Does the Current Minimum Wage Perpetuate Poverty?

When discussing current events, one of the most heated topics revolves around raising the minimum wage. While many family members and friends feel that it’s unreasonable to pay unskilled laborers $15 an hour, it is also unreasonable to expect anyone to support themselves on $7.25 an hour.

All the statistical data shows that the current minimum income thresholds do not provide livable wages. Sadly, it has not been able to sustain a family’s cost of living since the 1960s. The American Dream has become a nightmare for the working poor who are struggling to survive.

Why We Need to Raise Minimum Wage

(Photo by Andy Kiersz/Business Insider)

What COVID-19 Taught Us about Minimum Wage Workers

When the pandemic first began, COVID-19 brought the world to its knees. Economic activities worldwide came to a screeching halt as people stayed home to stay safe. Factories shut down production, international trade ceased, and people stopped going to work. However, government officials and community leaders demanded a return to business as usual to avoid a global recession.

It was during this time that we finally viewed low wage laborers as “essential workers.” Our national conscience suddenly awakened. We finally realized how much we depend on the people who serve and deliver our food, stock our shelves, care for our children and elderly, clean our buildings, and take away our garbage.

However, it seems deeply hypocritical that we expect low wage workers to risk their lives, yet are still unwilling to provide a sustainable salary. The current minimum wage falls far short of covering a family’s daily expenses for basic necessities.

And, since most employers only offer watered-down health benefits to its workers, and often none at all to part-time employees, many couldn’t afford to risk their health. The medical expenses alone are enough to set someone deep in debt for years to come.

While these jobs are essential to our country’s daily operations, what incentive is there to return? Why should anyone risk their life for a job that can’t even pay their bills?

Current Minimum Wage Limits

It is important to note that the federal and state governments can set different limits. The Fair Labor Standards Acts puts federal minimum wage at $7.25 an hour, but minimum wage also varies by state.

A quick scroll across the interactive map will show you that many states already have higher minimum wages than the federal government.  Currently, 29 states have their minimum threshold set higher than the federal standard. An additional 16 states have at least matched it. Furthermore, 25 states have voted for additional raises in 2021 rather than waiting for Congress to take charge.

The strongest argument for raising the federal minimum wage is that it is long overdue. In fact, it has not changed since 2009. However, inflation certainly has changed. A lot. Although wages remain the same, the rate of inflation has increased by an astounding 23.94%. The spending power of $100 in 2009 is now equivalent to $123.94. If corporate America and the federal government want to keep people out of poverty, then they need to pay wages that keep up with the annual rate of inflation.

Raising Minimum Wage Lifts People Out of Poverty

Maintaining the Status Quo Perpetuates Poverty

By continuing to maintain the status quo, we are keeping people in poverty. Although many families already live paycheck to paycheck, long absences from work and periods of unemployment due to COVID-19 have pushed people over the poverty line. And as anyone who has been in debt will tell you, it is hard to get ahead once you have fallen behind with your bills.

When you are unable even to meet the lowest standards for the cost of living, social mobility becomes an impossibility. Every extra cent goes towards survival. When you can barely afford to put food on the table or a car to get to work, it becomes impossible to raise yourself out of poverty. It is an endless cycle of strife and struggle.

Important factors for socioeconomic change such as education, savings, and investments aren’t even an option if you can’t afford to keep a roof over your head. Most minimum wage workers are fighting to stay afloat, yet find their finances sunk when faced with an unexpected emergency expense.

As inflation increases and wages remain stagnant, social mobility becomes even more difficult. The wealth gap dividing the rich and the poor grows even wider. By raising the minimum wage, the federal government can help bridge that gap and raise people out of poverty.

The Immediate Benefits of Raising the Minimum Wage

Even the federal government acknowledges that raising the current minimum wage would benefit millions of workers. The Congressional Budget Office conducted a study and determined that raising the minimum wage to $15 ($600 a week) would lift an estimated 900,000 people above the poverty line. Overall, more than 40 million workers – a quarter of America’s workforce – would receive higher wages.

The most immediate and impactful benefit would be giving people more security. With so many Americans facing food insecurities, evictions, and mounting debt, raising the standard would allow some much needed breathing room. The stimulus checks helped Americans get through difficult financial times. But, they hardly scratched the surface for those forced to live on minimum wage.

The Long-Term Benefits of Increasing Minimum Wage

The long-term benefits are even more powerful than the immediate relief it would provide. Raising the federal limit would actually fuel economic growth. When you put money in the hands of people who will use it, you are putting it directly back into the economy. It boosts the purchasing power of those in the lowest tax brackets which causes a ripple effect through the entire economy.

Additionally, it empowers people by giving them more options. It also reduces people’s dependency on federal programs. When you earn a livable wage, there is no need to seek government subsidies since you can afford basic necessities such as food and health care.

Lastly, it puts greater pressure on corporations to properly compensate their employees. It removes the burden from taxpayers to subsidize these multi-billion dollar corporations and forces them to take care of their employees.

Any way you look at it, there is a critical imbalance. We need to start prioritizing those hardworking Americans that keep our economy running. The first step is to pay them fair wages to ensure they can take care of their families. We need to recognize the value of these jobs and respect the dignity of those performing them by properly paying people for their time.

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