Will President Obama’s federal minimum wage increase be helpful or harmful to Americans?

 

Giving what is deserved

 

THOMAS ELNESS

tkelness12@ole.augie.edu

An increase in the minimum wage is long overdue and should be raised to President Obama’s proposed $9 an hour.

An American working 40 hours a week for 52 weeks a year at the current federal minimum wage of $7.25 would only make $15,080 before taxes (40 hours x 52 weeks x $7.25 = $15,080).  With a poverty line at $15,510 for two people, Americans who work 40 hours every single week cannot support themselves and a child.

In 2009, the federal minimum wage increase to $7.25 was the equivalent of $5.30 in 1996 dollars.  Right now, the same $7.25 is equivalent to $4.97 in ’96 dollars.

The real problem boils down to inaccurate misconceptions.  Some will argue unemployment will rise with an increased federal minimum wage. However, past increases and many studies do not tie these two together.

“Mostly what we find … is that the net employment effect of an increase in the minimum wage is zero,” Augustana economics professor Reynold Nesiba said.

Building a strong middle class is crucial to the economic success of the United States.  Money going to families living on a minimum wage would have an immediate positive impact on the economy.  The extra $3,640 a year is enough to pay for an extra 910 gallons of gas, four average house payments, or over half of a year’s worth of groceries for a family of four.

Raising the minimum wage will increase demand in the market immediately.  This would, in effect, lower prices for everyone else in addition to taking strain off of government-aid programs such as SNAP (formally the Food Stamp Program), housing assistance and other forms of welfare assistance.  Not to mention, it would add extra income tax to a struggling federal government.

Politicians conjure up charts and diagrams showing the alleged nasty effects of a minimum wage increase on the economy, but scholars like Nesiba point out the charts’ errors.

“The simple supply and demand model that gets used to show a minimum wage causes unemployment is a deeply flawed, ideologically biased and intentionally misleading way of thinking about the minimum wage,” Nesiba said.

Feeding the wealthiest few more money and expecting it to slip into the hands of the middle class does not and will not work.

The middle class has fallen far behind the top few percentiles in the U.S.   Right now in the U.S., the top 1 percent has 40 percent of the nation’s wealth.  On the other hand, the bottom 80 percent of Americans only hold 7 percent of the nation’s wealth.

I think it’s safe to say the average person would be pretty hard-pressed to defend the “success” of the current system such immense inequality.

It’s time to rebuild the middle class in America.

Giving hard-working Americans an income that is enough to make ends meet is the furthest thing from socialism.  It’s doing the right thing, in addition to helping the economy.

 

 

 

Look at the bigger issues

 

MATTHEW HOUSIAUX

mjhousiaux12@ole.augie.edu

The United States is one large, unholy mess of a country at this point.

That said, the latest development in an attempt at damage control is a proposal by President Obama that would raise the federal minimum wage from $7.25 per hour to $9 per hour. The battle to keep the workers of our country out of poverty has been a constant and, for the most part, successful battle that has recently taken a downswing as partisan congressional squabbling continues to facilitate an economic stagnancy not seen since the oil crisis of the 1970s.

Additionally, the two different agendas of the Democrats and the Republicans have created a culture of welfare dependency among the poor and a culture of borderline gluttonous accruement of wealth and tax evasion among the rich.

So, is raising the minimum wage the solution?

While is sounds like a very pleasant solution, the likely result of raising the minimum wage will mean either unemployment or inflation, neither of which will do anything helpful to solve the problem of getting more Americans out of poverty.

I am tempted to be fatalistic and say that this country is essentially doomed to a slow, but steady downward slide to join the ranks of other fallen world powers in the dustbin of Western civilization.

Pretending for a second that this is not the case, here’s a few suggestions of what might happen to help ease us out of this economic collapse.

First, how about increasing the tax rate on money made on the stock market (a.k.a. capital gains)?

Perhaps the biggest problem in America right now is the fact that so many wealthy people make money on making money instead of making money by making something i.e. a product.

Second, raise the income tax rate on wealthier individuals a reasonable amount for a designated duration of time that will at some point expire just a means for the government to accrue some capital without the worry they will totally “plunder” private treasuries.

Third, provide tax breaks for small business owners and corporations who willingly hire more workers and create more job opportunities.

Fourth, eliminate tax breaks for religious organizations that are not non-profit. A study done by University of Tampa sociology professor Ryan Cragun revealed that the government forfeits almost $71 billion dollars a year by not taxing religious institutions.

Fifth, we need some real, hard-nosed, non-sequestered, spending cuts that everyone can live with.

The last is easier said than done and I would personally vote for cuts in defense spending and other stereotypically liberal things that most of you can probably guess.

However, that does not mean there is no applicability of the suggestions I’ve offered. I would encourage the greatest amount of tact and contemplation when facing a problem this difficult.