# Why do we have a national minimum wage? **URL:** \ **Category:** Great Debates\ **Created:** [August 26, 2004, 2:10am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538 "2004-08-26T02:10:29Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Kel\_Varnsen\_Latex\_Division](https://avatars.discourse-cdn.com/v4/letter/k/aeb1de/32.png) [@Kel\_Varnsen\_Latex\_Division](https://boards.straightdope.com/u/Kel_Varnsen_Latex_Division)\ **Post date:** [August 26, 2004, 2:10am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/1 "2004-08-26T02:10:29Z")
Isn’t it stupid to have a national minimum wage? Why is the minimum wage the same for Southern California as rural Alabama? In what way does this make sense? Wouldn’t it be better to have a minimum wage that is tied into the cost of living in the area people live? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [August 26, 2004, 2:31am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/2 "2004-08-26T02:31:39Z")
The national minimum wage, enacted in 1938, provides a bottom floor. Set at $5.15 an hour for the past ten years, it does not provide a full-time worker a liveable income, even in rural Alabama. (See [http://www.epinet.org/content.cfm/briefingpapers\_bp151.)](http://www.epinet.org/content.cfm/briefingpapers_bp151.)) There is a “living wage” movement which wants cities and states to establish local minimum wages keyed to local cost of living. See [http://www.livingwagecampaign.org/](http://www.livingwagecampaign.org/), [http://www.universallivingwage.com/](http://www.universallivingwage.com/), [http://www.epinet.org/content.cfm/issueguides\_livingwage\_livingwage](http://www.epinet.org/content.cfm/issueguides_livingwage_livingwage). ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [August 26, 2004, 2:33am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/3 "2004-08-26T02:33:59Z")
Sorry, mistake – the MW has been $5.15 for the past **seven** years. ---
**Author:** ![Kel\_Varnsen\_Latex\_Division](https://avatars.discourse-cdn.com/v4/letter/k/aeb1de/32.png) [@Kel\_Varnsen\_Latex\_Division](https://boards.straightdope.com/u/Kel_Varnsen_Latex_Division)\ **Post date:** [August 26, 2004, 2:36am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/4 "2004-08-26T02:36:45Z")
Hijack: How can you say that minimum wage does not provide a liveable income to workers? Many people _do_ live on minimum wage. They may not live well or they may have to work more than 40 hours a week, but they do survive? ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [August 26, 2004, 3:41am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/5 "2004-08-26T03:41:45Z")
> [@Kel Varnsen - Latex Division](#): > > Wouldn’t it be better to have a minimum wage that is tied into the cost of living in the area people live? Or, have no minimum wage at all and let the market decide the relative value of our labor…and us decide whether or not we are willing to work for the amount offered. Why do we have it? More of the nanny government trend to try and take control and pander to the people who don’t understand the free market and think that if you don’t Take Control™ the US will suddenly slide back to the 1890’s. Its a remnant of a time when Government tried to control the economy. I wish I still had the link, but Sam Stone did a thread recently where he gave us a link to the history of economic controls in the US and the world. Maybe I’ll dig it up later. -XT ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [August 26, 2004, 3:48am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/6 "2004-08-26T03:48:42Z")
> [@Kel Varnsen - Latex Division](#): > > Hijack: How can you say that minimum wage does not provide a liveable income to workers? Many people _do_ live on minimum wage. They may not live well or they may have to work more than 40 hours a week, but they do survive? There’s survival and there’s survival. Read _Nickel and Dimed: On (Not) Getting By in America,_ by Barbara Ehrenreich (Owl Books, 2002). Put another way: If you work 40 hours a week for $5.15 an hour, that’s $206 a week or $10,712 a year. How do you think you would be living if you had to live on that? ---
**Author:** ![pervert](https://avatars.discourse-cdn.com/v4/letter/p/bbe5ce/32.png) [@pervert](https://boards.straightdope.com/u/pervert)\ **Post date:** [August 26, 2004, 3:58am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/7 "2004-08-26T03:58:01Z")
> [@BrainGlutton](#): > > Put another way: If you work 40 hours a week for $5.15 an hour, that’s $206 a week or $10,712 a year. How do you think you would be living if you had to live on that? But this does not answer the question. Since many people do, in fact, live on incomes in this range (the poverty level is close to $8,000 a year and we have a few millions of people in that range), they must make a “living wage”. I suspect, that “living wage” is a political term which means something quite different. It wouldn’t sound as good in protests to use the phrase “living well wage”, “comfortable living wage”, or perhaps “can afford everything he needs without recourse to charity or help wage”. You, **BrainGlutton** are a much more sophisticated person than that. Certainly you have a link handy somewhere which defines the term in the context in which you mean it. My dictionary simply says “_a wage sufficient for a worker and family to subsist comfortably_” Which seems to me to be oxymoronic. How can subsistence be comfortable? ---
