Minimum Wage vs. Living Wage

Daniel Penzing
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Federal Minimum Wage

Historically, workers have had limited recourse when it comes to bad employers. The most effective way to get a raise in the past was to work harder, to lobby company management, and hopefully to stick around long enough to convince a manager that you are worthy of more. Unless you could prove true discrimination, courts tended to side with employers when workers claimed unfair treatment.

Another option was unionization, but this often left non-unionized workers in the dust when it came to getting paid what was fair.

At the beginning of the 20th century, as workers became more and more empowered, calls for worker-friendly legislation grew. Finally, in 1938, Congress passed the Fair Labor Standards Act. This landmark law set minimum wage rates for the first time, as well as a federal 40-hour work week.

The following is a look at how the federal minimum wage has changed over the last 75 years:

What is a Living Wage?

Help for Minimum Wage Workers

While minimum wage jobs are great for young people to help gain experience and start saving money, many would agree that it is not enough to live off. Some argue that they don퀙t even allow a person to survive. This is why many are pushing for minimum wage to be raised or for a living wage to be created.

What is Minimum Wage?

A minimum wage is the lowest hourly payment a worker can receive that meets or exceeds Medicare and social security payroll taxes.

Many people argue that the minimum wage cannot support a living because the expenses that a person has are significantly higher than what a minimum wage can cover.

Minimum Wage History

Minimum wage used to be considered living wage and the minimum wage earners could reliably support a family on their earnings.

In 1968, an organized group of laborers called for a wage increase. Their reasoning was that the standard of living was increasing yet they were still being paid the same low wage. Around this time, the inflation rate also increased. This caused the cost of living to go up as well. This caused many to push for a living wage.

What is a Living Wage?

A living wage is a wage that is high enough to support a family.

What Happens with a Rise in Minimum Wage?

Some people might have you believe that increasing minimum wage would be a drastic change, throwing all of our fragile economy for a loop. But most of the data suggests that the impact on most individuals would be very small. In fact, many economists believe that an increase in minimum wage would be the best way to get things going, creating jobs and putting us back on track.

Let’s look at some of the things that would happen with a rise in minimum wage:

Since minimum wage would increase, employers are likely to start looking harder for more productive employees and those cheaper-usually younger-foreign workers. This puts a lot of immigrants who work for minimum wage at risk of losing their jobs. A rise in minimum wage could cause them to look further for employment.

Some companies might reduce their workforce in order to compensate for the higher costs of doing business. Let’s be clear: fewer people working means fewer people who have the money to spend. So it’s possible that a rise in minimum wage could lead to a decrease in employment.

Some companies more heavily reliant on the low-end of the workforce, like fast food chains, could be forced out of business entirely. They would have to close or find some alternative source of income to support their operations.

Overall, there is a good chance that a rise in minimum wage would have a very small impact on our economic situation.