The Call to Increase Minimum Wage

From various countries in the world even down to the United States, The discussion of minimum wage has been a big subject of debate. Low-wage workers find it necessary to raise minimum wage to ensure livable income. The best way to improve the economy of the country to benefit everyone is to change the structure of the economy. Although we cannot necessarily do this by ourselves, making changes to the way the government is ran could help with the economic structure together. This may reduce the need for government assistance, Improve the health and likely hood of people, and decrease employee turnover. Today, the federal minimum wage is $7.25 leaves an adult with two children thousands of dollars below the federal poverty threshold. (Scott. 2019) We believe that we should be able to receive a living wage, in order to provide for our families. The living wage is the amount of income determined to provide a decent standard of living. It should pay for the cost of living in any location. It should also be adjusted to compensate for inflation. The purpose of a living wage is to make sure that all full-time workers have enough money to live above the federal poverty level. The living wage is often confused with the national minimum wage. The U.S. Congress originally created the minimum wage with the intent to provide a living wage. (Amadeo, 2020) There is a difference between the living wage and minimum wage.

After more than a decade with no increase in the federal minimum wage- the longest period in U.S. History- there is now no place in America where a full-time worker making the federal minimum wage can afford the basic essentials. The Raise the Wage Act will restore the value of work in our economy and lift struggling workers and their families out of poverty. (Edlabor.com, 2019) This also means that the average worker who is now living under the poverty level relies on the assistance of the local government to assist with paying for essential living items. These items seem minuscule but they are vital to the typical person’s day-by-day expenses. When working a low paying job and receiving minimum wage and trying to raise a family, is hard enough. The average worker, receives Food stamps or SNAP, Childcare assistance of some sort, and Medicare for health insurance, all services that are provided on the state government level. Most workers who participate in SNAP are in service occupations (e.g., home health aides or cooks), administrative support occupations (e.g., customer service representatives), and sales occupations (e.g., cashiers). (Jennings & Palaciao, 2017)

The Federal minimum wage has been $7.25 since 2009, set forth by the Fair Labor standards Act (FLSA). The act also dictates that workers must receive overtime pay equivalent to 1.5 times the standard wage, for any more than 40 hours worked in a single week. (Debt.org, 2013) This amount is not a great amount, but this amount is the amount most companies have to pay when they are paying employees in the company. The federal minimum wage amount can also vary from state to state because this amount differs from the State minimum wage law. States can pass their own minimum wage laws. These laws can be lower than, equal to or higher than the federal minimum, or states can have no minimum wage laws at all. If a state has no minimum wage law or its minimum wage is lower than the federal law, workers are entitled to the federal wage. (Debt.org, 2013) However, for many workers in certain sectors, wages are so low that even those who work full time must rely heavily on government assistance to make ends meet. This suggests that low pay by many employers—facilitated by weakened or inadequate labor standards, such as a low minimum wage and outdated overtime regulations—is placing unwarranted demands on public resources. (Cooper, 2016)

  For businesses not affiliated with the government, it is not required to pay a living wage, but some employers choose to do so anyway. However, as D.C. gets more expensive to live in, some workers say $14.50 is not enough. (Ann-Simmons, 2019) Beginning July 1, 2019, the minimum wage in the District of Columbia will increase from $13.25 per hour to $14.00 per hour for all workers, regardless of the size of employer. Under the new law, the minimum wage will progressively increase to $15.00 per hour on July 1, 2020, and as of July 1, 2019, the base minimum wage for tipped employees will increase from $3.89 per hour to $4.45. However, if an employee’s hourly tip earnings, added to the base minimum wage do not equal the District’s full minimum wage, the employer must pay the difference. (DOES.Gov, 2019) The average worker that gets paid minimum wage works in a field of food service. Many make money from the tips or the gratuity left from a consumer for services. Some companies tax employees on the tips, because they incorporate the tips into the base pay for the employee. For employees who receive gratuities, the minimum wage will progressively increase to $5.00 by 2020, beginning 2021 to increase the minimum wage during each successive year pursuant to the consumer price index. (DOES.gov, 2019)

The turnover rate when it comes to workers who receive minimum wage is slightly higher for companies who only pay the minimum wage, and differ from a company that pays more hourly. According to the data from tens of thousands of small business employers who work with Gusto across the U.S., employees earning $7.25/hour (the current federal minimum wage) have a 70% chance of leaving within a year, more than double the average turnover rate of 32%. This finding comes alongside the recent passage of the Raise the Wage Act in the U.S. House of Representatives. The hill proposes a gradual increase to the federal minimum wage from $7.25/hour to $15/hour by 2025. Gusto’s data indicates that at $15/hour. Turnover rates drop significantly from 70% (at the current federal minimum wage) down to 41%. (Castillon, 2019) Knowing that the turnover rate can decrease depending on the company and how long someone stays with a company, can also be a clear indication of how much an employer is paying the employee.

