Minimum Wage – The Good, Bad and Ugly

As of January 1, the minimum wage went up in these states: Arizona, Colorado, Montana, Ohio, Oregon, Vermont and Washington.

We’re not talking about a large amount, either for the wage or the increase. In Ohio, for example, the minimum wage went up from $7.30/hour to $7.40, and in Arizona it went from $7.25/hour to $7.35/hour. The federal minimum wage is $7.25/hour, and states are free to have a higher minimum wage. Most states simply follow federal guidelines, but many (like Arizona) include annual cost-of-living adjustments or (like Ohio) index their minimum wage to inflation.

No matter how you look at it, the minimum wage is, well, minimal. $7.25/hour translates into $14,500/year and the highest minimum wage in the country – Washington State’s $8.67/hour – amounts to $17,340/year. In either case, my parents could have never raised 6 kids in Pittsburgh on only $17,340 per year.  And that’s only if the earner is working full time, and it’s well-known that most minimum wage jobs are part-time.

President Obama has proposed raising the minimum wage to $8/hour this year, and someeven advocate a “living wage” that would be much higher. Economist Thomas Sowell, on the other hand,  argues that “minimum wage laws in countries around the world protect higher-paid workers from the competition of lower paid workers” and links minimum wage laws to higher unemployment figures, especially for low-skilled workers.

I’m sympathetic to nearly all voices in the endless debates about the minimum wage in this country. It’s hard to see a minimum wage as anything but a government-mandated price control, and just about any economist will tell you that government-mandated price controls make for inefficiencies and skewed prices on a large scale. But I am also a realist, and I know for certain that without a minimum wage, many employers around the country would simply exploit some of the most vulnerable people in our society. Currently, around 35 million people in the United States make the minimum wage, and they deserve some form of legal protection.  Even the most efficient Human Capital Supply Chain still needs their entire Workforce making enough income to take care of their family. 

For more up-to-date news on recruiting and staffing software, follow the Human Capital Supply Chain blog and subscribe to our newsletter.

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