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Updated: 11:04 a.m. Monday, May 19, 2014 | Posted: 6:00 a.m. Thursday, May 15, 2014

Should The Minimum Wage Be Raised?

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The federal minimum wage is now $7.25. Should it be kept the same or raised?

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There should not be any minimum wage.

Keep it the same.

Raise it to $9 an hour.

Raise it to $12 an hour.

Raise it to $15 an hour.

Other

By Clark Howard

ClarkHoward.com


The minimum wage is a hotly contested issue. But I want to have my say on the topic in a non-political way.

Polling says large amount of the American people want a raise in the minimum wage. There's a proposal in Washington to raise it to $10.10. President Obama and the Democrats are using it as a campaign tool leading into the midterm elections. But it's not gaining any ground in D.C.

The states, though, are going in all different directions. Vermont is going to raise the state minimum wage to $10.50 over the next 4 years. Other states are raising the minimum wage to above $10 an hour. Then other states are saying no to a minimum wage hike; the GOP and many conservatives call it a job killer.

My opinion on raising the minimum wage

Here's my take: Right now, we have great laboratory under way with some states raising the minimum wage and others keeping their hands off it. It gives the opportunity to see how it will play out in the real world. Will it kill jobs or will it raise the standard of living?

As far as being a job killer, I think you need to look back in American history. Farms used to employ 97% of all Americans. When mechanization of farms came about, there were fears that permanent and severe massive unemployment would result.

We all know how that played out! Today, farm employment is a fraction of 1 percent of the U.S. workforce and farms produce more food than ever. The jobs simply came from other places in an increasingly less agrarian society. That's going happen again.

But I want to look at the minimum wage debate from a different angle. What happens if you take a low-wage business, like fast food, and turn it into a high-wage business?

The operator of that business has to automate functions and then hire a smaller staff that makes more money. Look at the European countries where there already are higher wage rates. Their fast food restaurants have automated everything from ordering to paying. The cooking in the kitchen is done by robotics!

So when you raise wage rates in a labor-intensive business, you ultimately reduce how much labor it takes to run that business. Because machines take the place of workers. And that's why economics is called the dismal science.

That's why I love the idea of *not* coming to a national consensus on the minimum wage and letting the living labs of the states take over. We'll see if we change jobs or if we kill them. Do states that hold down wages end up with far more employment than the others? We'll find out.

The reality is you can't support a family on the federal minimum wage of $7.25. But is the solution raising the wage? I believe the ultimate solution is education so we give people more ability to provide greater economic value for their hours worked.

The voters in the states will ultimately decide whatever they want on this issue. But how about you? Be sure to vote in my new poll.

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