Raising the minimum wage: a nation-wide hot topic

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The impact of the minimum wage increase on individuals based on their educational attainment — this dispels the myth that most minimum wage workers are uneducated.

Being stuck in a minimum wage job after graduating is every college student’s nightmare. But these are exciting times. The media exploded the past couple of weeks when a major retailer, Gap Inc., announced they are going to raise their company minimum wage to $10 by next year. This turn of events has brought attention to a congressional bill that would raise minimum wage nationwide to $10.10 an hour.

“To us, this is not a political issue,” Gap Chairman and CEO Glenn Murphy said in a statement. “Our decision to invest in frontline employees will directly support our business, and is one that we expect to deliver a return many times over.”
Gap Inc. owns Banana Republic and Old Navy. The initiative will increase wages for all companies under the Gap umbrella.
First-year Kayla Evens started working at Banana Republic in January. “They said that they want to have all the wages increase by 2016. My wage will actually increase to $10 an hour in sixth months, around like July,” Evens said. “It’s sooner for the people who are already working there.”

Federal minimum wage is currently $7.25 an hour. There are 21 states and many cities that have a minimum wage higher than the federal level. Washington state has the highest at $9.32 and Oregon trails second at $9.10.
Recently, individual cities and businesses have taken it upon themselves to increase the minimum to $10 or more.
“I’m [currently] making $8.25 an hour so already above minimum wage,” Evens continued. In regards to Gap raising their minimum to $10 she said, “I think it’s a great idea because I know a lot of people [who work there], that’s either their only job or that’s on top of other jobs that their working so [it’s] going to help them a lot.”

Last month, President Obama signed an executive order to raise the minimum wage for federal employees to $10.10 an hour. Their wage increases will go into effect next year.

Obama is pushing voters across the nation to support a congressional bill that would increase federal minimum wage to $10.10 an hour.
Gap isn’t the only business to enact a company minimum wage. Costco’s starting wage has been above the federal level for years, and the company is a vocal proponent of raising the federal minimum wage.
“At Costco, we know that paying employees good wages makes good sense for business,” Costco CEO and President Craig Jelinek said in a press statement. “We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low.”
“An important reason for the success of Costco’s business model is the attraction and retention of great employees,” Jelinek continued. “Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty.”
At $7.93 an hour, Florida’s minimum wage is higher than the federal but not by much.
This is in stark contrast to Seattle-Tacoma in Washington, as they have the highest minimum wage in the country at $15 an hour.

Third-year Amanda Bragg, a literature and political science AOC, works four campus jobs. She is an RA, telecounselor in the Admissions Office, Phonathon caller at the New College Foundation and Black Box House Manager. Most student jobs at New College pay $8 an hour although RAs earn a yearly stipend.

“It can be very difficult working a minimum wage job because you put in so many hours and then you don’t see as much of a benefit as you would like,” Bragg said.

“Although [raising the minimum wage] could be difficult for New College, the school has a lot of issues with student workers given the fact that there is not a lot of funding for either work study or just paid students in general,” Bragg explained.
Raising the minimum wage may put more of a strain on public colleges and small businesses on a tight budget versus larger companies such as Gap.

Those against raising the national minimum wage argue that many workers will lose their jobs and it will hurt the economy.
Students are taught the basics of supply and demand in introductory economics courses. The minimum wage is a price floor, meaning workers must be paid at least that amount or more. The supply is the workers and the demand is from employers.
With a price floor there will be a flood of workers into the market. One example is college students strapped for time, who previously thought an hour was worth more than $7.93. With an increase in pay, some who were previously not in the job market will now look for jobs thus increasing the supply of workers.
Simultaneously, business owners will demand less workers because of the increase in costs. Since the minimum wage is above market equilibrium, many workers will lose their jobs, increasing unemployment and dampening the economy.

According to a recent Congressional Budget Office report, once fully implemented the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent.

“Families whose income would have been between one and three times the poverty threshold would receive, on net, $12 billion in additional real income. About $2 billion, on net, would go to families whose income would have been between three and six times the poverty threshold,” according to the CBO report.

Proponents argue that the benefits of an increase in the minimum wage would outweigh the costs. They believe increasing the hourly pay of the lowest paid workers will strengthen the economy by bringing workers above the poverty line and allowing them to afford more goods and services.

As to how the Gap wage increase will help a New College student, “I’ll be able to not have to stress as much about paying for textbooks,” Evens said. “I feel like my time will be better spent. I’m excited! It feels good to know that I’m making enough that it will help me in the long run and that I will feel satisfactorily compensated for my time.”

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