So, what is the minimum wage? It is a law that limits how low hourly wages can be at the low end of the wage spectrum. It’s the lowest amount of money an employer is allowed to pay their employees. Whatever the minimum wage is set at, businesses are not allowed to pay their employees any less than that minimum. There is a federal minimum wage, which is set the same for the entire country, but states are allowed to come along and set a state minimum wage amount that’s higher than the federal level. In fact, local governments, like cities and counties, can set their own minimum wage that’s even higher than their state’s minimum wage.
For example, in 2019, the federal minimum wage was set at $7.25 per hour. States like Arizona and California have a state minimum wage set at $11.00 per hour. There are currently 29 states that have a higher-than-federal minimum wage.
Some cities, such as Seattle, Washington and San Francisco, California and Santa Fe, New Mexico have created in their cities a local higher-standard minimum wage amount that is even higher than their respective state minimum wage standards.
There seems to be quite a bit of disagreement as to whether minimum wage laws are beneficial or detrimental to workers. Some people argue that minimum wage laws improve workers’ standard of living, reduces the chances of poverty, helps eliminate inequality, and improves the spirit and morale of those workers whose incomes have improved because of raising the minimum wage. Then there are others who believe that raising the minimum wage hurts businesses, forcing them to have to lay off workers to make their ends meet, which drives up unemployment among low income workers, and drives up the prices those businesses charge their customers, which reduces demand, forcing more layoffs, and can end up, if not done right, with the business shutting its doors because it can no longer make money, and the unemployment of all the workers who worked for those businesses. Although I do care about the well-being of American workers – I was in the working class for the longest time – I do tend to agree with the second approach, that raising minimum wages in a way that is not in line with market mechanisms for raising wages, tends to hurt workers in the long run rather than help them.
You’ll find that about 9 out of 10 black people, a large majority of them, and 7 out of 10 Latinos, which is still a large majority, and only about half of white people, support raising the minimum wage, because they think that raising it will have a substantial benefit on a large number of people, and will benefit society greatly. But, there’s a big problem with this argument. What do I mean?
The truth of the matter is that only a tiny fraction of the population makes the minimum wage. Only about 2% of whites, Latinos, and Asians, and only 3% of blacks, make the federal minimum wage – that means more than 97% of the workforce population makes more than the federal minimum wage. Now, of course, this begs an important question: If only a small fraction of working people make the minimum wage amount, and a vast majority of people make more than that, then why does it always seem to be a hot political topic?
Because it’s a way for politicians to score points with potential voters. That’s why.
