Raising the federal minimum wage to nine dollars an hour may help temporarily alleviate the financial burdens felt by the growing poor class; however, doing so will not solve poverty. In fact, it will drive inflation while squeezing employers to the point they are far less likely to offer experienced and exemplary workers higher wages. Instead of addressing the growing wealth gap between the very rich and everyone else, simply raising the minimum wage will stifle the ability of the working class to pursue middle class wages.
Globalization means American workers must compete against workers in countries where a “living wage” translates into a much, much smaller sum. This is often coupled with lower overhead thanks to lower regulatory standards and tax burdens. By raising the minimum wage for all workers, employers, who are competing in the global market, must lower the maximum wage for everyone as well. This leads to wage stagnation. Wage and income stagnation are, in fact, the real issues driving American workers into poverty. The only way government can deal with this conundrum is by seeking policies that give Americans greater leverage at the negotiating table, which also must be reopened, so our capitalist system can cope with the need to provide workers with growing wages while addressing the wealth distribution problem.
Government must first empower American workers by reasserting our economic sovereignty. This requires, in part, major changes to our tariff and tax system. “Free Trade” means taxing American goods and not taxing already cheaper foreign goods. “Free Trade” can offer American consumers benefits, but the costs to Americans workers need to be better understood, thus our “Free Trade” agreements need renegotiated to maximize the benefit for our foreign partners and ourselves. In terms of taxation, any distortions created by taxing capital gains, for example, at lower rates than earned income, royalties for innovations, dividends, etc. need to be addressed; otherwise, wealth will continue to be valued higher than labor and innovation, thereby offering the wealthy far more, far greater opportunities to expand their assets . Meanwhile, our government must start properly regulating our economy by minimizing the cost of regulation and beginning to regulate issues that have gone unaddressed. These include labor and environmental issues where standards for working conditions and wages have been violated, such as low wage independent contractors.
Quite frankly, there are a whole host of economic issues that need to be addressed before increasing poverty in the US and the rest of the world can be stemmed. Raising the federal minimum wage and bolstering the social safety net will not solve the problem of poverty; doing so can only alleviate it. That said, ignoring economic disparity and hoping the economy will eventually serve the needs of the poor and/or the majority of the population is foolish as the current rules of our economy drive the widening wealth gap and poverty.
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