Ian Hildebrand, Contributing Writer

With political movements like Fight for $15 gaining serious traction (both California and New York are enacting gradual minimum wage raises to $15), the country is buzzing with conversation on the topic of the minimum wage: do we need to raise it? Would doing so either be a net benefit for the least privileged among the American people, or cause more harm than good?

I’d like to argue that the typical positions against raising the minimum wage – that is causes unhealthy increases in inflation, and loss of jobs – don’t have legs to stand on. Furthermore, there is a moral case for the minimum wage that we have to reckon with. Before we go on any further, let’s tackle these issues of inflation and job loss.

The premises for the inflation argument is essentially this: if we increase the cost of labor, prices will necessarily increase across the board to account for the cost increase, effectively making the wage increases a wash: nothing of value occurs, and we only have inflation to show for it since everything will now cost more. This looks sound from a theoretical stand-point, but the economy has a much more complex structure than what we see on paper. In his 2014 article, “The Minimum Wage and Inflation,” Arthur Macewan, professor emeritus of economics at UMass-Boston, draws an example from the restaurant industry to clarify. If a restaurant owner merely raises prices proportionally to fully absorb the cost increase, the business will lose customers; they’ll simply make less money than before. Dr. Macewan comes to the conclusion that one way or another, the owner will have to absorb some the costs from profits. Your next thought is most likely, “But Ian, if businesses are going to have to make less money than before off minimum wage labor, won’t they just lay off workers? They won’t be able to afford the wage increases!”

The most eloquent answer I’ve found comes from a blog post from PhD student Benjamin Studebaker entitled, “Misconceptions: Raising the Minimum Wage Does Not Automatically Lead to Inflation.” Studebaker makes the following point: this statement rides on the assumption that companies are paying their workers the largest wage possible. This is inconsistent with the overall goal of just about any business – to maximize profit.

This isn’t necessarily a bad thing. After all, if a business cannot turn a profit, then a business can’t operate, and one needs to be able to make a large enough profit to justify staying in an industry instead of moving to another one (the concept of opportunity cost); however, when a company minimizes its costs, as it’s wont to do when it’s trying to maximize profit, it necessarily tries to push down costs of labor.

So why is this the way business is conducted? The majority of the population are paid above the minimum wage, of course. But there has to be a social paradigm that allows for this to be acceptable – to pay someone an amount for work that cannot provide a dignified life? Our economy – American capitalism, in particular – is often viewed, or sold, as a perfect meritocracy. As long as one is willing to work long and work hard, one can always rise up, escape poverty, and find success.

But in a world of systemic oppression, where one’s race, gender identity, sexuality, age, and disability is cause to discriminate and categorize and deny, how can we suggest that one is given pay solely upon merit? And moreover, when people cannot acquire “merit” with the same ease as others (in the form of education, when there isn’t a level playing field, as it were, how will people ever truly be paid based upon their talent? This is what is commonly called the myth of merit; we operate under the assumption that people only deserve what they can provide for society, when how we determine one’s worth cannot ever possibly be fair.

The minimum wage, its purpose, is to protect the interests of the least privileged, the most downtrodden members of society who don’t have the means to collectively bargain for higher wages. It should not be a foreign concept that a worker should be paid a wage that reflects their dignity as a human being, that will provide for their families, put roofs over their heads, food on their tables, and the basic utilities that will allow them to thrive. If we don’t increase the minimum wage, it will be an injustice against those who are least able to stand up for themselves.


Courtesy of The All Night Images via Creative Commons