Matt's opinion

Monday, January 01, 2007

Why raising the minimum wage is important

For those of you who don't know, the U.S. House of Representatives recently passed HR 2, which would raise the minimum wage from $5.15/hr to $7.25/hr over a two-year period. I can't emphasize how important this increase is for everyone from full time minimum wage workers trying to support a family to part time teenage workers trying to save for college. Raising the minimum wage will give these workers roughly $4,000 more per year to pay their rent, healthcare, or to pay for tuition at a local community college so they can get a better job.

It's absolutely unconscionable that this wage has not been increased during the past 9 years and even more unconscionable that Republicans are opposing a rise in the minimum wage due to the limited but increased burden on small businesses. It may be true that due to the rise in payroll costs small businesses might be forced to either raise prices or skimp on other benefits for themselves or their employees. However, I think these costs will be compensated for by the increased buying power of workers, who've just gotten their first raise in 9 years, and the increased productivity resulting from employees being able to not have to make as many difficult choices between paying rent, feeding a family, and staying healthy. Of course these difficult choices will never go away as long as someone is forced to work at the lowest legal wage.

I came across an article recently that brings home the importance of helping low wage workers rise from poverty. The article (link below) describes how a middle class woman lost her job and was forced to work for $6.50/hr and try to survive. What's incredible is that this woman was still able to pay the mortgage on her house and most of her bills on such a small salary. Most others making similar wages aren't so lucky. The current federal minimum wage is $5.15/hr and a person working at this wage full time grosses $824/mo and takes home ~$660/mo assuming a 20% tax rate (which is a conservative estimate, Melissa and I are subject to a tax rate of ~30%). How can anyone possibly live on that?

Here in Illinois the current minimum wage was just raised to $7.50/hr with subsequent raises of $0.25/yr planned until 2010. At the current wage, using the same assumptions as before, a worker would come close to taking home $1,000/mo, far more than the current federal minimum wage. While this still isn't anything close to what most would consider a middle class income, when combined with any other income from a second job this could be enough to help lift someone out of poverty and help them to become more self sufficient instead of relying on programs like Welfare and Medicaid.

Article link:
http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/IMake650AnHourAmIPoor.aspx?GT1=8998&wa=wsignin1.0

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