Minimum Wage

Forewarning: This has the potential to be controversial so if you don't like hearing opinions that don't adhere to your own, you might want to stop reading.

If you want the TL:DR (too long, didn't read), minimum wage in the US is grossly under what it needs to be and I have yet to find a valid, logical point in favor of not significantly raising the minimum wage.

I have almost always felt that minimum wage in the US was insultingly low and now that I have lived and gotten paid in a place where it is justifiably high, I'd say I have the qualifications to speak on the issue.  The easiest way to lay this discussion out is to simply provide some arguments I've found online/heard in person against raising the minimum wage and disputing them.

For some background info, the national minimum wage in Australia is $17.29 per hour.  The federal minimum wage in the United States is $7.25 per hour.  On the most basic level, this means people in Australia get paid roughly 2.4 times the amount of people in the US per hour.

A few arguments opposing raising the minimum wage:

It Would Result In Job Loss

What a good argument to start with.  First off, this has been proven not true.  The reason being, if people have more money to spend, they're going to spend it.  With more money being spent, more people are needed to provide the higher demand for goods and services, thus potentially even increasing jobs [I address people spending more money a bit later].

It Would Hurt Low-Skilled/Young Workers

The argument here is that with a higher minimum wage, younger people will not get hired since they are less experienced and managers will not want to pay them high wages.  Once again, Australia has the perfect solution:  vary pay rates based on age.  In Australia, everyone over 21 gets paid at least the minimum wage and those younger get paid less depending on how old they are.  This actually makes hiring young people more appealing because businesses don't have to pay them as much.  

This model also rewards people who do have experience.  A business can hire a low skilled worker with little to no work history and not pay them as high or they can spend some more money on hiring someone who has more knowledge.  It's sort of like buying a product.  You can spend less money and get a lower quality product or spend a little more and get something better.  Comparing hiring people to buying products probably isn't the best analogy but hopefully you get what I'm trying to say.

It Would Have Little Effect On Reducing Poverty

This can't seriously be an argument.  Since this is my blog, I'm going to use myself as an example.  I got paid well above the national minimum wage at the last job I had in the US, earning $10.25/hour (Oregon minimum wage is $9.25/hour).  Let's say I work a 30 hour week.  After taxes, my average paycheck was around $540 for 2 weeks (about 60 hours) work. Looking at rent prices in Portland, the average apartment is $1450 for a 2 bedroom, or $725 per person per month.  I got 2 paychecks per month totaling around $1080.  My student loan payments per month are around $230.  Living off a higher than minimum wage rate, after paying loans and rent, I would have $125 per month to pay for things like utility bills and food.  $125 for an entire month.   That is insane.  And this is coming from a single person who doesn't have to support anyone, doesn't own a car, and is still able to be on my parents insurance (don't even get me started on healthcare costs).  Think about someone who has another person they need to financially support.  I honestly have no idea how they would do it.

Now let's look at the same situation but going off minimum wage in Australia.  Because I know it might get brought up, I did the AUD to USD conversions to prove that it's still substantially more getting paid even in a weak foreign currency (just imagine getting paid $17.29 in USD).  Using the same scenario as above, a paycheck for 2 weeks worth of work after taxes is roughly $1040.  That brings the monthly income to $2080 ($1558.75 USD). After rent and loan payments, that would leave me with $1125 ($843 USD) in disposable income.  $1125 ($843 USD) versus $125.  If someone can explain to me how having $1000 (~$750 USD) more per month would have little effect on reducing poverty, I would love to hear it.  Not only could it help get people out of poverty, they should also be able to build a savings.

It May Result In Higher Prices For Consumers

Well yeah, sure, there's really no arguing this one.  Of course prices will likely go up (although there's a great argument that it will hardly be noticeable due to a savings in high staff turnover costs).  Australia has one of the highest costs of living in the world.  That said, when you're making about $140 for an 8 hour shift as opposed to $58, higher prices don't really matter.  Yes, the McDonald's $1 menu will likely become the $2 and you will have to pay a little bit more when you go shopping.  When you get paid so much money this doesn't matter!  I still get sticker shock getting groceries in Australia but then I look at how much is left in my account and instantly forget about it.  In the US, the service industry, more specifically waitresses/waiters, gets brought up a lot because of tipping practises.  With a higher minimum wage, tipping will no longer be necessary thus potentially reducing the overall costs of things like eating out to the consumer.

Flipping burgers doesn't deserve to get paid more

Okay, deep breaths.  This could be a really long and complex answer so I'll try and condense. Let's start with people saying "it's not a real job."  If you genuinely think this, you have never worked in the service/food industry.  These people deal with way more than you likely do sitting in your office all day and earn a fraction of the pay.  And then let's get into what a "real job" is.  I'm guessing the thinking of a real job is one where you get paid salary.  But how does one get a salaried job?  In this day and age, the main way is to get a bachelors degree.  A bachelor's at an in-state college costs, on average, $25,000 in the US per year. For a 4 year degree, that's $100,000.  Good luck finding the money for that if you aren't fortunate enough to have a family at least in the middle class.  Yes, it can be done, but it is by no means easy (I won't even get started on the non-financial aspects of attending university with having a family considered working class). Therefor, for some people, it's unrealistic to assume they can get one of these "real jobs."  If you use this argument, you're basically saying you don't deserve to have a decent living wage because you couldn't go to university for one reason or another.  That actually makes me feel a little sick.

Since I just mentioned it, let's talk about college degrees for a second.  Earning a bachelor's nowadays is essentially like getting your diploma in the past; it doesn't mean much since everyone is getting one.  Out of all of my friends from both high school and uni, I believe maybe 2 got "real jobs" right out of school.  The rest of us got low paying work just so we could afford to begin to pay off student loans and had to move back in with parents (I could also talk about loan repayments in Australia vs. the US but won't).  Yes, the majority of my friends would have loved to get a "real job" but it's not that easy. Entry level positions, jobs designed to get one into an industry, now require 2-3 years experience.  How is it possible to get 2-3 years experience for an entry level job if you can't get a job to earn it?  According to that logic, it is virtually impossible to be qualified for an entry level position.

That was a bit of a tangent from the topic at hand but basically those people who "flip burgers" could easily have a university degree but are unable to get other jobs for a number of reasons.  In fact, about 37% of minimum wage workers hold university degrees. 

And finally, if you think people who flip burgers don't deserve to be paid more, do it yourself.

Small business will go out of business

Seriously?  If you're a business owner and your business model is to pay your staff as little as possible, you need to reconsider your thinking.  Your employees are the ones allowing you to run a business.  Without them, you have no business.  Also, the only people I could find arguing this are CEOs of massive corporations.  In fact, smaller businesses tend to already pay their employees more than minimum wage anyway.


One of the only potential downsides I can see to having such a high minimum wage is it seems some people don't manage their money as well.  I've seen a lot of people here spend a lot of money very quickly because they can make it back just as fast.  That said, as I pointed out in the first point, it's good people are spending more because it helps support jobs.  Also, I've heard from multiple people around my age here in Australia they are thinking about buying their first homes fairly soon.  Doing that at my age, let alone any age, on a US wage is pretty much impossible.

Let me know your thoughts and have a good week.

That's all for now.  Bye.