Regardless how they rationalize it, there’s no founding at all to the right’s disposition against raising the minimum wage except, perhaps, envy and venom against the poor. Raising the minimum wage is a more cost-effective way of making government cuts than anything they’ve produced so far; for instance, a recent study by the Economic Policy Institute shows that increasing the minimum wage would help more than it would hurt. For instance, it’d save the taxpayers $7.6 billion per year on social programs.
The study notes that it’s been more than five years since the federal minimum wage was raised to $7.25, and over those five, the value of the minimum wage has dropped by more than 10% as a result of rising prices — a mere drop in the bucket compared to the massive plummet in value it’s undergone over the last forty years. The study notes that despite an increase in productivity over the last 30 years, the federal minimum wage is so laughably inadequate that workers today end up making 25% less in inflation-adjusted terms than people 45 years ago did:
Every year that the minimum wage is not raised, inflation slowly erodes its real (i.e., inflation-adjusted) value, meaning that minimum-wage workers cannot afford to buy as much as they could in previous years. As shown in Figure A, the current minimum wage of $7.25 is worth roughly 25 percent less than the minimum wage in 1968, when it equaled $9.58 in today’s dollars.
Work hard, they say. You’ll get rich, they say. Maybe 45 years ago, when workers were making more money.
The result is this: a full-time, full-year minimum wage worker who has one child will be so fabulously wealthy they won’t even make the federal poverty line.
The study notes that the failure to raise the minimum wage is what’s led to the overall stagnation of wages, and that about half of the workers in the bottom 20% receive public assistance, either as Medicaid, or through programs like the Earned Income Tax Credit (EITC); the Supplemental Nutrition Assistance Program (SNAP); the Low Income Home Energy Assistance Program (LIHEAP); the Supplemental Nutrition Program for Women, Infants, and Children (WIC); Section 8 Housing Choice Voucher Program; or the Temporary Assistance for Needy Families (TANF). These workers, according to the study, receive little over $45 billion in government assistance each year, with roughly half going to workers who make under $10.10 an hour:
Figure C shows each wage decile’s share of all benefit dollars from means-tested income-support programs going to workers or their families. (Note that these figures, and all other dollar values throughout this brief, do not include the dollar value of Medicaid.8) Almost half (48.9 percent) of all income-support dollars received by workers or their families go to those in the bottom two deciles of the wage distribution—again, roughly everyone earning less than $10.10 per hour. These workers receive over $45 billion in income support each year. Over two-thirds (67.5 percent) of all income-support dollars received by workers or their families go to those in the bottom three deciles of wage earners, i.e., workers with wages less than $12.50 per hour.
Thus, the study reaches a logical conclusion: raising the minimum wage to $10.10 per hour would reduce number of people dependent on the government funds, thereby reducing government expenditures by $7.6 billion year, and possibly more, since the estimate is a conservative one.
Raising the minimum wage and providing a little more pittance to the wage slaves of this nation would reduce government spending and take the burden off the taxpayers; who would’ve thought that smart government could accomplish multiple positive things that neither small government nor big government could?