Four Arguments For Raising the National Minimum Wage

Think you could live indefinitely on a job that pays $7.25 an hour? That's the national minimum wage set by the Fair Labor Standards Act as of July 24, 2009. If you add up the numbers, 50 weeks of 40-hour workweeks at the minimum wage comes to a total of $14,500 a year -- well below the U.S. poverty level of $22,050 for a family of four, and just about even for a household of two. In other words, the minimum wage is a far cry from being a living wage, which is why advocates for low-income workers are pushing for higher wages all over the country.

"The International Labour Office in Geneva, Switzerland reports that some 90% of countries around the world have legislation supporting a minimum wage," writes Lisa Smith on "The minimum wage in the countries that represent the highest 20% of the pay scale is about $40 per day, or about $1,185 per month."

And yet in the United States, a government-mandated minimum wage policy is a favorite whipping boy for politicians, even though less than 5% of the country's workers are paid the minimum wage. Supply-side politicians generally argue that a minimum wage is bad for the economy because it artificially pushes up income levels. That in turn is bad for businesses and leads to inflation and inefficient capital markets, they say.

On the other hand, arguments in favor of the raising the minimum wage are plentiful. In fact, in President Barack Obama's home state of Illinois, the minimum wage will go up to $8.25 per hour starting July 1, 2010, because politicians there say working families can't get by on the current minimum and paying them more will help rev up Illinois' economic engine.

Here are four of the strongest arguments in favor of raising the minimum wage:

1. The minimum national wage is good for the economy.

We live in a consumer society, so people who earn more spend more.

2. The minimum national wage helps lift people out of poverty.

Many of the poorest states in the United States have no minimum wage law, including the poorest state in the nation, Mississippi, according to the U.S. Department of Labor.

Wealthier states that help low-income families make ends meet benefit their economies on the principle that a rising tide lifts all boats.

3. In a market economy, the minimum national wage lessens the gap between rich and poor.

A recent Merrill Lynch/Capgemini World Wealth Report found that the the world's richest people in 2009 regained nearly all the wealth they had lost in the recession of 2008, and that "ultra high net worth individuals" with investable assets of at least $30 million saw a 21.5% gain in their wealth last year. Against that backdrop, legislation that guarantees an hourly wage of $7.25 for the working poor seems a small price to pay for our market-driven economy.

4. No one wants to earn the minimum national wage forever.

Like other social benefits in a civilized society, earning $7.25 an hour is a stopgap that helps people keep going at a low-paying job until they're on their feet, educated, retrained or otherwise put into a position of being able to command a higher wage. Let's face it, no one ever expects to live indefinitely on the minimum wage. Would you?

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