Should the minimum wage be increased from its current rate of $7.25 per hour? In a recent Gallup Poll, 76 percent said yes; only 22 percent said no. But hold on. Did you know that a person earning $7.25 per hour can make $63,336 per year? There’s just one caveat. He must work every hour of every day – all year.
Let’s put the minimum wage in context. It has not been raised for six years. If minimum wage had been adjusted for inflation since 1968, it would be $10.90 today. And a person working 40 hours per week will make just $15,080 a year on minimum wage. While some, like Bernie Sanders, are calling for a hike to $15, with a more modest gain as suggested by President Obama ($10.10 per hour), the salary would jump to $21,008. Adding support, Forbes Magazine says such a raise would not lead to the predicted layoffs lamented by the opposition.
The argument against any raise goes like this. There are only 1.3 million who work for minimum wage, and they are almost all part-time workers, mostly in high school or college. Further, we know that the last time the minimum wage went up, in 2009, the jobless rate for workers between age 16 and 19 jumped from 16 percent to 26 percent. Small business did, in fact, lay off workers in order to not lose money.
Good arguments can be made on either side. I have two suggestions.
1. Let the states decide. There are two huge problems with any national minimum wage. First, it limits competition. By letting each state decide its own rate, competition, a foundation of capitalism, ensues. Let the more liberal states that want a $15 wage (Oregon, California) do their thing, while the more conservative states set their rate between $7 and $10. Then theory will become reality.
The other problem with any national minimum wage is that it doesn’t take into consideration cost of living. It is much, much cheaper to live in Texas than California. $7.25 goes a lot further in most states in the South than it does in New England. So, to be consistent, a $7.25 wage in South Carolina, for example, would need to be more like $12-15 in New York to put them on an even playing field.
2. Just work harder. I remember my dad making $30,000 one year and being grateful for it. So you minimum wage workers, you can make $63,336 per year if you want to. Just work 24 hours a day, seven days a week, 52 weeks a year. It’s not that difficult!
Comedian Chris Rock once said on Saturday Night Live, “You know what it means when someone pays you the minimum wage? You know what your boss is trying to say? He is saying, ‘Hey, if I could pay you less, I would, but it’s against the law.'”
Minimum wage was put in place during the Great Depression, in 1938. It was set at 25 cents per hour. When adjusted for inflation, that would be $4.19 today. So be grateful, minimum wage workers. The great thing about America can be summed up in one word – freedom. At $7.25 per hour, you can make anywhere from $15,080 to $63,336 per year. It just depends on how many hours you want to work.