Wage Inequality Affects Us All
By Metal Center News Staff
on Feb 16, 2014
Chances are no one reading Metal Center News is working for minimum wage. Chances are Metal Center News readers--owners and operators of metals service centers--pay very few employees minimum wage. So it would be easy to write off President Obama's executive order to raise the minimum hourly to $10.10 for employees of federal contractors as just another political ploy. But the issue of wage inequality in this country is a serious one and merits everyone's thoughtful consideration.
As the president pointed out in his State of the Union address, those at the top of America's economic ladder have climbed to new heights, while wages for the average individual have barely budged. Today's federal minimum wage has buying power 20 percent below levels of 30 years ago.
Conservatives have been trying to make a case against the minimum wage since it was first enacted in 1938 as part of the Fair Labor Standards Act, which set the bar at 25 cents an hour. It has been raised many times since then to the current federal minimum of $7.25. Over 20 states and the District of Columbia have established their own higher minimums. Opponents argue that the free market should be allowed to set wage rates without government interference. A higher artificial minimum causes small businesses to hire fewer workers or cut workers' hours, and thus hurts the very people the law intends to help. Forced to raise wages, some small businesses may fail. All will pass on the additional cost to consumers, worsening inflation. The minimum wage is primarily for part-timers and students anyway, they contend, so it is not meant to be a living wage.
Advocates of a higher minimum wage maintain that it will increase the standard of living for the poorest and most vulnerable in society, who do indeed depend on minimum-wage jobs for full-time employment. It will stimulate the economy by putting more money in the hands of low-income consumers. It will help decrease the cost of social welfare programs and lower crime rates. And since the minimum wage only involves the bottom 6 percent of American workers, the additional cost will not be significant enough to jeopardize job creation or threaten small business.
President Obama hopes to persuade lawmakers to pass the Harkin-Miller bill, which would raise the minimum wage for all working Americans to $10.10 over time and index it to inflation. Given his history with this Congress, chances are slim. The best chance for all of us is a much stronger economy, from top to bottom.