Friday, December 6, 2013

Minimum wage woes

Texas Republican Joe Barton has added his voice to the small group of die-hard conservatives who say we should do away with the federal minimum wage. Though Barton himself does not give his reasoning, the theory that other Republicans have touted is that raising the minimum wage would hurt businesses and would dampen hiring.

Here's the thing, though. If everyone makes a bit more money, and has enough to spend on more luxury items, or even just more to spend in general, that helps the economy. It goes back to supply-side vs. demand-side economics. If you believe that putting more goods on the shelves will translate into more sales, then minimum wage doesn't matter. If you believe that putting more money in the consumer's pocket will translate into more sales, then minimum wage matters a lot.

According to Republicans who support the abolishment of the minimum wage, like Lamar Alexander (Tenn.), we should increase the earned income tax credit instead. This would allow people to get more of their tax money back and keep it out of the government's hands. The plan sounds good in theory, but there are two problems with it.

First of all, a company with no minimum wage requirement could pay their employees whatever they wanted. If you think there are a lot of people in poverty now, barely surviving, imagine if they are getting paid half or even a quarter of what they are now.

Then, if that were to happen, those people wouldn't be paying much less - if anything - for federal taxes, so the earned income tax credit bump would be pointless. The government would still be losing all that revenue, the people would be losing what little they're making already, and super-profitable companies would become even more obscenely profitable.

On the flip side, of course, there are those who want to increase the federal minimum wage and tie it to the cost of living. Those voices, mostly in the Democratic party, are much more prominent. They also happen to represent the majority opinion of the American People, which is supposed to be how our representatives vote.

I sincerely hope that we will see some movement on the minimum wage issue, because it represents a chance to do something significant to help the economy. More buying power means more buying, which translates into a better economic outlook. Not to mention that it would help people pay their bills, meaning they would no longer need to rely as much on financial assistance. Win-win-win.

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