By: Rhiannon Flanagan
In 2016, current U.S president Donald Trump discussed minimum wage with Bill O’Reilly. In this interview, Trump argued that states should control the minimum wage, for states to compete. On the other hand, during the Fox Business Network debate, he informed the audience that he believes federal minimum wage should remain the same. Whether or not these contradictions align with more republican views, or if the lack of global competition will lead us into an isolationist period is not the major concern. The major concern is deciding if increasing minimum wage truly has benefits.
On July 27, 2016, during a press conference, Trump stated, “The minimum wage has to go up. People are — at least $10, but it has to go up. But I think that states — federal — I think that states should really call the shot.” In correspondence, on Jan. 1 in 2018, some states moved their minimum wage higher according to ncsl.org. However, the federal minimum wage has remained at $7.25/hr, which to some Americans, is a dire problem.
In some areas, raising the minimum wage seems like a way to increase jobs and lower the gaps between class incomes. For example, CNN describes the onset of pressure in early 2018,
“Activists pushing minimum wage increases all over the country are doing so out of a sense that poor people haven’t shared in what otherwise looks like a booming economy.” Similarly, Trump has offered a similar opinion via Twitter in late 2015 declaring, “The middle-class has worked so hard, are not getting the kind of jobs that they have long dreamed of – and no effective raise in years. BAD.”
In recent times, the federal minimum wage is still at a standstill, yet we still see further pushes as mentioned by forbes.com, “Politicians and activists have been trying to raise the federal minimum wage for years now. The Fight for $15 crowd is probably the most well-known, but other groups have been pushing for similar increases.” Ultimately, this issue has many inconsistencies and decades of frustration based upon fears linked all the way back to the Great Depression and the recession in 2008. However, the fact that the minimum wage hasn’t changed for nearly a decade is more positive than some think.
Considering Trump’s proposal of state dominance over the minimum wage, which had been effective before Trump’s term, 29 states have a higher minimum wage than the federal amount according to the economic policy institute. This change still doesn’t help those who argue for a greater federal minimum wage, but the truth is that there are too many economic variances.
Essentially, states typically guide their minimum wage based on the cost of living or they put in place annual increases. Therefore, some areas with more metropolitan areas need a higher minimum wage, and if there were to be a general higher federal minimum wage, some areas with low wages already present would be harmed. Ultimately, many feel that the purchasing power disparities between cities and non-metropolitan areas whose wages are unequal seem to create a false sense of inequity within the U.S. Nonetheless, the States power over the variation of wages helps to create fair proportion between wages, workers, as well as decades of wavering sustenance and growth.
Although prior statements are more argumentative regarding whether the current state of the federal wage stagnation and the power of the states is effective enough in maintaining economic stability, the truth is that there will always be displeased individuals. Altogether, the only fear is panic and political upheaval, because in truth there will always be enough to sustain. One of the reasons the U.S. is such a strong power is because of its competition and open playing field, and yes applying a higher minimum wage is a plausible solution to economic failure or depression in accordance with Keynesian values. But currently the federal minimum wage hasn’t changed since 2009 after the crisis that occurred in 2008, and there is not a strong reason it should have to change now.
Withal, The United States’ economy comes with many perplexing details and issues, but the call for a higher federal minimum wage is not such one necessary “problem.” Outside of opinionated newspapers and movements, David Ricardo’s Iron Law of Wages simplifies the reason why there is no need to raise the minimum wage. He proposes that wages or “natural wage” will always remain at subsistence level with no need for governmental interference, “Like all other contracts, wages should be left to the fair and free competition of the market and should never be controlled by the interference of the legislature.”
