The Minimum Wage: Why it Works
The minimum wage was originally passed with the intention of providing a full-time worker the capacity to support himself and a family. The federal minimum wage in the United States was set at $0.25 per hour in 1938. It was not tied to inflation and has to be increased by law. The term “Act of Congress” is often used to describe a massive and nearly impossible action. In this case it is both a literal and figurative truth.
Most everyone I meet seems to think that the minimum wage was never intended to be other than a wage for teenagers. They are wrong. The minimum wage is just that, the minimum acceptable wage that a full-time worker can make and be able to subsist without assistance.
No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. —President Franklin Delano Roosevelt, 1933
The minimum wage was established to ensure that all workers in the US would be able to live independently on their wages. The existence of a minimum wage provides all other workers with useful bargaining leverage, increasing wages throughout. Historically this typically results in a redistribution of wealth from owners to workers (not a commensurate increase in prices as some here have claimed), which always results in an overall increase in economic growth as workers are also consumers.
In the US minimum wage has become stagnant, failing to reflect inflation. A large part of that is the misconceptions throughout this thread. Minimum wage is not “earned solely by teenagers and college students for beer money.” Nor can any reasonable person suppose that anyone doesn’t deserve to “live comfortably on 40 hours a week.”
These, fairly recent, attitudes have been encouraged by business owners who have little incentive to pay their workers a reasonable wage, so long as there is an army of unemployed and underemployed willing to do the same job. The minimum wage subverts that desire.
Simply put, an owner pays a little as he can for the labor. The rarer a laborer’s skills are (not how skilled or useful he is, the owner never pays anyone he doesn’t have to) the more he can charge because he is difficult to replace. Minimum wage establishes a floor, as do overtime requirements and other fair labor standards.
The minimum wage has nothing to do with whether or not someone “deserves” to be paid for their work. Your boss will never pay you more than he has to, that is the central premise of a free market. A minimum wage says that no matter how little he wants to pay you, he should still pay you enough to live on. It is also simple economic sense, it saves money that would go to public welfare to support people who are employed. It is a decision by society as a whole that no one who is willing and able to work should find themselves in poverty.
All that being said, the shareholder prefers that money goes to his bottom line, and not into wages. So he fights any increase tooth and nail. The misconceptions and the insane anger from some focused on those on the rung lower on the socio-economic ladder are one tool to avoid it. Another is spreading misinformation to lawmakers; claiming that increasing minimum wage dampens, rather than strengthens, the local economy. And the last is simple apathy, since the minimum wage is not tied to inflation it becomes increasingly trivial as time goes by. After a while it becomes, as it has now, a poverty wage.