I want to get a job, so I offer my services to a company for $3.00/hr., and as I gain experience my employer must pay me more or I will go elsewhere. eventually I will earn what society deems my labor is worth. But minimum wage laws make me (the 16 yr-old) a criminal for
such actions. What right do you have to tell me I cannot work for less than $7.25 an hour if I willing choose to?