The Minimum Wage Debate

Currently, $10.00, in the City of Chicago, can buy 2 cups of coffee (Carmel Machoattos) at a
Starbucks. The total bill is $9.44. Also, $10.00 may also allow you to buy a Whopper with
cheese, a small fry and a medium soda at a Burger King, which will cost $8.89. It is safe to say
that earning $10.00 per hour is not going to help you pay your rent or mortgage; it may not even
be enough to feed a family. That $10.00 per hour minimum wage is currently the hourly
minimum wage for employees that work at various venues in the City of Chicago. If one works
outside the City of Chicago, but remains employed in the State of Illinois their hourly minimum
wage rate is only $8.25 per hour. The minimum wage is defined as the lowest wage permitted
by law to pay an employee. For the last 10 years, the raising of the minimum wage has been a
controversial subject amongst politicians and workers for various reason. While many groups
feel that the minimum wage should be increased, there are just as many groups that oppose the
idea and want the minimum wage to remain if effect at its current rate in Illinois which is $8.25
per hour. The groups in Chicago as well as in the State of Illinois protest on numerous occasions
hoping that the legislatures will increase the minimum wage in Illinois to $15.00 per hour.
The minimum wage debate in the United States can be traced as far back as 1938. At that
time, the first national minimum wage laws were passed in the United State as part of the 1938
Fair Labor Act, which established a federal minimum wage for all employees and also set
standards for compensation for working more than 40 hours per week. Further, workers who
worked more than 8 hours a day were to be compensated time and a half or the minimum plus
half for every hour over 8 hours. Workers who worked longer than 12 hours were compensated
double minimum wage. These rules were exempt for management, executives, secretaries and

other administrative jobs. Consequently, many employers reclassified jobs to avoid paying
overtime. (Carrington).
Since 1938, various amendments have been made to the Fair Labor Standards Act, which
included rules that governed vacation time, as well as what types of companies had to abide by
the rules with regards to the minimum wage. In 1938, the national minimum wage was .38 cents.
(Blazina p.22). The minimum wage did not break the $1.00 threshold in the United States until
March of 1956, almost twenty years after the inception of the minimum wage standard. (Blazina
p.23) . While the minimum wage was low compared to modern standards, the minimum wage in
the early 1940s and 1950s was set in accordance with the cost of living. According to author
Dave Blazina, ..the value of a dollar went a long way in the 1950s as we witnessed people
working and spending money. The minimum wage allowed people to live a decent life. Many
people in the United States worked in minimum wage positions such as steel factories, auto
plants and construction. (Blazina p. 33).
Unfortunately, the minimum wage in the United States failed to keep pace with the cost of
living and inflation. It was not until 2007, that Congress passed the Fair Minimum Wage Act of
2007. At that time, the United States raised the federal minimum wage from $5.15 to $7.25 per
hours. At the time, the raise was significant enough to have states pass their own minimum wage
standards. At the time the minimum wage standard was set in at $7.25 per hour, certain states did
not adopt any type of minimum wage standards. Those states, South Carolina, Alabama,
Mississippi, Louisiana and Tennessee elected to not adopt the federal minimum wage standards
as jobs were not as plentiful as in states such as California, Texas or New York.
In comparison to other countries, the United States has one of the lowest minimum wages
standards. Currently, in Germany, the national minimum wage is an equivalent of $11.50 in U.S.

currency. In Canada, the minimum wage standard was established relative to the cost of living in
the respective provinces. The highest minimum wage in Canada as of June 2016 was $13.00 in
Nunavut, Canada. The lowest wage $10.85 per hour in the British Columbia. (Green p. 294). The
Canadian minimum wage was established by each province, just as each state within the United
States has adopted their own minimum wage.
While many debate on just how much the minimum wage should be regulated, there are even
more critics who are against raising the minimum wage. It has been said that when the minimum
wage is raised, businesses have to raise the price on whatever products or services they offer, to
offset the loss of profits from having to pay their employees more money. (Katz p. 13) With
products more expensive, economists believed that consumers would not be able to afford as
much as they normally would. The end result will cause businesses to close down.
Another argument raised in favor of not raising the minimum wage was that employers would
be forced to cut staff/workers to make efforts to pay workers the new minimum wage which
would be proposed on a state by state basis. (Warren). Further, some feel that most minimum
wage jobs are for directed to high school students and high school drop-outs.
In John Warrens web article titled The Effect of Minimum Wage Rates on High School
Completion, Warren found that 43% of minimum wage jobs are in the fast food industry. With
that said, Warren wrote that minimum wage jobs were meant to be stepping stones for other
careers and were only temporary jobs. As such, Warren argued that the the minimum wage
should be kept at its current rate to encourage workers to gain an education and skills necessary
to seek employment in a career-orientated field.
While respecting Warrens theories against raising the minimum wage, many proponents of
raising the minimum wage counter his arguments. To begin, raising the minimum wage to