**Author:** ![MrManfrengenfrensen](https://avatars.discourse-cdn.com/v4/letter/m/90ced4/32.png) [@MrManfrengenfrensen](https://boards.straightdope.com/u/MrManfrengenfrensen)\ **Post date:** [August 26, 2004, 5:15am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/8 "2004-08-26T05:15:21Z")
> [@pervert](#): > > the poverty level is close to $8,000 a year and we have a few millions of people in that range, Sort of. The poverty level for a family of four is [18K](http://aspe.os.dhhs.gov/poverty/03poverty.htm). This is the figure you’ll commonly hear when people talk about poverty level. Usually in the arguments I hear referring to a living wage, they are referring to this figure. Now, as far as minimum wage… There’s a couple of ways to look at this. One way is to view it as a payroll tax on employers to support poor workers. To which, we could make the argument that such a tax should be borne by everybody, not just employers, if it is the case that we want to support a floor on worker wages. So, we ultimately get to the question of what is the goal we’re trying to achieve with a minimum wage (or a living wage)? The goal, obviously, is to provide people who work a minimum standard of living. Personally, I think everyone should be provided with a minimum standard of living, and people who work should be provided with a minimum better standard of living. Could we provide a minimum standard of living without a minimun wage? I don’t really see how. The only way wages can rise in a free market system is if the labor supply is constant while the economy is growing. Hower, two factors prevent this from happening in the US. The first is that, in general, when wages start to rise, the Fed will raise interest rates to prevent wage inflation. The second is that when wages start to rise, and labor shortages occur, corporations will import workers under the H-1 visa system (or illegally) to depress wages. The H-1/illegal worker system pretty much ensures that employers will never need to pay a decent wage. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [August 26, 2004, 6:18am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/9 "2004-08-26T06:18:15Z")
> [@pervert](#): > > Certainly you have a link handy somewhere which defines the term in the context in which you mean it. Certainly. From [http://www.epinet.org/content.cfm/issueguides\_livingwage\_livingwagefaq:](http://www.epinet.org/content.cfm/issueguides_livingwage_livingwagefaq:) > [@](#): > > What is a living wage ordinance? > A living wage ordinance requires employers to pay wages that are above federal or state minimum wage levels. Only a specific set of workers are covered by living wage ordinances, usually workers employed by businesses that have a contract with a city or county government or those who receive economic development subsidies from the locality. The rationale behind the ordinance is that city and county governments should not contract with or subsidize employers who pay poverty-level wages. > > How are living wage levels determined? > The level of the living wage is usually determined by consulting the federal poverty guidelines for a specific family size. Often, living wage levels are equal to what a full-year, full-time worker would need to earn to support a family of four at the poverty line ($17,690 a year, or $8.20 an hour, in 2000). Some living wage rates are set equal to 130% of the poverty line, which is the maximum income a family can have and still be eligible for food stamps. The rationale behind some living wage proposals is that these jobs should pay enough so that these families do not need government assistance. (The poverty guidelines are available from the U.S. Department of Health and Human Services. Note that poverty guidelines are different from the poverty thresholds; one main difference is that the poverty guidelines are more current.) > > Cities and counties with a higher cost of living tend to have higher living wage levels. The wage rates specified by living wage ordinances range from a low of $6.25 in Milwaukee to a high of $10.75 in San Jose. Furthermore, some advocates have attempted to calculate a living wage based on an income that would provide for a family’s basic needs (see EPI’s How Much is Enough? for a discussion of “basic family budget” measures). The living wage levels based on these self-sufficiency income measures are generally much