The current Federal minimum wage is $7.25 an hour, but president Obama is hoping to change that. Obama announced that he will make an executive order to raise the minimum wage for contract workers to $10.10 an hour. While this move is likely to only affect roughly half a million workers, he hopes that this will encourage congress to make the $10.10 minimum wage applicable for everyone.
Although there are some businesses and government officials against raising the minimum wage, there are a number of reasons why it would be a good idea, especially as it concerns minimum wage workers. Below are a number of reasons why a higher minimum wage would be a benefit, especially for low-income workers.
The biggest impact a $10 minimum wage would have on minimum wage employees is providing them with more income on a weekly basis. For someone who’s making a low wage already, even the smallest increase helps. A large percentage of low wage workers are employed by major corporations such as retail chains or fast food restaurants and those corporations wouldn’t be too severely impacted by an increase in the minimum wage.
Lower Poverty Rates
Several studies have been done that state that raising the minimum wage to $10 would lift almost half of the working poor out of poverty. While $10 is still not a very high hourly wage, it would go a long way for people who are currently making the current minimum wage. Money and low wages are one of the biggest influences of poverty, so this can be a good start to improving income inequality in the country.
Less Dependence on Government Assistance
A higher wage means less dependence on government assistance. Many minimum wage employees supporting themselves or their families on low wages rely on additional government assistance in order to survive. Having a higher wage means that they might not have to rely so much on government assistance.
Help Close the Wage Gap
It’s no secret that there’s a minority and gender wage gap that exists in this country. Studies have shown that a large percentage of minimum wage employees are female or minority workers, and raising the minimum wage to $10 would at least bridge that gap somewhat. While it will be awhile before the wage gap is completely bridged, raising the minimum wage would help those employees who are negatively impacted by the current minimum wage.
Boost the Economy
Many businesses and employers are hesitant to support a higher minimum wage, but raising it would help boost the economy. A higher income means will allow people to spend more money. More income means more spending which means an increase in the production of goods and services.
More Ability to Save
As with any situation where people enter into a higher income bracket, there’s a better chance of being able to save money and create an emergency fund. While $10/hour is still not enough to make anyone completely financially stable, it may allow someone living on a minimum wage to save a bit more than they previously were able to save. In addition, those who are earning as a side income such as teenagers or part-time workers, this is a great way for them to save more money.
Fewer Financial Difficulties
As previously stated, $10/hour is still pretty low in terms of income, as it only amounts to $400/week and $19,000/year for full-time workers. However, for someone who was making less than that, they may now be able to cover certain financial difficulties they previously were unable to on their own before.
One of the first things to go when you’re scraping by are paying for certain items that you know you need, but are unable to afford. Whether it’s a trip to the doctor’s office, paying the electricity bill or buying healthier groceries, even a small income increase can help. Increasing the minimum wage will help provide employees better access to the things that they need.
Reduces Job Turnover
Raising the minimum wage is also said to reduce job turnover, meaning that people are more likely to stay in one job than jumping from job to job. Going from job to job tends to put a strain on finances, so less turnover can be seen as a benefit of increasing the minimum wage both for employees and employers.