Meadville Tribune

Opinion

January 21, 2014

Raising minimum wage is the moral high ground and smart business

I think that the minimum wage for adults should be increased to the level of a living wage. Hearing that utterance from me might cause some of you to think I have gone soft in the head with increasing age, but please be assured that those who know me will vouch that I am as hardheaded as ever. To be precise, I believe the adjective they use is thickskulled, but we won’t argue semantics.

An adult capable of living independently and who works full-time should be paid a sufficient wage to be able to afford a safe, modest place to live; a nutritious and sufficient diet; adequate health care to maintain his health; and a reliable means of commuting to and from work. And he shouldn’t need assistance programs to achieve those modest expectations. Well-fed, rested, healthy employees benefit their employers more than the sick, exhausted and malnourished.

The present annualized minimum wage falls several thousand dollars short of enabling an adult to obtain a decent place to live without Section 8 housing assistance. It would be almost impossible for him/her to afford a nutritious diet without food stamps (Supplemental Nutrition Assistance Program). A full-time minimum-wage-earner certainly couldn’t purchase unsubsidized health insurance or pay a dentist out of pocket to repair an abscessed tooth. And we haven’t even begun to consider the added costs if a minimum-wage-earner has dependents.

Paying an adequate wage is the right thing to do, especially if you do more than offer lip service to the Golden Rule, a tenet of the Judeo-Christian ethic. The present minimum wage is insufficient to enable the wage earner to pay his real cost of living. And it allows the employer to escape paying the social costs of an employee, while benefiting from having that employee on his payroll.

Simply put, if one businessperson underpays his employees, then the rest of us, including his competitors, are in fact paying part of his labor costs through taxpayer-funded assistance programs.

Those opposed to increasing the minimum wage argue that prices will rise in an inflationary spiral and jobs will be lost. The 99 cent cheeseburger you are eating for lunch each day will double in price to $2. Gone will be the $5 pizzas and submarine sandwiches. Gasoline will rise another 20 cents per gallon. Hotel room rates will skyrocket because housekeepers will actually be able to afford to buy a well-used car to commute to work.

Nonsense!

So you will pay $730 for lunch each year for your cheeseburgers instead of the $361.35 you are currently paying. The fact is, you are paying far more than 99 cents for that cheeseburger as it is. Let’s examine how an increase in the minimum wage really affects the price of a cheeseburger (or any other commodity).

There are about 100 million wage earners in the U.S. Roughly half of them don’t pay federal income taxes because their wages are too low. The remaining 50 million taxpayers are subsidizing the food, housing and medical costs for many of those non-taxpayers. That subsidy amounts to about $10,000 per person per year (and that is a conservative figure). In essence, each federal taxpayer is subsidizing one minimum wage worker.

So let us assume that the only commodity you purchase from a minimum-wage employee is your daily cheeseburger. If we keep minimum wage at $7.25 per hour, the menu price of that hypothetical cheeseburger remains at 99 cents. But you are paying $10,000 in federal taxes to support the worker the government forced you to adopt. That translates into an extra $27.39 in hidden costs for each of your daily cheeseburgers. So with minimum wage pegged at $7.25 per hour, your 99 cent cheeseburger really costs you $28.38 apiece.

Or, if all you buy is gasoline, then at 500 gallons of gasoline purchased each year, your true cost of gasoline would be $24 per gallon when you factor in the hidden costs of federal support to minimum wage station attendants. Or, if you eat pizza once per week, each pizza effectively costs you an extra $200 when you account for cost of federal aid to keep that pie maker from starving.

On the other hand, if minimum wage is increased to the level of a living wage, then your cheeseburger’s menu price might double to $2, but decreases in food stamps, subsidized housing and health care subsidies will slash billions in taxes and federal borrowing to fund social programs. Your real cost to buy a cheeseburger will be far less than the $28 you are effectively paying at present.

Raising the minimum wage is the moral high ground. Raising the minimum wage provides workers with the ability to pay their own way and the dignity accompanying that ability. Raising the minimum wage is smart business because it increases the size of the middle class and expands the pool of buyers with discretionary income. Raising the minimum wage enables painless reductions in federal social programs and reductions in federal borrowing.

Or you can choose to keep the minimum wage abysmally low. You will never be able to balance the federal budget if you do, much less amortize the trillions of dollars of debt already on the books. And if you choose to embrace a substandard working wage, please don’t shake your head in disgust when the person ahead of you pays for his groceries with food stamps, because you are partly responsible for his economic distress in the first place.

James Roha is a former Meadville city councilman. He can be contacted at jroha@windstream.net.

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