$13.00 per hour in the United States would promote growth and would have a positive effect on
the economy. (Stoll). In Stolls web article titles Exploring the Minimum Wage Debate, U.S.
Labor Secretary Robert Reich recommended that the minimum wage be raised over the course
of a two-year period-not immediately. Reich felt that by raising the minimum wage, the number
of people on welfare would be reduced.(Stoll) With that said, Stolls web article focused on the
fact that a raise in minimum wage would motivate people to got to work instead of staying home
and collecting welfare.
Another factor in favor of raising the minimum wage is that raising the minimum wage would
raise the incomes of 28 million Americans. (Stoll) Also, the article sated that women would
particularly benefit from the raise because women tend to work for lower wages than men.
Further, Stoll reported When you raise the minimum wage, families with more income will
choose to retire, go back to school or have children, making it easier for others who need jobs to
find them. Working families would have more time for community life, including politics.
(Stoll).
In researching the debate of raising the minimum wage, President Obama discussed the issue
in a State of the Union Address that was televised. Clearly, President Obama was in favor of
raising the minimum wage as he stood in front of Congress and the nation and stated Nothing
helps families make ends meet like higher wages. Congress needs to pass a law that allows a
woman to make the same wages as a man. This is 2015, its time! And for everyone in this
Congress that refuses to raise the minimum wage, I ask this If you truly believe that you can
work full-time and support a family on $15,000 a year-TRY IT! If not you, need to give the
working class in America a raise!. The video was informative for the purposes of this paper
because it spelled out the real issue with the minimum wage-that being that it needs to be raised.

Unfortunately, President Obamas law raising the minimum wage did not pass Congress as the
Republican Party ruled the majority of Congress at the time and voted the law down.
Personally speaking, I favor the raise of the minimum wage as I recently worked a full-time
job this past summer in a factory. While I made $10.00 per hour, within the minimum wage
guidelines and worked a 40 hour week, I was stunned at the amount of my weekly checks. One
major issue that people fail to take into account is that event though the minimum wage is set
$10.00, that wage is rate received before taxes are deducted from the check. With that said, that
$10.00 per hour really turned into about $7.50 per hour after taxes were deducted. Therefore, I
barely earned $50.00 a day for 8 hours of work. While I resided at home with my parents, I did
not have the worries of paying rent. However, I quickly found that the $50.00 a day did not last
long after paying for gas to get to and from work which was approximately $25-30 per week,
depending on the gas prices, as well as paying for lunch. After paying for car insurance, which
was $275.00 a month, I had little money left to spend on clothes or more importantly, on school
tuition and books.
While I read the numerous web-related articles on raising the minimum wage, there were
some interesting points raised on both sides. However, while many journalists and economists
for years have been against the idea of raising the minimum wage, our economy is poor. When
the Fair Labor Standard Act of 1938 was passed, the cost of living was very simple. People went
to work, went home, cooked dinner and went to bed. Further, there were not as many distractions
in 1938 as we do currently in the form of expensive cars, numerous restaurants and other
avenues to spend money on as we do today, in 2016. While I understand the thought process that
minimum wage jobs are considered entry-level jobs, the raise in the minimum wage would

would encourage workers to take pride in their job for fear that someone else could come along
and take it if they were not diligent enough.
Raising the minimum wage impacts a relatively small share of the overall work force, which
is itself concentrated in industries such as as restaurants and demographic groups such as
teenagers. With that said, the argument that many businesses would close down because
employers would have to raise the prices on items and thus lose customers is not as widespread
of an issue as related. Just recently, Starbucks raised the prices on several drinks, by .20 cents in
April of 2016. (Manois) The raise in the coffee sales at Starbucks was done to raise the wages
for the Starbuck employees. However, in doing so, Starbucks has not closed down and its stock
has grown dramatically. (Manaois).
Workers that earn a minimum wage in Chicago and the State of Illinois are finding it difficult
to pay their bills and feed themselves. Those earning the minimum wage have dreams too and its
hard to shoot for the stars when you are unable to even pay your rent. When your living on
minimum wage, putting money in the bank is not an option; people earning the minimum wage
are living check to check. Working is supposed to keep you out of poverty, not keep you in it.