Who Benefits From a Higher Minimum Wage?
Like many people in the US, I’m sure that you believe the stereotype that only teenagers will benefit from a hike in the national minimum wage, but that isn’t the case.
Nationally, the Economic Policy Institute (EPI) calculates that 1 out of every five veterans who are employed in the United States will benefit from a higher minimum wage. That is 1.8 million veterans in the country would benefit from a wage increase, 66% of them are over the age of 40, and 69% of them work full-time. (source).
The EPI claims that the average low-wage worker is responsible for 51% of their family’s income and nearly one in five children (19%) has a parent who would be helped by an increase in the minimum wage.
The average age of a minimum wage worker is actually 35 years old, not a teenager. In fact, 89% of the nation’s minimum wage workers are 20 years old or older, with 37% being 40 years old or older, and on average they earn more than half of their family’s total income.
All this equates to around $15k a year, which is $4K below the national poverty line for a mother with two kids.
1,272,000 people working in Virginia would benefit from raising the minimum wage. 1,167,000 adults ages 20 and older; 774,000 are full-time workers; 751,000 are women; and 620,000 workers are of color.
But raising the minimum wage is a double-edged sword. We already know that the price of goods will rise due to raising the minimum wage. But everyone who is making minimum wage, they are likely to be eligible for Government assistance, like Food Stamps (SNAP), WIC, and similar programs. These programs cost American taxpayers billions. In 2020, the total cost of the U.S. Supplemental Nutrition Assistance Program (SNAP) was around 79.22 billion U.S. dollars, which is about 2% of the Federal budget.
Whatever path the Government takes, it will not be an easy path for Americans, we either pay for it in taxes or pay for it in goods.
I’m all for raising the minimum wage, but it will most certainly hurt. However, our young Americans need to understand that a minimum wage job, isn’t what you should strive for. You aren’t going to be able to afford a luxury apartment, Gucci and Prada, and the nice sports car all on minimum wage. And flipping burgers shouldn’t be the top of the ladder for you unless you are going to go into restaurant management
Price of Goods
The one thing that everyone seems to forget is the increase in the price of goods when we raise the minimum wage.
Let’s raise the minimum wage $1.00, and see how that caused the price of goods to increase. You are at McDonald’s and you are purchasing a large French fry which normally costs $4.00. Now let’s follow the birth of that french fry.
The farmer normally gets paid $5.00 a pound (I’m totally making the prices up) for potatoes. He normally pays $4.00 a gallon for off-road diesel for his tractor and he has five people who make the federally mandated minimum wage, which is now $10.00 an hour, up from $9.00. On an average eight-hour day, the farmer is paying $40.00 more per day, just for his labor (5 employees x $1.00 increase x 8 hours a day). **In this example, the farmer is able to process all the potatoes in one day
The cost of diesel is now $4.50 a gallon, because the manufacturers had to pay their employees more and pay more to transport the gas to the gas station, plus the gas station had to add a little money to cover the increased cost of their employees and overhead (overhead is the cost of things like electricity, water, sewer, the building, the cost of advertising and so on). The farmer uses 100 gallons of diesel to dig up the potatoes. That is another $50 out of the farmer’s pocket.
The farmer pays someone to haul the potatoes to the market, which is normally $200, but the hauling company had to increase their fee because they have to pay their drivers more and they have to pay an increase in fuel. It is now $250.00 to haul, which is a $50 increase that comes out of the farmer’s pocket.
We are now at $140.00 out of the farmer’s pocket just for one day’s work processing and taking his potatoes to the market.
Now, let’s go to McDonald’s, which has to pay extra money out of payroll for each employee. They also have to pay extra money for the fryer oil, the electricity, the container that the fries are in when you eat them, and so on.
There is no logical way that the increase in minimum wage doesn’t make prices increase. None of the above accounts for things like insurance and taxes. Nor does it count for all the price gouging that will happen. If we start paying people $2.00 more an hour. Suddenly, the rent on the average apartment is increased as the owner is money-hungry, and a couple of other landlords see the increase so they increase their rent knowing that they can get away with it. Before long most all the local apartment buildings have all increased their rent.
I’m for paying people more money if they are worth the increase. I’m not for giving money to people who don’t work well. For me, it is the same as tipping. I will tip for good service, period.
Sources:
https://www.nationalpriorities.org/blog/2014/08/26/raising-federal-minimum-wage-good-working-families-economy-federal-budget/
https://www.epi.org/publication/raising-federal-minimum-wage-to-1010/
Welcome to the Average Joe Weekly blog. This is basically my place on the web where I can help spread some of the knowledge that I have accumulated over the years. I served 10+ years in the Marine Corps on Active Duty, but that was some 25 years ago.
