Better Pay Now

We just learned that Rochester is the fifth poorest city in the United States.  The holidays are a time to reflect on the plight of those less fortunate than oneself.  This includes the person on the other side of that cash register as you grab a quick bite while Christmas shopping or attend a holiday party.  Almost 60 percent of U.S. minimum-wage workers are in either food service or sales.  It is no secret that sales clerks at your local Walmart and the staff at your local McDonald’s are low paid workers.  They are often only part-time so the employer doesn’t have to pay insurance and benefits.  Restaurants and retailers like to hire students and retired people because they don’t need insurance and the income is only supplemental so they will work for less than a livable wage.  Many people work in the restaurant industry yet still depend on food stamps and other government subsidies.  Did you know that the inflation-adjusted wages of nonsupervisory workers in the retail trade have fallen almost 30 percent since 1973?

Should we raise the minimum wage?  This is a complicated subject.  Paul Krugman argues “we have a lot of evidence on what happens when you raise the minimum wage.  And the evidence is overwhelmingly positive; hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings.”  “When it comes to the minimum wage, however, we have a number of cases in which a state raised its own minimum wage while a neighboring state did not.  If there were anything to the notion that minimum wage increases have big negative effects on employment, that result should show up in state-to-state comparisons.  It doesn’t.”

Krugman concludes, “A minimum-wage increase would help low-paid workers, with few adverse side effects.  And we’re talking about a lot of people.  Early this year the Economic Policy Institute estimated that an increase in the national minimum wage to $10.10 from its current $7.25 would benefit 30 million workers.  Most would benefit directly, because they are currently earning less than $10.10 an hour, but others would benefit indirectly, because their pay is in effect pegged to the minimum – for example, fast-food store managers who are paid slightly (but only slightly) more than the workers they manage.  In short, raising the minimum wage would help many Americans, and might actually be politically possible.  Let’s give it a try.”

Source:  Better Pay Now, December 1, 2013 New York Times.

Both sides are compelling.  What are your thoughts?

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