Nearly 8 million Americans go to work every day yet still live below the poverty line. That is in part because the federal minimum wage is too low.
Currently, an individual with a full-time job at the minimum wage and a family of three to support will fall below the federal poverty line. These workers are struggling to provide basic necessities for their families.
How have we been able to keep wages so low without significant social discord? By using tax revenue and a complicated government bureaucracy to subsidize low-wage employers and supplement minimum-wage salaries. The government provides workers with "income transfers," including the earned income tax credit, food stamps and Medicaid, to help meet basic needs.
These government supports mask a job's true value and set an artificially low wage. They also represent the height of inefficiency. Raising the minimum wage means the income required for basic needs is delivered in a one-step approach, via the paycheck from firm to worker.
Low wages also push workers into shadow labor markets where they get paid under the table, avoid reporting income and evade tax responsibilities.
In his State of the Union speech, President Obama called for raising the minimum wage to $9 an hour. That would be a start but it isn't enough. We propose raising the minimum wage, in stages, to $12.50 an hour, an amount allowing an individual supporting a family of three to live modestly, at about 138 percent of the federal poverty line. That level offers workers a way to escape poverty and live without significant government support.
A common objection to raising the minimum wage is that it destroys jobs. But recent studies note that raising the minimum wage increases earnings and reduces poverty, with an almost negligible effect on employment.
Some argue that raising the minimum wage offers benefits to those who may not need them. The Economic Policy Institute's latest analysis shows that most low-wage workers live in low-wage households, and 84 percent of the workers in low-wage jobs are at least 20 years old.
Finally, critics often suggest raising the earned income tax credit instead. But that takes money out of the pockets of taxpayers rather than from the businesses benefiting from the credit, creating, in effect, a federal subsidy for low-wage employers.
Raising the minimum wage is about reducing inequality, but it is also about restoring the true value of work. Every American's hard work should be rewarded.
Yes: Helps families meet basic needs
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Arizona' s rate of $7.80 per hour makes it one of 19 states and the District of Columbia with minimum wages above the current federal rate of $7.25.
Andy Stern is a senior fellow at Columbia University's Richman Center and former president of the Service Employees International Union. Carl Camden is president and CEO of Kelly Services and co-chairman of the board of trustees of the Committee for Economic Development.