As the years have gone on and the battle over how to reduce the despair over the cost of living crisis one thing that continues to be enacted is the increase in the minimum wage. With the cost of living getting out of hand, the minimum wage is not meeting the needs of many people who are in desperate need of financial well-being. The minimum wage is an outdated economic policy that doesn’t need reform, but outright abolishment. Modern economic issues require modern economic solutions. The minimum wage is not one of them.
The minimum wage was introduced following the Great Depression to stabilize and protect workers in the labor force. It was designed to create a minimum standard of living to provide for the most vulnerable. And was also a way to revive the American economy by adding jobs. Mind you, not all of these jobs were great, but Americans were desperate to make something of themselves to get out of this horrible situation. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt, but later found to be unconstitutional. In 1938, the Fair Labor Standards Act established it at $0.25 an hour. In 2021 dollars it is $4.81. Today that is an unliveable wage. And by its name, it is what it's designed to do. Mandate the lowest amount an employer can pay its workers.
Today the fight is to increase the wage to $15 an hour. Fifteen an hour doesn’t cut it. Nor does raising it even further. The more the minimum is increased then it no longer becomes the minimum. If it continues to grow, then it becomes a guaranteed wage like that of a salary. The illusion of increasing the minimum makes it harder to bring up people out of poverty and the lower middle class. I’m not going to argue that people who work minimum wage jobs are “lazy” or ripping off the taxpayer. They aren’t. Folks who work these jobs have to because of their predicament or because it’s a way for them to earn a living while in school pursuing an education. Minimum wage jobs are supposed to be a learning curve. Not a lifelong career. And there are studies that show that increasing it will provide better wages for people in these jobs. According to the Congressional Budget Office in 2021, the $15 federal minimum wage would have boosted the earnings of low-wage workers and decreased poverty. Another suggests that increasing it to fifteen would lift pay for more than twenty-four million workers in 2024. More money is great for people as it makes them less poor and boosts the economy. But it still doesn’t address a changed job market.
Some jobs will be eliminated by automation. Like that of fast food workers. We all know companies running fast food places are always looking to undercut their employees by paying them less than what they deserve. Even trying to circumvent their efforts to establish unions. Human Rights Watch has called for the elimination of the two-tiered minimum wages for tipped workers that have denied workers a living wage. And thus, the minimum wage keeps some people poor. Many of whom are black and/or women. In 2022, a study found that one in three workers in the U.S. are paid less than fifteen an hour. The subminimum isn’t working, but neither is the minimum wage. Across the country last year the minimum wage continues to go through expansion in measures or laws passed at either the state or local level.
What should we do if not to raise the minimum? Actually guarantee a set pay for all jobs by law. And federally speaking it does exist. The President and the Federal Reserve can implement this. The Humphrey–Hawkins Full Employment Act, known formally as the Full Employment and Balanced Growth Act was signed into law by Jimmy Carter in October of 1978 which is still on the books but hasn’t really been enforced. In the midst of the latest jobs report under the Biden administration where unemployment has now dipped to 3.4 percent in January of 2023, the first time since May 1969, the government needs to meet the demands of today’s economy. The Biden administration has made it clear from day one that the economy needs to be brought back to where it was before the pandemic. The latest report is a good sign and for things to get better, they have to move the ball forward. By enforcing the Full Employment Act, it should implement guidelines to increase wages and end unemployment. The law at the time of its passing stated, “By 1983, unemployment rates should be not more than 3% for persons aged 20 or over and not more than 4% for persons aged 16 or over, and inflation rates should not be over 4%. By 1988, inflation rates should be 0%.” Of course, allowing Congress to revise these goals over time. “If private enterprise appeared not to be meeting these goals, the Act in its original form, though not in its ultimate iteration, expressly allowed the federal government to create a "reservoir of public employment," provided of course that the legislation to establish the "reservoir" managed to become ratified. These jobs would have been required to be in the lower ranges of skill and pay to minimize competition with the private sector.”
Now, of course, none of these goals have been met other than what the law states mandating the Federal Reserve's Board of Governors to transmit a Monetary Policy Report to the Congress twice a year outlining its monetary policy and establish a monetary policy that maintains long-run growth, minimizes inflation, and promotes price stability. The Chairman of the Federal Reserve to connect the monetary policy with the Presidential economic policy. Requires the President to set numerical goals for the economy of the next fiscal year in the Economic Report of the President and to suggest policies that will achieve these goals. Instructs the government to take reasonable means to balance the budget. Instructs the government to establish a balance of trade, i.e., to avoid trade surpluses or deficits. And most importantly explicitly states that the federal government will rely primarily on private enterprise to achieve the four goals.
Since most minimum wage jobs are in the private sector the government can change things to make unemployment and low wages a thing of the past. Laws to increase the minimum wage can not be the only way to provide better pay for workers. Mandating jobs with a salary-based income provides better overall growth. It’s true that for independent contractors, paid interns, or unpaid interns, people paid per day, and people paid hourly at jobs this will help them. No matter the type of job or industry. Or how many hours one works. Things like severance, workers comp, paid sick/maternity leave, vacation days, etc should also be protected and guaranteed as well. Even whether they are union or non-union. Laws are designed to make the lives of people better. And labor laws in this case have to reflect this. In the era of Covid and now post-Covid, doing the same thing isn’t going to fix the situation that’s been broken or unable to adapt to the times. Guaranteeing a salary for workers guarantees eliminating poverty. Even if it’s Universal Basic Income. It no longer makes affordability a question on people’s minds.