The federal minimum wage has received a lot of attention in 2014.
President Obama expressed his commitment to raising the wage in his State of the Union Address. Obama proposed an increase to the federal minimum wage from $7.25 to $10.10 per hour. He announced an effort to call lawmakers to action by signing an executive order to increase the minimum wage for federally contracted employees to $10.10 starting in 2015.
In April, Senate Democrats introduced a bill that would effectively raise the federal minimum wage gradually until it reached $10.10. The bill was defeated by the Senate GOP in a vote of 54-42.
But the minimum wage is a polarizing issue. Some hope it will decrease the income gap and alleviate poverty, while others fear the unknown effects on consumers, businesses and even employees.
Ashley Mckenzie, 18, a Weber State student who previously made minimum wage and now makes $7.75 an hour, expressed frustration at working for such low wages.
“You feel like you are working really hard for a company, but your paycheck doesn’t show it,” she said.
Employees, like Mckenzie, who earn minimum wage anticipate the raise would help ease the pains of low-wage living.
Michael Ransom, a BYU professor of economics, suggests raising the minimum wage is often justified by the idea of alleviating poverty. Additionally, some employees making minimum wage feel they are being taken advantage of and even exploited.
According to whitehouse.gov, the Obama administration expects the proposed raise to benefit an estimated 28 million Americans while growing the economy by giving businesses customers who are able to spend more.
The White House set up a website on the issue and began promoting higher wages through social media and infographics. Democratic lawmakers and supporters continue to tweet their support using the hashtags #1010 and #raisethewage.
On MSNBC’s “Morning Joe” Mitt Romney diverged from Republican sentiment on the issue. “I think we ought to raise it, because frankly, our party is all about more jobs and better pay,” he said.
The issue of raising the minimum wage is not unique to America; countries around the globe are considering wage increases. A staggering $25-per-hour minimum wage was on ballot in Switzerland, but even after the efforts of labor unions, it was defeated by nearly two-thirds of the population.
Economists, and many business leaders, are also cautious about supporting a wage raise in America.
Ransom suggested the minimum wage is a “customary thing that is not based on sound economic reasons.” He admitted that an increase would only benefit a small fraction of the population, and although some would benefit, many would be hurt.
Currently, Washington state has the highest state minimum wage at $9.19. Utah matches the federal minimum at $7.25 per hour.
“Unfortunately, a raise in the minimum wage,” according to Ransom, “would mean excluding employees who do not create $10 per hour in work.”
The BYU retail dining services general manager, Joe Tiapson, acknowledged that raising the wage would help student-employees; however, the change would affect everyone — especially consumers.
“If you raise the minimum wage, all fast food prices increase, all customers will see and feel the change,” Tiapson said.
BYU dining employs more than 500 students during fall and winter semesters; the proposed wage increase could mean fewer jobs and higher prices on campus.
Mckenzie, who is saving for her wedding this fall, would benefit from the increase. However, she acknowledges the unintended consequences.
“It could be really bad because I think as minimum wage goes up, everything would go up,” Mckenzie said.
Ransom calls the U.S. economy a dynamic job market where people are always finding, losing and changing jobs, where employment is considered an arrangement that is an implicit contract.
“Since it’s voluntary on both sides, it’s questionable why the government needs to be involved,” Ransom said. “Raising the wage is more of an ideological approach that shows you are sensitive to the poor. If you really want to help the poor, there are other methods, such as the earned income tax credit, where all Americans are involved.”