Minimum Wage War Continues
NEW YORK ( MainStreet) On December 31, New York State will raise the minimum wage from $7.25 an hour to $8.00. This is the first of three increases that will happen over a span of three years capping the minimum wage out at $9.00 in 2015. Once this increase takes effect, New York will become one of at least 20 states (along with the District of Columbia) with a minimum wage higher than the federal rate. This raise in New York is part of a greater national debate. It is a conversation that hinges on what's best for American companies and the fact that the cost of living is on the rise in light of inflation.
According to the Bureau of Labor Statistics in 2012, there were 75.3 million workers in the United States age 16 and over paid at hourly rates, representing 59% of all wage and salary workers. Among those paid by the hour, 1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 2 million had wages below the federal minimum. Together, these 3.6 million workers with wages at or below the federal minimum made up 4.7% of all hourly paid workers.
Currently, many people who earn the minimum wage are enrolled in government entitlement programs such as welfare, food stamps, and Medicaid. That can be exaggerated in metropolises with a high cost of living.
"HRA administers programs that provide over $30 billion in cash, food stamps and Medicaid benefits for low income New Yorkers," said Carmen Boon from the New York City Human Resources Administration. There are 1,850,432 New Yorkers people enrolled just in Supplemental Nutrition Assistance Program (SNAP).
Programs like SNAP are funded by taxpayers, who are bearing the burden of many of these employees as well as the unemployed. With these figures and facts, raising the minimum wage substantially seems logical. Phillip Wilson, president of the Labor Relations Institute, explained the root of the issue.
"There is the shift of our economy away from manufacturing and into service," he said. "The basic thrust of Big Labor's argument is that every job should at least pay someone enough to get above the poverty line, no matter what that work is valued at by the market. Big Labor's tactic is to try to embarrass and harass employers into raising wages above market rates, and barring that trying to force them to do so through legislation. Creating media and PR events is one of the things unions are very good at. Economics not so much. While this whole effort sounds fair and just, it ignores basic economic realities."
Wilson continued to speak about the economic nuances that inform the wages.
"Making hamburgers or stocking shelves are not very valuable skills," he said. "Forcing businesses to pay for them as if they are has multiple consequences. It is a big cause of outsourcing and technological innovation -- replacing human labor with robots or computers. If you doubled the minimum wage you would see massive shifts toward automated ordering, robotic stocking, self-checkout, etc."