Is $15 an hour too much?
I’ve been reading many articles about the proposed $15 an hour minimum wage, both pro and con. One commentator said that the proposed hourly rate was too much for rural areas. I’d like to challenge that thought.
$15 an hour times 40 hours a week is $600, and that’s assuming you can get in that many hours; many full- time jobs in America are fewer than 40 hours a week. $600 a week times 52 weeks equals $31,200 a year.
Is It Already Enough?
I’ll give an example: Breathitt County KY. It is one of the most impoverished places in America. The population is 12,977. One-third of the county lives below the poverty level of $26,000 a year.
The Massachusetts Institute of Technology (MIT) produces an annual cost-of-living calculator for most areas of the country. They use local prices and rudimentary taxes but do not include vacations, eating out, and savings. Their figure for a living wage for a single adult with no children in Breathitt County is $13.37 an hour, or $27,810 a year. Can you believe that an extra $65 a week will be too much money for that citizen? I picked a single person with no children, but the figures from the calculator for that same county, with two adults with no children and one of them working is $22.36 an hour, also two adults with one child would require both adults to earn $15.00 an hour.
Another complaint is that if you live in a high-cost city like New York, Seattle, or San Francisco, $15 an hour is not enough. Nevertheless, if they now make $10 or $12 or even $14 an hour, $15 will be a raise, and they would be better off financially than they are now.
Seventy percent (70%) of America’s Real GDP is consumer spending. The economic principle regarding the propensity to consume vs. save tells us that when a household at the lower end gets a raise, they will spend a greater proportion of it, whereas a household at a higher income level has a greater propensity to save.
What Will Come of the Enactment of Wage Raise?
Let me speak about job losses because of the higher minimum wage. I don’t doubt there will be some job loss, but many more people will be better off. I’ve heard numbers quoted, but who knows what would really happen? If you manufactured something made from steel and steel prices went up, would it put you out of business? Would you have to lay off employees? No, you would raise your prices to accommodate the new cost of steel.
The Congressional Budget Office just issued a report stating that by the year 2025, when the $15 (if enacted) would be in full force, 17 million workers would get more money against the loss of 1.3 million jobs.
The Economic Policy Institute estimates that in 2025, the higher minimum wage would generate increased funding to Social Security and Medicare of between $7 billion and $13.9 billion. Plus, expenditures on the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) would decline by $20.7 billion, and the savings on food stamps would be as much as $5.4 billion. Clearly, this is movement in the right direction.
Do you think $15 an hour is too much? Let us know your thoughts in the comments.
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