With the federal minimum wage increasing tomorrow, I recently had a discussion with a colleague about the propriety of such an increase during a time of growing economic distress. While my colleague felt it was a bad idea to further burden businesses with high wage expense, I disagree.
Even with tomorrow’s increase, America still does not have a “living wage,” or a minimum wage sufficient for an individual to hold one job and provide for his or her housing, food, and other basic needs. A minimum-wage worker in our economy needs to hold multiple minimum-wage jobs or is forced to rely on social programs for support.
Without any data to support my hypothesis, I argued that increasing the minimum wage to a living wage could lead to lower overall taxes. The tax savings, I theorized, would come from the decreasing demand for social welfare programs that support much of the working class.
While it will take some time for the tax savings to be realized, wouldn’t the short-term sacrifice in corporate profits be worth the long-term increase in wealth and self-sufficience acheived by minimum-wage workers?