Why the US needs to raise the minimum wage

A basic moral principle that most Americans agree on is no one who works full time should be in poverty, nor should their family.

Yet over time we’ve seen significant growth in the “working poor” – people working full time, sometimes even 60 or more hours each week, but at such low wages that they remain impoverished.

What to do?

One step is to raise the minimum wage to $15 an hour. This is winnable. A powerful movement is fighting for $15 an hour and they’re winning new laws in cities and states, and forcing companies to raise wages.

If the minimum wage in 1968 had simply kept up with inflation it would be more than $10 today.  If it also kept up with the added productivity of American workers since then, it would be more than $21 an hour.

Some opponents say minimum wage workers are teenagers seeking some extra pocket money.

Wrong. Half are 35 or older, and many are key breadwinners for their families.

And don’t believe scaremongers who say a $15 minimum will cause employers to cut employment.

More money in people’s pockets means more demand for goods and services, which means more jobs not fewer jobs.

Studies also show that when the minimum is raised more people are brought into the pool of potential employees, giving employers more choice of whom to hire. This reduces turnover and helps employers save money.

Finally, employers who don’t pay enough to lift their employees out of poverty are indirectly subsidized by the rest of us – who are paying billions each year in food stamps, Medicaid, housing assistance, and welfare, to make up the difference.

The minimum wage should be raised to $15 an hour. It’s the least that a decent society should require.

This article is published in collaboration with Robert Reich. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Robert B. Reich is the Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies.

Image: Morning commuters are seen outside the New York Stock Exchange, July 30, 2012. REUTERS/Brendan McDermid.