higher than the poverty guidelines. > > How is the minimum wage different from a living wage? > The federal minimum wage is the minimum amount that a worker can be paid an hour (currently $5.15) and applies to almost all workers. States may also set a minimum wage that is higher than the federal minimum. Living wages commonly refer to wages set by local ordinances that cover a specific set of workers, usually government workers or workers hired by businesses that have received a government contract or subsidy. A “living wage” is a also term often used by advocates to point out that the federal minimum wage is not high enough to support a family. > > What is the difference between a living wage and a “prevailing wage”? > Prevailing wage laws require firms working under a government contract to pay the “prevailing” wage for each job, that is, the wage where half of all workers in the community in the particular job earn more and half earn less. The prevailing wage is different for each occupation and each city or county. > > Prevailing wage laws ensure that low-wage firms cannot unfairly underbid higher-wage firms when competing for federal or state government contracts. The prevailing wage is generally higher than the minimum wage, but can be lower than a living wage. Thus, prevailing wage laws do not prevent workers from being paid a poverty-level wage. > > Why do we need living wage ordinances? > The main reason for enacting a living wage ordinance is to reverse the downward trend in wages for low-wage earners. Wages for the lowest-paid 10% of workers fell 9.3% between 1979 and 1999. The number of jobs in which wages were below what a worker would need to support a family of four above the poverty line also grew between 1979 and 1999. In 1999, 26.8% of the workforce earned poverty-level wages, an increase from 23.7% in 1979. > > Living wage ordinances are necessary to prevent city and county governments from encouraging the creation of jobs that pay wages so low that workers live in poverty. Without living wage laws, governments could contribute to the creation of poverty-level jobs by hiring low-paying sub-contractors or giving businesses tax breaks or subsidies to create jobs without any guarantee that the new jobs will pay a decent wage. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 26, 2004, 6:28am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/10 "2004-08-26T06:28:33Z")
> [@MrManfrengenfrensen](#): > > The only way wages can rise in a free market system is if the labor supply is constant while the economy is growing. Where does this law of economics come from? Clearly if it is true with a constant labor supply and X% growth, it will be true with some level of a growing labor supply and \>X% growth. No? ---
**Author:** ![rjung](https://avatars.discourse-cdn.com/v4/letter/r/45deac/32.png) [@rjung](https://boards.straightdope.com/u/rjung)\ **Post date:** [August 26, 2004, 6:42am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/11 "2004-08-26T06:42:30Z")
> [@xtisme](#): > > Or, have no minimum wage at all and let the market decide the relative value of our labor…and us decide whether or not we are willing to work for the amount offered. So if there’s no minimum wage, and employers decide to go as low as $0.25/hour as a salary for menial work, and some people are desperate enough to take it because there aren’t any alternatives left, it’s okay for the rest of us to just reap the fruits of cheap labor and say, “Hey, market forces, baby!” 😕 Forget economics for a minute; are you _morally_ comfortable with such a stance? ---
**Author:** ![Largo62](https://avatars.discourse-cdn.com/v4/letter/l/45deac/32.png) [@Largo62](https://boards.straightdope.com/u/Largo62)\ **Post date:** [August 26, 2004, 7:48am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/12 "2004-08-26T07:48:51Z")
> [@rjung](#): > > So if there’s no minimum wage, and employers decide to go as low as $0.25/hour as a salary for menial work, and some people are desperate enough to take it because there aren’t any alternatives left, it’s okay for the rest of us to just reap the fruits of cheap labor and say, “Hey, market forces, baby!” 😕 > > Forget economics for a minute; are you _morally_ comfortable with such a stance? I agree with you, rjung, but you’ve been around here long enough to know that talk of morals with fiscal conservatives is fruitless. They have the ability to divorce fiscal policy from humanity and morality. And the really astonishing thing is that most of them are really decent and moral people. I think I’m a decent and moral person, too, but I confess I have no problem sticking a hook through a minnow’s gill in order to catch a bigger fish. I would have trouble morally with the kind of unregulated capitalism of the 19th century. But we all bend morality in our own way. ---
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [August 26, 2004, 8:21am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/13 "2004-08-26T08:21:02Z")
