McGinnis: Why a $15 minimum wage just makes cents

Emerson McGinnis, Staff Columnist

President Joe Biden’s proposed $1.9 trillion stimulus plan includes a push to increase the federal minimum wage to $15 an hour. This is not a new idea, yet it is being challenged by most Republicans and some centrist Democrats. While many people see such an increase as drastic, I believe that the federal minimum wage should be $15 an hour, as it makes sense from both a humanitarian and an economic standpoint. 

In a capitalist society such as ours, a wage is intended to correlate to an individual’s worth. In other words, whatever value a person contributes to a company, that is what they should be paid. This is partially to ensure that the individual feels their time and effort is valued and will thus continue to come back to work. Additionally, this system ensures that the individual is able to continue surviving and reproducing in order to continue working and create new little laborers. With that in mind, the minimum wage should be a living wage.

If we agree that workers should be paid a living wage, the next question is: What is that living wage? 

Since the minimum wage was established in 1938, there have been gradual increases to ensure it keeps up with inflation. While it is not typically raised by such a large amount at once, the federal minimum wage hasn’t been increased since 2009—marking the longest dry spell since a minimum wage was established in the U.S. 

Furthermore, the purchasing power of the minimum wage has dropped since 1968. The minimum wage in 1968, $1.60, was equivalent to $11.16 in 2016. 

An increased minimum wage of $15 an hour would correct for inflation, and allow individuals to afford their rent. According to a report done in 2015 by the National Low Income Housing Coalition, an individual would need to earn $15.50 an hour for a 40-hour work week in order to afford a one-bedroom apartment. The report states, “In no state can an individual working a typical 40-hour work week at the federal minimum wage afford a one- or two-bedroom apartment for his or her family.” 

Besides just a place to live, people also need food and medical care to have at the very least a decent standard of living. According to a 2015 report by the Alliance for a Just Society, unless a worker was to work 93-hour weeks at the federal minimum wage of $7.25, they would need to “skip necessities like meals or medicine.” If you do some math, you’ll see that $15 an hour for a 40-hour work week is roughly equivalent to $7.25 an hour for a 93-hour work week. 

$15 per hour is the bare minimum needed to live in the U.S. 

Of course, there are some people who don’t agree that all workers should be paid a living wage. I’ve heard the argument that the minimum wage jobs are intended for part-time workers, such as high school students who don’t really need the money. Forgetting the implication that students couldn’t possibly have things they need a living wage for (like supporting their families because their parents also earn minimum wage), only 49% of minimum wage workers are age 16-24, leaving 51% to be above the age of 25. Most of the people working at minimum wage are adults who support themselves, and possibly a child as well. 

Another argument against raising the minimum wage to $15 an hour is potentially causing inflation or job loss. The idea goes that if a company is forced to increase the wages of their lowest-paid workers, then they have two options to limit profit losses. One, increase the prices of their products, thereby negating the effect of the wage increase by making the cost of living higher. Or two, outsourcing the minimum wage work to countries where costs are lower, using machinery instead of people or just laying people off to reduce their effective number of employees.

I would argue that there is a third option: reducing the salaries of chief executive officers (CEO). 

The average CEO in the U.S. earns 300 times the amount of their average worker, with the highest-paid CEO, Elon Musk, earning $595.3 million in 2019. Musk, unlike many, pays his lowest-earning workers $30,000 a year. On the other hand, McDonald’s former CEO, Stephen Easterbrook, earned $18 million in 2019, 1,939 times the average employee. In other words, if the McDonald’s CEO was paid only 50x the average employee last year, he could have afforded to hire 1,880 additional employees, or paid his current employees a much higher wage.

After all the backlash McDonald’s faced for this income discrepancy within the company, they have stopped lobbying against the $15 minimum wage. As a matter of fact, many similar chains already pay near that. So why not put it into law, and increase opportunities for all individuals making minimum wage?