Minimum Waged Raised to $15 Per Hour: Economic Causes of Poverty Left Unaddressed

At the center of efforts to raise minimum wage to $15 per hour in places like New York, DC, and Settle is the desire for economic justice.  Focusing on fast food workers as New York is doing, fast food restaurants have embraced an assembly-line business model that has undermined the wages of restaurant workers for decades.  Although most fast food jobs are not considered lifelong careers capable of supporting a family, their low-wage business model hinders the creation of living wage restaurant jobs, henceforth the justice in raising minimum wage for fast food restaurant.

To boot, minimum wage was once a living wage and $15 per hour is now a living wage, so it makes sense from the perspective of workers to raise minimum wage to $15 per hour.  Of course, New York’s decision to focus solely on fast food restaurants across the State is likely a terrible mistake.  Not only does it neglect those stuck in the minimum wage trap throughout the rest of the service sector and puts a disproportionate burden on fast food corporations that is not shared by other corporations, it distorts the economics of poor communities, which will hurt businesses in those communities that cannot compete by raising their wages and prices.  

At issue when discussing minimum wage, or near-minimum wage, jobs is the inability off too many people to move beyond those positions.  Raising the minimum wage to $15 per hour helps address these fundamental issues.  Unfortunately, the inability of individuals to move beyond minimum wage work is only one symptom of our diseased economy.  When discussing poverty and the increasing failure of the US economy to provide for the needs of Americans, the notions of income inequality, economic disparity, and the narrowing of the wealth distribution curve are used to discuss the impact on workers.  This means local businesses are seeing less revenue and profit, which limits their capacity to pay their workers more.

Driving this degenerative dynamic is a myriad of bad government policies, not too low of a minimum wage.  Starting with globalization, the national economy should be built on servicing the needs of its People with excess production exported to other nations.  Through the embrace of free trade policies where the taxation of local production increases the competitive edge of tax-free imported goods and creates a lower bidder economy where demand for increased wages can be avoided to the point necessities can no longer be locally produced, the world economy has become over-reliant on exports.  Because everyone relies on the same goods, they rely on the same set of raw goods/commodities instead of locally plentiful goods, thus limited global supplies are sure to translate into increased prices at some point as we see with goods like oil.

Aside from driving production out of the US by making foreign goods temporarily cheaper through a lack of taxation, encouraging the over-reliance of a narrow set of limited commodities like oil, and catering to global economic concerns, bad internal policies and practices also hurt workers.  In America, the capital gains tax favors financial capital over labor and intellectual capital.  There has also been a tendency to undermine representative groups like unions to the point workers no longer have the leverage they need to balance worker interests with employer interests.  In addition, regulations and government expenditures are too often geared toward special interests, thus they are inefficient and ripe with corruption.

Unfortunately, all of these and other issues must be addressed before our economy will start distributing wealth in an efficient manner.  Instead, politicians take the easy way out and push for an artificial increase in minimum wage.  At this point, an increased minimum only makes the American economy an unattractive environment for businesses without addressing the root causes of increasing economic disparity.  Instead of embracing this haphazard socialist approach to achieving a living wage, populous capitalism geared toward balancing the interests of all Americans must be embraced.  The minimum wage is not the problem; it is the inability of the majority of people to work their way up to a living wage in a reasonable timeframe while having the opportunity through stable, viable finances to grow beyond an entry level Middle Class lifestyle.