Another way to put it is like this: Does manipulation of the minimum wage really make things better for a large number of people?
Like I said in the title: the answer to this question is: NO. Like I said in other articles on the subject of the minimum wage, only between 2 and 3 percent of the workforce actually makes minimum wage, which means that 97 to 98 percent of the workforce actually makes more than the minimum wage. Raising of the minimum wage is such a hot political topic that creates so much division in our country that you’d think it affected a lot more people, but you’d be wrong. So, it could be argued that raising minimum wage is not as important an issue as the political left would have you think.
On top of this is another problem. The political left likes to make some claims that, if you look at the facts, are simply not true. For example, they say that if you don’t support the raising of the minimum wage, then you obviously don’t care about the working class – at least to them. They say that many of the people that work these minimum wage jobs are “stuck” in these low-wage jobs for long periods of time, like years and decades of time, and that they have no way out. They say that the bottom 10 or 20 percent of wage-earners stay at the bottom because they’re stuck there. But there’s nothing about any of these statements that’s true. So, let’s look at some of these facts, shall we?
A Three-Decade Study
Two economists, working for the University of Michigan, Michael Cox and Richard Alm, tracked more than 50,000 Americans over the course of three decades, and you know what they found?
– Over 75 percent of families in the lowest fifth of income distribution in 1975 had made their way to the top two quintiles by 1991, which means that three out of every four families had upward economic mobility.
– If you look at all the families that were in the lowest 20 percent bracket in 1975, the average gain in those families’ annual income by 1991 was $27,745. Those in the top 20 percent bracket made gains too in their annual income, but only by an average of $4,354 per year. In other words, the rich got richer, but the poor got richer faster.
– How many of the people that were in the lowest 20 percent income bracket in 1975 were still there in 1991? Less than 1 percent! Almost all of those people had moved out of that lowest income bracket into a higher income bracket.
– If you look at all the families that were in the lowest 20 percent income bracket in 1975, more than half of them were out of that income bracket by 1979, a mere four years later.
Now, this study is more than a quarter century old, but the facts still remain. Only a small portion of the population works at minimum wage, and those people, and others in the lowest quintile, don’t stay there for long, but are able to achieve upward economic mobility.
Maybe the important thing to ensure is the availability of plenty of jobs so that people have the ability to move to other jobs that pay more. In other words, make sure the demand is higher than the supply, when it comes to jobs and wages, as that drives up wages, and gives those low-income workers many more options.
Conclusion
With all of this being said, let me restate myself one last time. Only a small fraction of the working population is stuck at a minimum wage job – only 2 or 3 percent. Out of that 2-3 percent of the population that works a minimum wage job, more than half of them get a higher-paying job in four years, and 99 percent of them do within 15 years. When politicians and journalists on the political left do a sob story on someone, who is starting a family, stuck in a minimum wage job, it’s almost like they’re doing a “straw man” story, as if that story, as extremely rare as it is, epitomizes reality as a whole, rather than just that one person in the example.
In those rare cases epitomized by those examples used by the left, where someone is married and starting a family, but is still stuck at a minimum wage, there are much better uses of our energies than working to improve their minimum wage. We can figure out what their psychological roadblocks are to them going out there and looking for a better-paying job, which he or she knows is out there. Or we can help them learn some new skill set that allows them to land that better paying job. Or we can give them training in how to create a great resume, and give them interview coaching, so that they are much better during the job interview part, as they’re out there looking for that better-paying job.
And throughout all of this we can train them to learn to manage their finances in a way that leads to prosperity and better life, which many Americans absolutely don’t seem to know how to do, as you might find with Financial Peace University.