> [@rjung](#): > > So if there’s no minimum wage, and employers decide to go as low as $0.25/hour as a salary for menial work, and some people are desperate enough to take it because there aren’t any alternatives left, it’s okay for the rest of us to just reap the fruits of cheap labor and say, “Hey, market forces, baby!” 😕 > > Forget economics for a minute; are you _morally_ comfortable with such a stance? This is complete horseshit, and you know it. Ever heard of welfare? You’re paying for it. Working for a quarter an hour? You can come up with a better argument than that. The welfare benefits are what are lost in this argument. Minimum wage would be $10,500 per year ($5.25 is the minimum btw times 2000 hours at 40/week.) Double that for a married couple that has the sense to know that they have to work 2 jobs to make ends meet. (And I’m sure they hate that tax cut) Now we get to the crux of this whole bitchfest. If you’re over the age of 21 and still make minimum wage, time to wake the hell up. Get a frigging job that pays better. Hell, even here in North Dakota McDonald’s is hiring at $7.50 an hour. Poverty doesn’t mean you can’t afford a Lexus and plasma TV. Show me kids starving to death for a reason not related to negligent parents, and I’ll buy into the idea that minimum wage is a huge problem. In fact, I’ll accept a simple cite of someone raising a family that is at min. wage level. ---
**Author:** ![Gest](https://avatars.discourse-cdn.com/v4/letter/g/9d8465/32.png) [@Gest](https://boards.straightdope.com/u/Gest)\ **Post date:** [August 26, 2004, 11:52am UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/14 "2004-08-26T11:52:04Z")
> [@duffer](#): > > This is complete horseshit, and you know it. Ever heard of welfare? Among free marketers, the level of opposition to a minimum wage is often matched by the level of opposition to welfare. Fundamentalists reject both altogether (at least when it comes to welfare provided by the state). ---
**Author:** ![MrManfrengenfrensen](https://avatars.discourse-cdn.com/v4/letter/m/90ced4/32.png) [@MrManfrengenfrensen](https://boards.straightdope.com/u/MrManfrengenfrensen)\ **Post date:** [August 26, 2004, 12:44pm UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/15 "2004-08-26T12:44:03Z")
> [@John Mace](#): > > Where does this law of economics come from? Clearly if it is true with a constant labor supply and X% growth, it will be true with some level of a growing labor supply and \>X% growth. No? Agreed. I should have worded that better. But I don’t think this undoes my point. If the labor supply is large enough, then it will take an immense amount of growth to push up wages, right? The question is how much growth do we need to keep wages stable or rising, given the amount of the labor supply + legal + illegal immigration. Anyone out there with stats? ---
**Author:** ![Renob](https://avatars.discourse-cdn.com/v4/letter/r/8c91f0/32.png) [@Renob](https://boards.straightdope.com/u/Renob)\ **Post date:** [August 26, 2004, 1:21pm UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/16 "2004-08-26T13:21:26Z")
Of course, much of the rhetoric about the minimum wage misses the mark. Since most people who are in minimum wage jobs are not the breadwinners in the family, and since many are teenagers, it’s not like many people are actually supporting their families on a minimum wage salary. As the National Center for Policy Analysis reports: > [@](#): > > The Employment Policy Foundation has come up with some enlightening statistics regarding minimum wage workers. > > Fewer than 20 percent of the 4.4 million minimum wage earners live in poor families – most of them being young and unskilled. > > More than 40 percent of them live at home with their parents. > > One-third are teens and more than half are under the age of 25. > > Half of all minimum wage earners live in families with incomes above $25,000 – and nearly one-fifth live in families with incomes over $50,000. > Fewer than one million of those earning the minimum live in working-poor families, which have one or more parents working and are still below the poverty line. And I must also disagree with this assertion: > [@MrManfrengenfrensen](#): > > Could we provide a minimum standard of living without a minimun wage? I don’t really see how. The only way wages can rise in a free market system is if the labor supply is constant while the economy is growing. Actually, if you want your wages to rise, then improve your skills. I worked at minimum wage jobs before and during college. Guess what? My wages rose dramatically after I graduated. It’s foolish to rely on government to raise your wages. Go out there and get an education or better training. There are plenty of opportunities for this out there. ---
