Raising the Minimum Wage: a Clash of Values, Economics, and Innovation

Shamar El-Shabazz works at a Burger King in Delaware for the state minimum wage of $8.25 per hour. At 50 years old, he lives in a one-bedroom apartment with his daughter and wife, who cannot work due to a medical condition. Shamar had previously worked for Cease Violence, a non-profit organization, but lost that job when funding ran out. “I’m trying to survive as best as I can without getting into any trouble,” said Shamar in an interview with USA Today. “Every month, I get into more debt — I’m in the red with my rent, I’m in the red with my gas and electric. I had to cut cable because I couldn’t afford it. I just don’t want to live like this,” he added.

There are 4.8 million workers in the United States who earn the same income as Shamar or lower. At the federal minimum wage of $7.25 per hour, these workers make around $15,080 per year, placing them below the federal poverty line as families of two or more. Many analysts agree that the current minimum wage is simply “not livable,” barely covering expenses such as shelter, food, taxes, and utilities. As Shamar suggests, debt is inevitable, and struggling to make ends meet on a daily basis is the reality for most of these workers. The Alliance for a Just Society estimates that a living wage requires more than $14 per hour in every state.

After years of congressional gridlock, a record number of states have started taking action to raise the minimum wage, dollar by dollar. At a minimum wage of $10 per hour, California offers the highest minimum wage to its workers, while Arkansas, Georgia, Minnesota, and Wyoming continue to maintain the federal minimum of $7.25 an hour. Currently under national debate, the “Fight for 15” movement advocates for a national minimum wage of $15 per hour. The proposed Fair Wage Act of 2016 would legalize this proposal, pushing the wage up by a dollar a year until it reaches $15 in 2021.

Advocates for the law argue that the wage would combat the ever-widening income gap and raise the standard of living for millions of Americans. Rather than struggling to pay for food, medicine, and other basic necessities, people would have more to spend on clothing, local groceries, and secondary education, thus stimulating economic growth and stability.

“It’s just unfortunate that Delaware doesn’t acknowledge the fact that $8.25 just doesn’t cut it…I believe that’s why some people don’t want to work. They would rather sell drugs and commit crime in order to make a real living,” Shamar said. Shamar’s words are backed by hard data; according to a recent study on Market Wages and Youth Crime, there is a strong relationship between wage levels and criminal behavior.

Jeffrey Grogger, a National Bureau of Economic Research faculty fellow, concluded in the study that “Young men are quite responsive to price incentives,” and that a 10 percent increase in wages would reduce youth participation in crime by roughly 6 to 9 percent. A $15 minimum wage would constitute an increase of 106 percent from the current wage. If Grogger’s prediction holds true, this would mean a 60-90 percent reduction of youth participation in crime.

Opponents argue that “unnaturally” raising wages would drive down demand for workers, thus leading to employment cuts nationwide.  This issue has already been addressed, however, in myriad peer-reviewed studies, and many have found that changes in the minimum wage have little to no impact on employment.

Another popular argument against the wage predicts that companies will be driven to replace minimum wage workers with increased automation in order to continue to make soaring profits. Current technology includes kiosk and tablet-based ordering, while Persona Pizzeria’s vice president Harold Miller predicts that drone delivery systems will replace delivery workers.

At the federal minimum wage of $7.25 per hour, these workers make around $15,080 per year, placing them below the federal poverty line as families of two or more.

However, there is value in a human touch. People do not necessarily go to a restaurant in order to receive their food from robots. “We’re selling hamburgers, shakes, and fries, and customers want to talk to somebody and say, ‘Here’s how I want it,’” said Andy Wiederhorn, chief executive of Fatburger. “I think in the hospitality industry, to assume that technology will take the place of workers is a false assumption.”

One of the angriest responses to the “Fight for 15” movement comes from those who currently earn close to $15 an hour — paramedics, police officers, firefighters, and others. Many argue that flipping burgers and working the cash register requires minimal skill and thus deserves a pittance paycheck. This kind of argument assumes minimum wage workers are “lazy” and could go out and get a higher paying job if only they worked “hard enough.” But the value we place on certain professions over others is subjective. Despite the fact that many customer service jobs simply involve meeting and greeting customers, answering phone calls, and scheduling appointments (receptions and hosts, among others), these workers are considered much more respectable than fast food employees, who essentially perform a variation of these duties. Despite the fact that these workers are necessary to a functional society, we de-value their labor to the point that that some people don’t even believe this sector should earn a livable wage. One can certainly argue that flipping burgers may not require a lot of skill, but at the end of the day, we absolutely need the work to be done, which holds value in and of itself.

These individuals are not adolescents or entry-level workers — half of minimum wage workers are older than 30, and the average age is 35. In an ideal universe, these workers would start out making a small wage and then move up the ladder, climbing from manual worker to branch manager to franchise owner, as the fast food industry likes to purport — but the fact remains that only 2.2 percent of fast food jobs are managerial, professional, or technical occupations. The National Employment Law Project’s report “Going Nowhere Fast” found that for every 293 McDonald’s employees, there is only 1 franchise owner. Most minimum wage workers will not climb up the metaphorical ladder simply because the positions aren’t available. Another study published in the Monthly Labor Review found that upward earnings mobility does exist — for those who work full time, remain in good health, and receive more education. The picture is quite the opposite for those who are older, less educated, and African American.

For every argument against raising the minimum wage, the fact remains that every human being deserves to get his or her basic needs met. Currently there are 4.8 million workers who are barely able to cover their minimal expenses. They work at least 8 hours every day to provide us with cleaning services, meals, childcare, and security, and they deserve the right to live comfortably for their work. Although a raise in minimum wage may impose a few negative consequences — we don’t live in a perfect world — it is at the very least better than our current situation. As Shamar himself said, “Why not give us the opportunity to make a decent living?”