The federal minimum wage is quickly becoming a hot topic. President-elect Joe Biden has vowed to raise it to $15 per hour, more than doubling it from the current minimum wage of $7.25.
Proponents have argued that since people cannot support a family on the minimum wage, it needs to be raised. After all, they argue, it’s not right that someone has to work two jobs in order to raise a family.
Of course, opponents take issue with that characterization, but we’ll get to them in a bit.
Lately, proponents of the raise have taken to Twitter to tell us all about how it’s a great idea.
If u can't pay $15 an hour to your employees, maybe u shouldn't own a business pic.twitter.com/rjA7pBuKaW
— Red Bull Racing F1 Fan Account (@FlyoutChase) January 14, 2021
Yes, people really are that stupid.
See, what people don’t understand is that businesses that can’t afford to pay employees simply won’t. They’ll either contract with someone else for the service or the owner will just do it themselves. Being able to pay a certain wage is never and has never been a requirement to own and operate a business.
But this is far from the only idiotic example of “arguments” being put forward.
Try this one:
$15/hr • 40hrs/wk • 52wks= $31,200 annual salary. Why are you angry about someone making $31K a year?
— Tamika (@iBiteiStrike) January 15, 2021
The thing is, no one begrudges anyone making $31,000 a year. No one at all.
But the issue is that all of this poorly frames minimum wage workers. Everyone screams about raising the minimum wage, but few actually understand the minimum wage.
First, let’s understand that remarkably few people actually earn the minimum wage. In fact, it represents just 2.3 percent of all workers in the United States. That’s 1.8 million people in a nation of 328 million.
Now, we can all see that the number of minimum wage earners is only a tiny fraction of total workers. Yet what matters is that we look at just who those workers are.
According to the Bureau of Labor Statistics, over half of those who make minimum wage are workers under the age of 25. In other words, young workers with few job skills.
So what happens if you raise the minimum wage to $15 per hour?
Well, let’s start by understanding that while some major companies can easily afford to pay $15 an hour, not everyone can. Just over 47 percent of all people are employed by small businesses, which means that many people are working for companies without billions in profit that can easily lead to higher wages.
If the minimum wage is raised, at least some of these small businesses will have to adjust. They’ll either raise their prices or, more likely, lay off some employees. Further, they’ll be less likely to hire first-time workers who have few skills to warrant $15 an hour.
They may want to give people a shot, they just can’t afford it.
Further, while people like to look at the McDonald’s worker as the typical minimum-wage employee, they don’t really understand what they’re seeing. After all, McDonald’s is everywhere. They can afford to pay more, right?