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Obama’s Call for an Increase in Minimum Wage: A Blessing or a Curse?

Obama’s Call for an Increase in Minimum Wage: A Blessing or a Curse?

 

With the current global financial crisis, different nations globally, as well as their citizens are on the lookout for ways to get back on their feet and gain financial freedom, have control of their lives, improve their standard of living and live happier, healthier and more fulfilled lives. To this effect, individuals as well as nations strive to cut their budgets and minimize spending as we march gradually towards the worldwide economic recovery. Americans and their governments are not left out of the struggle.

It is American tradition to increase the minimum wage after a few years. The current minimum wage of $7.25 was the result of the last increase in 2009 by the then George Bush’s administration. America’s history has known disparities and inequalities between the average wage of middle class individuals and that of lower class citizens. Many workers especially women are being underpaid for their work.

America’s minimum wage is one of the least among the industrialized nations of the world irrespective of the wealth of the nation. What this means is that the rich are getting richer while the poor are getting poorer and are barely able to survive irrespective of their hard work. Obama in an effort to deal with this inequality has presented himself as “a savior and redeemer” to the poor minimum wage workers and families by proposing a hike of the minimum wage to 9 dollars per hour in addition to his tax policy that has targeted more tax for the wealthy and less for the poor. Will the president minimum wage increase actually solve the problem of the poor, put more food on their table, and offer them job security, housing needs plus other necessary amenities? Well, let’s see what Americans have to say on the issue.

The majority of Americans think that  the increase is long overdue while some think it will have a negative impact on the poor that it was intended to help. President Obama, had proposed minimum wage increase in his first tenure but that intention of his could not move forward due to the global economic downturn. Now, in his second tenure when the economy is gradually recovering, he thought it as the right time to do the hike though now lesser than the $9.5 dollars he proposed then. It is his plan to eradicate poverty by boosting the income of the poor and women who mostly fall within that salary range.

His proposal is not a new one in the American history but what is unique in his own proposal, is his intention to tie it down to helping poor families and eventually letting inflation determine the minimum wage as it is done in some industrialized nations like France which will eliminate the politicians having to hike the price occasionally. The minimum wage will then be regulated by market forces of demand and supply.

The proposed minimum wage hike is definitely going to increase the income of millions of Americans, place America in its place as the richest and most powerful nation on earth but whether it will translate to an overall/net increase on the workers wage is a question we need to ponder on. Americans have received the proposal with double and conflicting emotions.

Low income earners will get paid higher but the hike may also lead to increase in  production cost which would in turn lead to many small businesses being unable to cope up with the increased cost of labor, lay off of some workers, increased in unemployment rate, joblessness, homelessness and destitution. To be able to eradicate unemployment, small businesses should be encouraged to be able to hire more workers. When the unemployment problem has been tackled to its barest minimum, the increase in the minimum wage will potentially benefit the majority of low working class Americans.

Ways Obama’s call for an increased in minimum wage is a blessing

You may want to know why the introduction of the minimum wage when the American economy is still struggling to rise above the global financial crisis and when the rate of employment is beginning to increase and the rate of unemployment are just about to start declining. If you are one of those unclear about the reason for its introduction, see below,  few facts and figures that would guide you for a better understanding.

1. The minimum wage of Americans is far too low compared to other industrialized nations of the world.

2. Raising the minimum wage of Americans to echo the actual place of American globally is a good move.

3. Being the most affluent nation of the world, it is expected that every American should be living above the poverty line. This hasn’t been the case and that is one of the things the proposal hoped to achieve.

4. The majority of people on the minimum wage are women. The minimum wage will boost the salary of women, eradicate inequality between men and women in terms of the wage being paid and;

5. Will also address the striking difference between the average salaries that every American worker should receive versus the actual minimum wage.

6. It would also address thethe so-called “tipped” minimum wage and pegging it to inflation as well” Also hiking the minimum wage would  increase the income of millions of Americans.

