Red v. Blue: Minimum Wage

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A weekly column in which Gettysburg’s College Republicans and College Democrats will engage in debate about issues in the news. 

By Conor Brooks, President and Isabel Gibson Penrose, Vice President, Gettysburg College Democrats

If the minimum wage had kept pace with inflation since 1968 it would be nearly $11.00 an hour. Not keeping up with inflation is foolish both for the economy and the well being of our country. We write this article to argue that most states, as well as the federal government, should raise their minimum wages.

According to a Forbes report, the average CEO earns almost $12,300,000 a year. That is 331 times as much as their average worker, and 774 times as much as minimum wage earners. Many associate the term “job creators” with the people behind those incredibly high figures, but we believe “job creators” more accurately describes the people who work the average job.

Simple economics tells you that increased production does not mean increased demand. The fact is that a CEO paid 331 times an average worker is not buying 331 times the product. We are in no way saying CEOs do not deserve high compensation for their work. We are saying if average workers were better paid, they would have more income to spend on manufactured goods. Paying the average worker more will mean increased demand for the products they should be buying, but cannot afford. It will mean paying the workers enough so full time minimum wage earners will not need to be on welfare.

U.C. Berkley Center for Labor Research and Education recently released a study of what the economic effect of Walmart raising employee wages would be. Walmart employees – who get paid $8.81 an hour – received 300 million dollars in food stamp payments last year. If Walmart raised their hourly wage to $13.63 an hour, their employees would be making a living wage and would no longer require food stamps. That means 300 million dollars would be freed up for other government spending. And even if Walmart shifted 100 percent of the increased wage cost on to the consumer, it would still only cause a 1.8 percent rise in the price of Walmart goods. $5 bargain movies would now cost $5.09. Not as catchy – but much more efficient.

Costco, well known for high wages and excellent treatment of workers, has an annual employee turnover rate of 10 percent. Walmart, not known for either of those things, has a turnover rate nearly 4 times that amount. This is the only way to put numbers to the humanitarian justification for increasing the minimum wage. People are more likely to stay in a job with decent pay, and everyone deserves the opportunity to work for a company that can offer them that. The human factor not only makes economic sense, but moral sense as well.

Robert Reich, Professor of Public Policy at UC Berkeley, sums it up best when he said, “True patriotism isn’t cheap. It’s about taking on a fair share of the burden to keep America going.” We would spend a few more dollars in the checkout line to know we are supporting those working behind the counter.

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Author: Isabel Gibson Penrose

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