The Bare Minimum

More and more campaigns are popping up to raise the minimum wage to $15. I do not think this is the solution to the problem.

So what is the problem? The problem is that too many full-time workers are still below the poverty line because the current federal minimum wage is at $7.25.

For this article, I will define a traditional family as two full-time, working adults with two children. I will also define a single-parent family as one full-time, working adult with three children.

For the traditional family, if both adults are making minimum wage, working 40 hours a week for 52 weeks, they will bring in $30,160, and after a 15% income tax, they will have $25,636. This is pretty measly; it is not below the $23,283 poverty line definition, but it is close.

For the single-parent family, the parent, working 40 hours a week for 52 weeks, will bring in only $15,080, or $12,818 after federal income taxes. This is way below the poverty line definition of $23,364.

The problem isn’t the minimum wage.

Now, if both families make the new $15 minimum wage, they will have an after-federal-tax income of $53,040 and $26,520, respectively. Problem solved.

Oh wait, no it isn’t.

This will cause inflation, and/or more people will be unemployed, and we will revise the poverty line, and, in fact, more people will be under the poverty line. This doesn’t solve the problem, and arguably doesn’t even solve the symptom.

The problem isn’t the minimum wage. The problem is that many people are being paid minimum wage for their career because for whatever reason they cannot find or get a job that pays more.

Minimum wage jobs should be for high school and college students, and new entrants into the workforce. We should work to convert unskilled workers into skilled workers, and then help skilled workers find jobs that they can be paid fairly. How we do that is another post entirely, but that is how we should approach the problem.