Obama’s introduction of the increase in minimum wage is definitely going to be beneficial to the country’s economy and will be a blessing to the country and citizens in various ways but it as well has some implications which must also be considered before we make our conclusions.

Now let’s see reasons why such an introduction may be considered a curse rather than a blessing.

Negative effects of Minimum wage Hike

The increase minimum wage could affect small businesses negatively  and could in fact lead to folding up and extinction of most of them; see some small business views on the effect of the increase to their businesses: TheBlaze.com and RawStory.com.

Again, such increase could in turn lead to increase in the cost of production, cost of labor, laying off of workers, increase in unemployment, and so on.

Mark Wilson in his essay, ”The Negative Effects of Minimum Wage Laws” enumerated some negative effects of minimum wage increase as;

  • “Increasing the likelihood and duration of unemployment for low-wage workers, particularly during economic downturns;
  • Encouraging employers to cut worker training;
  • Discouraging part-time work and reducing school attendance;
  • Driving workers into uncovered jobs, thus reducing wages in those sectors;
  • Encouraging employers to cut back on fringe benefits;
  • Encouraging employers to install labor-saving devices;
  • Increasing inflationary pressure;
  • Increasing teenage crime rates as a result of higher unemployment; and
  • Encouraging employers to hire illegal aliens.

Considering these possible harm that the increase in the minimum wage may cause, it is wise to move with caution by making provisions to sort the possible harm that the wage hike may cause so that the citizens that the hike hope to help will get full benefits of the increase and not lose overall.

Balancing the opposite side of the coin

Obama probably has a good intention to help low class and middle class American workers. Every policy irrespective of its teeming advantages may as well have a negative implication. This is applicable to the introduction of the minimum wage. What matters most is being able to strike a balance between the two sides of the coin. Making sure that the merits outweighs the demerits and ensuring that any possible loopholes that may lead to quashing of the intention for which the policy is introduced is properly handled and taken care of.

If the government could make adjustments to ensure that the hike doesn’t lead to small businesses getting frozen and more people losing their job, joining the unemployed mass and  becoming homeless; then the government proposal should be welcomed with an open hand. Why not? Why should any American be opposed to that since it would raise the standard of living of its citizens? I really think that the introduction of the minimum wage increase is a good initiative that ought to be supported by every well meaning American. It is shocking to know that our country’s minimum wage is far below the rate in other industrialized nations of the world.

The introduction of the $9 minimum wage, when it fully becomes operational by the year 2015 as proposed by the present administration will raise the hope of Americans poorest of the poor who have been underpaid for their works and services. It would put more and better qualities of food on their table; it will improve their standard of living and would mean that they would have more access to basic and social amenities.

Small businesses could make up the minimum wage increase by adjusting the prices of their product, the subsequent determination of the minimum wage by the forces of inflation would mean that the wage hike will not affect small businesses as some critics think and this would also mean that the employment rate will not be affected negatively. Laws could be enacted to check excesses that this hike would cause, such as more school drop outs, plus other delinquencies, employment of illegal workers and so on as already discussed above. Having considered the two opposing views;

 

Do you think that Obama aims to bring a curse on Americans by the increase in minimum wage?

Oh, no far be it! In my opinion, he is actually trying to find ways to remedy the numerous problems that the economic downturn has cause to the nation and its citizens. Though the introduction may have a negative effect if not properly checked and handled, the proposal is a step in the right direction. What we should rather do is join hands together to discover ways to tackle any possible loophole the hike might bring.

No parent is happy to give birth to a stunted child who doesn’t grow day by day and year by year. We should rather be progressing rather than be standstill or retrogressing. We are the most powerful nation and the richest in the world and must assume that position or we lose it to other nations who can better take care of the needs of their citizens.

What is your own opinion? Should the minimum wage be raised? Do you think that Obama’s call for an increase in minimum wage is a curse or a blessing to you as an American and to all of us as a country? Please leave your comments!

 

Published by Valentine Belonwu

My name is Valentine, founder of this site, an entrepreneur working as a moderator at Bizsugar a small business community news site. Connect with me on Google+ at Valetine Belonwu

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