Living in the United States is a great opportunity that we are afforded, but finding a job that will help us to be able to live the life we want is harder than most can actually believe it is to do. We all know that the cost of living rises each year, and it does not often affect us. The average person lives paycheck to paycheck, just to live comfortably and even that is not the case. We say living paycheck to paycheck and that just means they work for one paycheck and use it to offset bills and rent/mortgage and have just barely enough to last until we get the next paycheck, which is often two weeks from the first. Although working 40 hours, does not mean you make enough to afford anything, the average worker has to put in more hours than that just to make ends meet. In order to afford the average two-bedroom apartment in the nation’s capital, the average worker would need to make $32.02 an hour according to the National Low Income Housing Coalitions fact sheet. This is calculated as making a minimum wage of $14/hr. and each week working on average of 80 hours to afford a modest 1-bedroom rental home at fair market rent. (NLIHC, 2019)

A 2012 study by the National Low Income Housing Coalition looked at the discrepancy between earnings and housing costs. It recorded how many hours a minimum wage employee would have to work each week to be able to afford a two-bedroom home with standard rent. The study assumed that 30 percent of an individual’s income would go towards housing. The study found that in every stare an individual would have to work at least 63 hours a week at minimum wage to afford rent. (Debt.gov, 2019) This means that the average worker who works under 20 hours and is just barely making enough to live anywhere. There are still talks of increasing the minimum wage to a livable wage to ensure we are living above the poverty Line. Senator Bernie sanders said,” We need to raise the minimum wage to $15 an hour. Together we are going to increase the minimum wage to a living wage. And we are also going to establish equal pay for women.” Sanders also states,” While the housing market may have recovered for many, we are nonetheless experiencing an affordable housing crisis, especially for very low-income families. In America today, nearly 11 million families pay more than half of their limited incomes toward rent and utilities. That leaves precious little for other essentials.”(Gibson, 2018)

We, as a country are putting our people at harm by having unhealthy foods; like chips, sodas, cookies and fast food available at a cheap cost. If you want to by a salad from a fast food restaurant that cost can run you on average $5-8 dollars on the other hand you can get three burgers for half that cost. So what is a family of four to do when they have to pay bills that is more than what they make in a yearly salary? The final report of the World Health Organization Commission on Social Determinants of Health and the Centers for Disease Control and Prevention (CDC) Health Disparities and Inequalities Report identified income as a key factor influencing the health outcomes of individuals, families, and communities. (WHO, 2011) Studies have shown that by rising minimum wage can provide a better out come to try to improve the overall health of people. According to the latest information from the Kaiser Family Foundation, individuals with low incomes disproportionately experience adverse health outcomes, including higher rates of chronic illness and disability and lower life expediencies, because wages directly affect a person’s ability to access resources such as healthy foods. (NCHS, 2014).

In conclusion, Minimum wage is primarily just that, a minimum amount of money paid to employees for wages as part of an agreement for employment. This amount is not a livable wage, because that amount is a different amount. Most states have their own state minimum they pay each worker.  The average employee relies on the assistance of the state government to help offset any money needed to help them stay afloat. Whether they are receiving Food Stamps, Rental Assistance, Daycare assistance or Medical assistance the average person who is paid minimum wage relies on this assistance just to help ease the stress of not being able to afford the minor necessities. Although minimum wage is a federally mandated amount, we know this amount has not increased or changed in over a decade. However, the efforts of the House to increase the pay of minimum wage to help alleviate workers making or living under the poverty line to make the living wage and the minimum wage something we can live with. We are still waiting on this to happen and until then most states will continue to do what they can to ensure workers are making a decent wage.

References

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15. Matthew Castillon, data scientist at Gusto. '70% of Workers Quit at Current $7.25 Federal Minimum Wage in 'brutal' Turnover Cycle.' CNBC, 7 June 2019, www.cnbc.com/2019/09/25/70percent-of-workers-are-likely-to-quit-at-current-federal-minimum-wage.html.
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