News

It’s always that case when an avid newspaper page flipper scans through the headlines as well as the meager articles in search of a story that they feel really matters to them. I for one am definitely one of these individuals. I also know there are many of you page flippers out there who just flip around and say, “oh that looks interesting….but it has too many words in it so I will just keep skimming.” I do that! I am criticizing no one. Nonetheless, a certain article struck my attention one day while I was reading the New York Times. The NY Times is a good read, especially its business section that, more than usually, contains a decent topic of discussion or in their case, journalism. That article discusses a significant platform as well as proposed legislation that is passing through the Democratic party. The legislation is the proposal of a HUGE increase in the minimum wage cap for the workers in the United States. Many states that have noticed growing economies are on the motive to begin reforming old minimum wage rates.

State legislators specifically in New York ($7.25), New Jersey($7.25), Connecticut($8.25), Illinois($8.25) and many other states are pushing to raise the minimum wage above the federal level. Massachusetts has a Senate bill right now within its state legislator with the intention of increasing the states minimum wage. Senate Bill 951 was “reported favorably by committee and referred committee on Senate Ways and Means,” within the state to progressively add to the minimum wage until it reaches $10.00 in July of 2013.

This legislation would make Massachusetts the state with the highest minimum wage, surpassing the state of Washington whose minimum wage is set of $9.04.

These legislative actions that are occurring at only state levels may soon make their way to seeing a federal debate over raising the federal minimum wage. After all it is election season and on the heels of movements such as the Occupy Wall Street as well as the demands by labor groups, Democrats in Congress may attempt the proposal of a new minimum wage referendum bill.

The last time Congress even passed a bill increasing the minimum wage was in 2006. Democratic Senator Tom Harkin of Iowa is the head figure in the act of proposing a bill to reform the at present minimum wage. This possible legislation will raise the federal income tax from $7.25 to $9.80 in 2014. Although the bill seems like it would be for the good of the voter, this is a two sided issue that has multiple aspects to it that will not result in the overall wellness of the American minimum wage earner.

One side of the argument to increasing the minimum wage is that Dems as well as left leaning economists believe that Americans are not buying products because of their wage earnings. Under this philosophy, Dems want to raise the wage so that workers earn more and therefore they will buy more. Of course there are studies and polls that show citizens support a raise in the minimum wage because why would anyone say “no” to getting a pay raise on the federal level?

This is the argument by the Dems and it could possibly become the argument as well as a platform of the White House in months to come as the President begins his campaigning. In her interview with a reporter for the New York Times, Jen Kern, a minimum wage campaign coordinator at the National Employment Law Project, made the point that this issue can be salient enough to be put on a platform stating, “It’s always good to surface an issue that captures voters’ enthusiasm and distinguishes the bad guys and the good guys.”

The argument that through providing more income for minimum wage earners will allow citizens to buy more and this in effect will increase the business for small businesses can be a viable platform for proposing a federal increase in the wage. However, this is a “what if” situation. “If” minimum wage increases then there is a “possibility” that people “might” go out and put that higher income into the market.

Now the other side of the argument is also a cause and effect argument that shows the slightly realist views of businessmen who oppose this wage increase. My personal account of an increase in minimum wage is that when I use to go eat at a local fast food restaurant the price of its most popular dish increased one day by a whole extra dollar. Now this occurred when I was young and it was not a big deal to me because I did not understand why the business was raising the prices on not just its most popular dish, but on majority of the other dishes as well.

This much is economical fact about the effects of raising the minimum wage; prices of products sold must– not will but– must go up so that the businesses can sell for a profit and less workers will be hired by small businesses. Less hirings will occur because owners will not want multiple payrolls with such a high minimum rage. In this case, Democrats and labor groups actually want to propose a piece of legislation that will raise the minimum wage from $7.25 to $9.80 by 2014. That is a rise in wage earnings by $2.55 in less than 2 years.

The private sector of the economy has reportedly made sluggish growth since the beginning of 2012. Citizens earning minimum wage would back up any one who wanted to raise it, however, this idea won’t even benefit our federal government in revenue increases. According to the Tax Policy Center and their report on taxes for the past year, 46% of the American public did not pay income taxes. Now, 28% of that 46 did pay payroll taxes like Social Security, however, out of the remaining 18%, 10% of citizens who were exempt of paying income and payroll taxes were elderly and 7% percent were workers with low-income under $20,000. Therefore, workers who are making an annual income less than $20,000–which most are, with average income ranging in the $15,000– are exempted from filing or paying income taxes or payroll taxes completely.

Those are the real numbers, however, the “what if” factor can play a role in showing these numbers up. “If” workers have a minimum wage raised by over $2 then most likely their annual income may rise above $20,000. “If” that happens, then yes Democrats can gloat that they have in a way shortened the wealth gap in the United States. However, think about this question; when someone finally earns over the $20,000 mark in their household what will happen? They will have to start filing taxes and have a significant amount of their income taxed even though they may have child income tax credit or education tax credit. Businesses may receive more tax cuts to higher workers, but “what if” hiring the workers would cost more than to pay the corporate tax rate? The business would then not hire that worker, and this would follow suit for multiple businesses.

It would look good on a ticket for a campaign. It would give the working man more earnings. It could shrink the wealth gap, maybe not significantly but possibly. It would also make businesses hire less. It will also make the prices of products go up. Think of it like this, is the idea of raising a minimum wage really more for the economical benefits of a slow growing economy or is the idea gilded to be a headliner on the ticket to get more votes?