What’s the right minimum wage? How about $5 an hour?

We’ve heard a lot of talk about where the minimum wage should be set to increase economic opportunity and provide an adequate income for low wage workers. Gov. Inslee has talked about bumping it a buck or two. The president and some in Congress want the federal minimum wage set at $10.10. In Seattle they’re looking at $15, like SeaTac. And House Democrats have proposed a statewide minimum of $12.

But what wage really would do the best job of lifting people out of poverty? In the Wall Street Journal, Robert Strayton suggests $5. Don’t scoff until you read the entire article. Strayton, a retired public relations executive and volunteer for the Society of St. Vincent de Paul makes a strong case that the lower minimum wage opens the doors of opportunity for people who may otherwise be forever shut out.

You’d think no one can value making $5 an hour. But for those in poverty, a primal need is immediate and reliable access to an income of one’s own. When one has nothing, anything becomes priceless. Watch the expression on the face of a poor person when you provide him or her with $2, $3 or $5 to put gas in a neighbor’s borrowed car so he can bring free groceries, clothing, linens, housewares or furnishings from our organization back home. You’ll see then the value of such a “trivial” wage.

When more Americans are able to take a first step into the workforce, some for the first time, we will also see tradesmen expanding, entrepreneurs taking more risk, better staffed social services, and a citizenry proud of the peace and dignity that many new working residents are able to achieve. With such peace and dignity, poverty ceases to exist.

While he’s likely to find few takers here, his argument should prompt a reconsideration of the likely effect of raising the wage, putting that first job out of reach for too many who just want a chance to work, earn, and climb the career ladder.

 

One thought on “What’s the right minimum wage? How about $5 an hour?

  1. It might increase the number of jobs and allow society’s most unemployable segments to find some kind of work – but it would also undercut wages for tens of millions of currently working Americans.

    And it’s also important to be careful when estimating how “painful” any negative employment effects may be. Many low-wage workers have two part-time jobs, so quite a few of the job losses would take the form of workers with only one PT job instead of two. After adjusting for the higher wage, that person’s earned income would still be 60-70% of what it was beforehand – and the real rate of income would be slightly higher %-age yet due to increased eligibility for things like food stamps, plus a slightly smaller %-age of the paycheck withheld as payroll taxes.

    (And this same person would also gain the full leisure time of not having a second job, BTW….)

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