Raising The Federal Minimum Wage

0
Raising The Federal Minimum Wage
sallyjermain / Pixabay

Raising the federal minimum wage has long been a highly contentious issue, especially during the last few years. And yet, a large majority of Congressional Republicans and Democrats agrees that the federal minimum hourly wage of $7.25 has long been overdue for a substantial increase. The last time it was raised was in 2009.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q4 2020 hedge fund letters, conferences and more

Federal Minimum Wage: Where Do Our States Stand?

Let’s see where our fifty states stand with respect to their own minimum wage rates. Twenty-nine states have minimum wage rates of over $7.25. And a dozen states now have a minimum hourly rate of at least $11 an hour.

Consistency is what makes the top 50 best-performing hedge funds so strong

Every month and quarter, multiple reports on average hedge fund returns are released from several sources. However, it can be difficult to sift through the many returns to uncover the most consistent hedge funds. The good news is that Eric Uhlfelder recently released his "2022 Survey of the Top 50 Hedge Funds," which ranks the Read More

What kind of standard of living is provided by an hourly wage rate of $7.25, which comes to about $15,000 a year? The federal poverty rate for a family of four is $26,200. No wonder one of every five American children lives in poverty. Two thirds are children of color.

Many Democratic members of the House and Senate contend that the federal minimum wage rate should immediately be raised to $15 an hour, while most Republicans contend that raising it by so much would put a lot of people out of work because their employers could not afford to pay them that much.

Virtually all economists agree that doubling the federal minimum wage would result in some job losses, but no one can say for sure how many. This is a very crucial question.

If just a few hundred thousand workers lost their jobs, while perhaps twenty million others received substantial wage increases, then raising the federal minimum wage to $15 would be a no-brainer. But if doing so would result in several million people being thrown out of work, then perhaps it would not be such a great idea.

Raising Wage In Annual Steps

One possible compromise would be to immediately raise the federal minimum wage to, say $11 an hour. This would probably pass Congressional muster, and not cause the layoff of a great number of employees now earning less than that hourly rate.

Another compromise might be to raise the minimum wage in annual steps, beginning with $11 in 2021 up to $15 in 2025. This, of course, would surely draw the ire of most Republicans as well as nearly all progressive Democrats. The former would consider the increases coming too slowly, while the latter would prefer that they not come at all.

But such a bill could probably get through Congress, even overcoming the threat of a Senate filibuster. Almost no one would be completely happy with this solution, but consider the alternative -- leaving the minimum wage at just $7.25.

Updated on

Steve Slavin has a Ph.D. in economics from NYU, and has written twenty math and economics books, including “The Great American Economy: How Inefficiency Broke It, and What We Can Do to Fix it.” The 12th edition of his introductory economics text came out in September.
Previous article Bitcoin To Hit $100,000 In 2021? Commentary
Next article American Rescue Plan Addresses The Needs Of Small Businesses

No posts to display