Equal Pay/Fair Wage

Minimum Wage Doesn't Pay for Hard Work; Let's Hike

Tuesday, February 7, 2012

Minimum-wage jobs are mainly held by women struggling to support families on way too little. Let's guarantee these hard-working breadwinners a living wage. The first in a series of articles by Women Employed on the challenges facing low-wage workers.




(WOMENSENEWS)--Have you ever thought about what it would be like to raise your family on minimum wage?

The short answer is it would be hard and probably impossible without some form of public assistance despite your long, tiring hours.

The federal minimum wage is $7.25 an hour, or less than $14,000 a year for a full-time worker, which falls below the federal poverty line for a family of two or more. This breaks down to about $270 a week, before taxes, to pay for all of the bills and expenses a family faces.

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These are important numbers to keep in mind because many Americans may link minimum wage to jobs performed by teenagers for extra spending money. But that's far from the reality.

Few minimum-wage workers are in their teens. Eighty percent are 20 years or older, and most minimum-wage earners contribute more than half (54 percent) of his or her family's weekly income.

Minimum-wage earners are breadwinners--disproportionately female--who are supporting spouses, children, parents and other relatives. While women make up just under half of the national work force, we are roughly 60 percent of minimum-wage workers.

With the worst recession in a generation gripping our nation, more families than ever are relying on minimum-wage jobs in industries such as retail, home health care and food preparation and service. Oftentimes, these are the only jobs available to people trying desperately to keep their families afloat.

Not Enough

In Illinois, where Women Employed is located, our minimum wage is a dollar more than the federal standard, but working full time, that still translates to $15,840 a year.

That's not enough.

A single parent in Illinois with a pre-schooler and a school-age child would need approximately $50,000 a year to cover the basics of housing, food, health care, transportation and child care without government support.

That would be a real living wage and it would be more than three times what a minimum wage worker would earn.

Rachel Readus can attest to how hard it is to survive on the minimum wage in Illinois. When she was still in high school, her mother passed away and she had to support herself. Even as a single woman without children, living on minimum wage was a struggle.

"I was working in retail jobs for minimum wage and I had to pay my own bills -- rent, utilities, food, the whole nine yards. I was working until 1 or 2 in the morning, and then I'd have to be back at work at 8 a.m. the next day, but I still wasn't earning enough to get by," she told me. "Most of the time, I couldn't afford to pay my rent. I would live in an apartment for three or four months until I couldn't afford the rent anymore, and then I'd move from place to place, sleeping at friends' houses. I just could never earn enough to get by."

We can do better for people like Rachel, and we have done better in the past.

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Times Haven't Changed for 'The Help' of Today

Raising the minimum wage is not the panacea to ending poverty among women. Although increasing the minimum wage does increase consumer purchasing power in the short-term, it also has ramifications on purchasing power in the long term. Even with an elementary understanding of economics, we can understand that forcibly increasing incomes also increases the prices of goods and services because the employer must derive the higher wage from what it charges consumers.

In order for the minimum wage to work, we need to assume that consumers are not price sensitive. But that is not always the case. A couple examples of where demand is more elastic are in the retail and restaurant industries. We may also note that these are the industries that are more likely to pay a minimum wage. If we raise the minimum wage, then prices may increase on these goods. This effect drives consumers away and thus pressures the employer to mitigate costs through laying off employees. This doesn't help anyone.

Let's say San Francisco's government increases it's minimum wage, currently at $10.24, to $11.24. It implements this increase so Sally, a single mother who works at a grocery store, and Mary, a single mother who works in clothing retail, can have more purchasing power. However, the increase does not affect them equally. The owners may increase their prices to compensate for the wage increase. Customers at the grocery store are not price sensitive because they need food. Customers at the clothing store, on the other hand, may cut back on buying clothes. Sally can be confident that she will not be laid off or have her hours cut. Mary, on the other hand, will be at a much bigger risk of being unemployed or underemployed. Thus, by increasing the minimum wage, the government put one impoverished woman in jeopardy of losing her job and increased the living standards of another person by a small margin. Is that fair?

If we really wanted to raise the living-standards of impoverished women, we have to look at why they are in that condition in the first place. Yes, it may be because of sex discrimination or the responsibilities at home, but raising the minimum wage does not fix any of those problems. What can address those problems is increasing human capital – the skills that these minimum wage women may have. One obvious step is to push more women to pursue higher education, but that is not always possible when one is older, has a family to feed, or pays rent every month. An alternate route is to encourage women to raise their human capital in the workplace. Employers can benefit from having their employees take up more responsibilities. Businesses can become more productive and efficient. Employees may get a raise or may find better opportunities elsewhere. Increasing human capital is how we can raise the living standards of impoverished women, not by forcing businesses to raise their incomes.

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