**Author:** ![JRDelirious](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jrdelirious/32/9531_2.png) [@JRDelirious](https://boards.straightdope.com/u/JRDelirious)\ **Post date:** [August 26, 2004, 1:57pm UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/17 "2004-08-26T13:57:38Z")
BTW, the “Federal Minimum Wage” is not absolute or universal. There are whole employ_ee_ and eploy_ment_ categories and workplaces that are exempt or subject to “subminimum”, and the individual states/territories may also have their own requirements and exemptions of minimum wage and benefits. [Several pages on this](http://www.toolkit.cch.com/text/P05_4039.asp). And yes, it is a way of exerting a market-regulation function by limiting the “range of motion” of the labor market in a direction. However, **IMO** this is an entirely different animal from the “Living Wage Movement”, which I don’t think MW was created for _that_ purpose. ---
**Author:** ![Leonard](https://avatars.discourse-cdn.com/v4/letter/l/a6a055/32.png) [@Leonard](https://boards.straightdope.com/u/Leonard)\ **Post date:** [August 26, 2004, 3:20pm UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/18 "2004-08-26T15:20:21Z")
What of the people that, due to the minimum wage have no job at all instead of a lower than minimum wage job? I don’t know how much it varies by state, but around here welfare pays somewhere around half minimum wage (this based on my friend who was a single mother with one child last year). When the price of labor is forced up to X amount, some of the people whose market wage would be between welfare level and X level will not be hired (or let go if it’s an instantaneous change) and end up on welfare, which would be lower than their wage would be on the free market. Also some of them would have their wages raised to meet the regulation, I’m not ignoring that. I’m just saying it has _negative_ net effect for some. If welfare and minimum wage were the same level (maybe they are some places, I don’t know) it wouldn’t have the negative effect on some, but there would be some serious problems with incentives. I see the minimum wage law as helping one group of the poor at the expense of another group of the poor. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [August 26, 2004, 3:50pm UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/19 "2004-08-26T15:50:28Z")
> [@Renob](#): > > Of course, much of the rhetoric about the minimum wage misses the mark. Since most people who are in minimum wage jobs are not the breadwinners in the family, and since many are teenagers, it’s not like many people are actually supporting their families on a minimum wage salary. As the National Center for Policy Analysis reports: … The right-wing / libertarian NCPA and the (what looks to be business-funded) Employment Policy Foundation both have an agenda and this can influence how they selectively tell you the facts. In this case, the most obvious problem I see with their analysis is that they are apparently focussing **only** on those people earning exactly the minimum wage. They don’t look at those earning, say, 25 or 50 cents or $1 more than the minimum wage. Thus, they are clearly going to be seeing the very newest workers in the workforce since nearly everyone gets raises eventually and this skews their figures. By providing a floor, the minimum wage tends to push up wages near the bottom, so that those earning 25 or 50 cents or a dollar more (perhaps even those earning a few dollars more) still are benefitting from that minimum being in place. ---
**Author:** ![pervert](https://avatars.discourse-cdn.com/v4/letter/p/bbe5ce/32.png) [@pervert](https://boards.straightdope.com/u/pervert)\ **Post date:** [August 26, 2004, 4:14pm UTC](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538/20 "2004-08-26T16:14:12Z")
> [@jshore](#): > > By providing a floor, the minimum wage tends to push up wages near the bottom, so that those earning 25 or 50 cents or a dollar more (perhaps even those earning a few dollars more) still are benefitting from that minimum being in place. Ah, but does it push up the floor by raising everyones wages, or does it simply drop those below the new floor out of consideration? Perhaps some combination? > [@](#): > > …most obvious problem I see with their analysis is that they are apparently focussing only on those people earning exactly the minimum wage. I’m not sure this is the problem you think it is. Minimum wage is not as universal as it would need to be for this to be such a huge problem. Many people just entering the workforce, for instance, do so only part time. They may not be subject to the same minimum wage restrictions as those working full time. What I’m saying, is that looking at the minimum wage in isolation is not necessarily looking at entry level workers and ignoring all others. BTW, **Renob** can you link to where you found that information? I’d like to look at it. [Next page](https://boards.straightdope.com/t/why-do-we-have-a-national-minimum-wage/261538.md?page=2)