A Discussion on the Problems Associated with the Minimum Wage

About this essay

Wage is one of the main issues brought up in the articles we have read and analyzed thus far. Many of them spoke of those that were higher up in the company and how their salary compared to those who were paid minimum wage. Other articles used statistics to support their bias or opinion. Still, all of these articles address the troublesome minimum wage and what we could do, as the public, voters, taxpayers, to fix it. The key issues presented in these articles are if minimum wage is enough to live on and the ways that one might fix the problems associated with minimum wage.

I believe that minimum wage is not enough to live on and that some of the many solutions presented to deal with the problems associated with minimum wage should be combined. Most articles address the problem and try to offer a solution to it. In the following paragraphs I will discuss in depth the main issues and key solutions presented in each article.

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Some of the many issues connected to minimum wage are addressed in “What’s Behind the Huge (and Growing) CEO-Worker Pay Gap,” an article by The Atlantic, Derek Thompson addresses the difference in salary between most CEOs and their typical minimum wage, or low paid, workers. One example of this that was presented in the article is Ron Johnson. Johnson, the “disgraced outgoing CEO of JC Penney,” earned “1,795-times the average wage and benefits” of his store employees (Thompson par. 1). As you can see Johnson had made a lot more than his average employee although he had probably done a lot less physical labor.

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But why is the pay gap so wide? Well one explanation that Thompson offers in the article is that the increase in CEO pay correlates with the slow increase of market wages for the middle- and lower-class workers.

Another idea for the widening gap in CEO-worker pay is mentioned in another article, titled “The Growth of Executive Pay” written by Lucian Bebchuk and Yaniv Grinstein, from Harvard Law School and Cornell University. In the article by The Atlantic, they refer to what Bebchuk and Grinstein said about “bull markets make CEOs fabulously wealthy, and they make shareholders indifferent to their fabulous wealth” (Thompson par. 6). So in a way the wage increases are “commanded” by the bull market and the shareholders look past, because they don’t really care for seeing their wealth. One of the problems that was presented in this article was that minimum wage seems to be correlated with the socioeconomic classes. The problem with this is that minimum wage is so often associated with poverty, which are too separate issues. Both of which should be addressed and resolved separately.

Other articles, not only present solutions, but may also question/support them or those who have came up with them. In an article, “Economists agree: Raising the minimum wage reduces poverty,” Mike Konczal, from the The Washington Post, writes that “They [economists] all tend to think that raising the minimum wage would reduce poverty” (Konczal par. 2). Of course this is not at all correct, minimum wage and poverty may be closely correlated but that does not mean they have a cause and effect relationship. Minimum wage may have some effect on poverty but it obviously is not the only thing that has an effect on poverty levels. Konczal provides an example of to what effect, altering minimum wage would have on the poverty levels within the article by mentioning that “raising the minimum wage 10 percent (say from $7.25 to near $8) would reduce the number of people living in poverty 2.4 percent” (Konczal par. 3).

Here we see that altering and changing minimum wage does have an effect on poverty levels, but it is slight. We see in the article if that minimum wage is raised to ten percent, the people living with, or in, poverty was reduced by two point four percent, a slight payoff for a semi-eventful change. In this article the solution was presented that raising minimum wage reduces poverty and they tried to prove this by providing facts and statistics but they are not that strong.

Other articles suggest a combination of solutions to address the problems associated with minimum wage. In “Who Really Gets the Minimum Wage,” an article written by David Neumark from The Wall Street Journal, David Neumark speaks about this. In the article, Neumark mentions that, “this evidence suggests we should consider alternative policies” (Neumark par. 11). The evidence that Neumark is referring to is the research his graduate student, Sam Lundstrom, conducted using the Current Population Survey from recent years. Lundstrom determined that “if we were to raise the minimum wage to $10.10 nationally, 18% of the benefits of the higher wages (holding employment fixed) would go to poor families” and that actually, “twenty-nine percent would go to families with incomes three times the poverty level or higher” (Neumark par. 8).

Here Neumark is not suggesting that we choose only one solution and stick with but instead I think that Neumark is alluding, or suggesting, to look at all the effects of rushing to solve a problem that we may not fully understand. After looking at all solutions and how they will affect minimum wage and poverty levels we should decide on some of the solutions that will work together the most to combat the problem with minimum wage and it not addressing the reduction in poverty levels directly. He also addresses another solution, called Earned Income Tax Credit, saying that “The Earned Income Tax Credit directly targets low income families, rather than low-wage workers” (Neumark par. 12).

Here Neumark suggests using EITC because it will boost income for poor families and this will allow the program to directly help those that are impoverished instead of just those that are low-wage workers are come from a middle-to high-class family setting. From the rest of his article you could infer that he wants to utilize the Earned Income Tax Credit program in conjunction with other solutions to make sure that the overall program and system really does help those who need it the most and who are working these jobs out of necessity and not just those that are working minimum-wage jobs out of choice.

Although I feel that minimum wage is not enough to live on some other people may oppose this view, saying that minimum wage is enough to live on. Some may say that a good set of budgeting skills will allow you to live comfortably on minimum wage. In an article by Think Progress, Bryce Covert, goes over an experiment that challenges state lawmakers to “live off of a typical budget for a worker who makes the federal minimum wage of $7.25” (Covert par. 1). Covert’s article stated that in this experiment state lawmakers would be allotted five dollars a day for food and nine dollars a day for transportation. The lawmakers were given this exact budget each day and all other factors, like where they worked and lived, were left alone.

Although the experiment results did show that living off minimum wage is a possibility, it showed more so the struggle of trying to make it work. The participants’ eyes were opened to the amount of stress and work goes into living on a budget of that of a minimum wage worker. The research participants had started to open up about how they struggled to make ends meet daily, starting with even the first day of the experiment. Covert writes that, one of the lawmakers, representative Frank Hornstein, had “told CBS Minnesota that it made him take more notice of his costs” (Covert par. 3). Putting these lawmakers and representatives in the shoes of those who make minimum wage served many purposes. The purposes include putting those who have higher paying jobs on a budget that a lot of minimum wage workers have and letting them experience what it is like living on minimum wage, if you could even live on it. The other purpose this article serves is it serves as a sort of motivation for lawmakers, and even voters who may read this article, to help get a higher minimum wage to pass.

Minimum wage is an issue that needs to be addressed in our society. Numerous solutions have been proposed and some have even been tested. I believe that it is important to utilize all ideas and maybe sort out a combination of solutions that would combat problems associated with minimum wage effectively. One thing will remain the same until something is done about minimum wage, living off minimum wage is difficult if even possible for some people. Like poverty, the lowest legal minimum wage, is a socioeconomic problem that should not be a big problem that we have, but we do. Although not directly related, both poverty and minimum wage are correlated, and although that does not mean if you deal with one you solve the other. It does mean that if we find a way to combat one, we may gain knowledge about the other and find an effective solution. Minimum wage is not enough to live off of but we just may be able to combat it if we try to understand it more and look at all the solutions, not separately but as a whole.

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A Discussion on the Problems Associated with the Minimum Wage. (2022, Oct 24). Retrieved from http://studymoose.com/a-discussion-on-the-problems-associated-with-the-minimum-wage-essay

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