A Too-low Minimum Wage is Costing Us Too Much

Jul 23, 2014

In the United States the federal minimum wage has not been increased since 2007. That’s a problem. We live in a market economy. People “vote” with their dollars. When so much of the population has fewer dollars to signal its wants and needs, the market can’t get it right in providing the goods and services that are genuinely in demand.

So many Americans are in jobs that pay less than $10 per hour. These are jobs with no benefits, for the most part. These workers continue to fall behind when prices rise and they have fewer dollars to spend on the basket of goods and services they must have for their families.

The government often has to step in to support these individuals through federal assistance programs. That’s a cost to the taxpayer. This increases the federal deficit and makes the debt burden we are passing on to younger Americans that much more difficult to manage.

There are conflicting reports about how raising the minimum wage will encourage some employers to reduce payrolls by laying off workers, while others note that the increased take-home pay of these workers will stimulate the economy in increasing consumer demand and generating the need to hire more workers.

The key is that we have a moral obligation — especially in a nation of such wealth and blessings — to help those who want to help themselves. People stuck in minimum wage jobs are already making the effort to improve their lot in life. Raising the minimum wage from the paltry $7.25 an hour to something more in sync with the cost of living is a move that will help them, but also help the economy, and reduce the need for expensive government programs that often wind up wasting more dollars in bureaucratic inefficiencies.