Tuesday, September 3, 2013

An Argument for Conservative Support of the Minimum Wage Increase

The Democrats and South Dakota Labor Unions have officially launched the drive to Raise the Wage in South Dakota.  The kick off drive in Sioux Falls saw about 100 people and as Mark Anderson with the South Dakota State Federation of Labor stated that the timing was perfect as was the weather for the day:
"I think it's appropriate that we started it over the Labor Day weekend, which is actually the weekend when we honor the achievements of American workers," he said. "If Americans are working hard, they ought to earn a living doing it."
 A lot of Republicans have some concerns about an increase of the minimum wage.  I wanted to share some reasons why a good fiscal conservative can get behind the increase to the minimum wage.  The first reason is that it will help decrease the need to support business and decrease the level of subsidies paid out in the form of welfare benefits:

No one earning the current minimum wage of about $15,000 per year can aspire to live decently, much less raise a family. As a result, almost all workers subsisting on those low earnings need panoply of taxpayer-supported benefits, including the earned income tax credit,food stamps, Medicaid or housing subsidies. According to the Congressional Budget Office, the federal government spent $316 billion on programs designed to help the poor in 2012. 
That means the current $7.25 minimum wage forces taxpayers to subsidize Wal-Mart Stores Inc. (WMT) and other large employers, effectively socializing their labor costs. This is great for Wal-Mart and its shareholders, but terrible for America. It is both unjust and inefficient. 
A higher minimum wage would also make low-income families less dependent on government programs: The CBO report shows that the federal government gives about $8,800 in annual assistance to the lowest-income households but only $4,000 to households earning $35,500, which would be about the level of earnings of a worker making $15 an hour.
While this article from Bloomberg argues for an increase to $15 an hour, but the basic idea is true in South Dakota's case.  Increasing the minimum wage will decrease the number of people that currently use welfare support to off-set the needs to live.  

This is becoming a huge problem post-recession and without an increase to the minimum-wage the need for welfare assistance will only increase, but there is an easy solution.

The 2008 economic collapse and the recent recession cost America decent middle-class jobs. The cost has proved steep and lasting. Most job growth now —  and six in 10 jobs expected to be added over the next decade — are in low-wage fields. 
So as we look back over the years since the Fair Labor Standards Act passed, and compare the wage and job quality erosion for lower income workers to the good fortune of the wealthiest — we should be ashamed. U.S. income inequality is greater today than in any other developed nation on earth and exceeds that of many developing countries. Worse, the Congressional Budget Office projects U.S. income inequality will continue to grow through at least 2034.
Fortunately, the solution to this part of the wage crisis is simple: Fix the minimum wage. Raise it, boost the guaranteed rate for tipped workers (frozen at a scandalous $2.13 since 1991), and index the overall wage to the cost of living. 
So there you go.  If you want to follow a more conservative path of reducing dependency on welfare, raise the minimum wage.  It is good for the economy, it is good for the tax payer, and it is good for the vast majority of businesses.  I will let an opinion piece in the Wall Street Journal sum it up for you:
The low wages provided by large, profitable corporations don't harm only minimum-wage workers. They also harm taxpayers and many small-business owners who are already paying more than minimum wage in one simple way: through our taxes. 
Corporations pay their workers such low wages that the workers can't afford to buy the food, pay the rent, or get the health care they need. Consequently, these employees increasingly turn to the taxpayer-funded government safety net via food stamps, Medicaid, the earned income tax credit and housing-assistance programs. Taxpayers end up footing the bill for the unconscionably low wages paid by profitable corporations. 
Wal-Mart, which grossed $318 billion in the U.S. last year, provides its workers with technical advice about how to apply for this public assistance. For responsible businesses to subsidize the low wages of their larger competitors is a complete perversion of capitalism. 
Stop the perversion of capitalism and support the increase in the minimum wage. 

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