How about a $20 Minimum Wage?

By Jonathan Kevorkian; Image by “dhkpopart” on Etsy

“Fight for $15!” Odds are you have heard this chant somewhere across the country. The last time the minimum wage was raised at the federal level was in 2009 to a paltry $7.25 an hour. Fortunately, the majority of states have raised it, with the ones who have yet to predominantly run entirely by Republicans since ‘09, or Republicans controlling part of the legislature or governor’s mansion, blocking such legislation.

Someone working a standard 9:00-5:00 job five days a week at this pay would earn $15,080 by the end of the year (Poverty). These are predominantly in retail and fast food. This would put the worker $20 above the federal poverty line by 2024 income levels (Federal). For single adults without children (dependents), this would result in them having too high an income to qualify for government assistance programs, such as Medicaid (Medicaid). If the minimum wage rose in step with economic productivity from 1968, the last time this was achieved, it would be $21.50 (Baker, 2020). From a liberal and even a conservative standpoint, the minimum wage has to be raised to not $15 an hour, but $20.

From a liberal’s perspective, businesses will not choose to raise wages for their employees. If the business’s goal is to maximize profits, poor working conditions, low-quality healthcare, and low wages are a recipe for success, as they all reduce costs. 20 states still keep their minimum wage at $7.25 (Sahadi, 2024), so it cannot be expected that the rates will change. If the minimum wage is raised, the poor get wealthier, this helps the middle class. As a result, the wealthy will see increases in their income, as more money in the hands of consumers will lead to more spending and higher spending levels. This will lead to an increase in quality of life. In addition, giving money to those at the bottom does not lead to higher unemployment rates, despite many believing otherwise. However, higher minimum wages, according to economist Michael Reich from UC Berkeley’s Center on Wage and Employment Dynamics: “… kills job vacancies, not jobs.” The higher wage makes it easier to recruit workers and retain them. Turnover rates go down. Other research shows that those workers are likely to be a little more productive, as well” (Reich, 2023).

Conservatives should be incentivized to raise the minimum wage as well. More employed Americans will result in fewer of them being reliant on government assistance. Because employed Americans incomes will rise to higher levels (over $40,000 annually), they will no longer qualify for Medicaid, Supplemental Nutrition Assistance Program (SNAP), etc. This will result in less government spending. More people will buy private insurance, and spend their disposable income on goods and services, and the free market will play a larger role as the public sector contracts. Furthermore, conservatives who believe that wages are decreasing because of inflation should support a wage increase, as raising it would counteract inflation because wage growth is a response to decreases in pay.

Why $20 an hour? Why not $15, or any hike, no matter how small? Firstly, many large multinational corporations pay the majority of their workers under $15, including McDonalds, Wendy’s, and Sonic (Sainato, 2022). This means that an increase would have to be above this level, given that that is the number that many elected officials campaign on, and that ballot initiatives pass in conservative states such as Nebraska and Florida.

The Center on Budget and Policy Priorities found that over 90% of families who qualified for a child tax credit in 2021 spent that credit on food, utilities, rent or mortgage, clothing, and educational costs (Zippel, 2021). The money can be used to help those who are in desperate need of help. As mentioned earlier, many of those living off of the minimum wage are impoverished, and in need of some kind of assistance. Giving them extra money will not be used on frivolous goods such as drugs and alcohol, as conservatives often claim, but on essential functions of life.

Massachusetts Institute of Technology researchers have determined that a living wage in 2022 for a family of four with two working adults and two children was $24.16 (Living, 2023). Two parents earning a combined $14.50 an hour cannot afford to pay for housing, food, utilities, healthcare, childcare, etc without falling into debt immediately. Their only option is to not pay for some things. In addition, full-time workers must earn over $23 an hour to rent a one-bedroom apartment without spending over 30% of their income (Barnes, 2023). To afford a two-bedroom rental, a minimum wage worker must work 104 hours a week, equivalent to working almost 15 hours for all seven days. A one-bedroom rental is not much better, requiring 86 hours a week. Minimum-wage workers do not earn enough to survive in this day and age. $15 is a step in the right direction, but nowhere near enough.

A minimum wage would help workers across the country. The poor get wealthier, the middle class gets wealthier, and this trickles up to the already wealthy who see their portfolios grow. A hike in the minimum wage would result in greater economic activity as people have more disposable income, eventually leading to less reliance on government assistance. Instead of the fight for $15, we need the tussle for $20.

Bibliography

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• Barnes, Adam. “You Have to Work More than 100 Hours a Week to Afford a Two-Bedroom Rental on Minimum Wage: Report,” June 15, 2023. https://thehill.com/business/4052150-you-have-to-work-over-100-hours-a-week-to-afford-a-one-bedroom-rental-on-minimum-wage/.
• “Federal Poverty Level (FPL),” n.d. https://www.healthcare.gov/glossary/federal-poverty-level-fpl/.
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• “Medicaid Income Eligibility Limits for Adults as a Percent of the Federal Poverty Level,” n.d. https://www.kff.org/affordable-care-act/state-indicator/medicaid-income-eligibility-limits-for-adults-as-a-percent-of-the-federal-poverty-level/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
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• Sainato, Michael. “Most Workers at Large Retail and Food Firms Get Less than $15 an Hour – Study,” April 19, 2022. https://www.theguardian.com/us-news/2022/apr/19/how-much-retail-food-companies-pay-workers-per-hour#:~:text=Dollar%20General%20pays%2092%25%20of,less%20than%20%2410%20an%20hour.
• “What Are the Annual Earnings for a Full-Time Minimum Wage Worker?,” n.d. https://poverty.ucdavis.edu/faq/what-are-annual-earnings-full-time-minimum-wage-worker#:~:text=The%20annual%20earnings%20for%20a%20full%2Dtime%20minimum%2Dwage%20worker,is%2040%20hours%20each%20week.
• Zippel, Claire. “9 in 10 Families With Low Incomes Are Using Child Tax Credits to Pay for Necessities, Education,” October 21, 2021. https://www.cbpp.org/blog/9-in-10-families-with-low-incomes-are-using-child-tax-credits-to-pay-for-necessities-education.