Problems With Minimum Wage, Essay Example

Hourly wage has always been a major bone of contention for Americans today. As the economy starts to recover from the financial crisis of 2008, there are more jobs placed within the job market. However, most of these jobs that are available and are hiring are low paying jobs. This would not be much of a factor if the cost of living was actually sustainable for individuals that have a family. Take into factors of the cost of transportation, rent/mortgage, and other factors, the minimum wage of $7.25 Is too low for paying rent to a one-bedroom apartment of $830, or if they have children a two-bedroom apartment for $1050. (Weber and Dunbar, 2013) The current policy for Austin, as well as the rest of Texas, is that minimum wage is set at $7.25. (TWC, 2013) Yet the cost of living in Austin, as well as other major Texas cities is too much to live off. It is important for workers in the workforce to be able to be able to afford their basic needs.

There are numerous reasons in which the minimum wage in Austin should be raised. One of the first is that people in the workforce that usually work 40 hours or more during the week, should be able to come home to their dwelling. Many of the workers that for instance work at McDonalds, or other low wage jobs cannot afford the high price tags of apartments. They are forced to live with their parents, are live in neighborhoods that are more affordable, but is littered with criminals, and criminal activities. The amount that works earn, puts them almost close to the poverty line, which is abhorrent. According to ACCRA, the national organization that is dedicated to policy research and economic development, the cost of living in Austin is 84.9. (Austin Relocation Guide, 2012) This score is based on the average for metropolitan and non-metro that is 100 for the cost of living for each city. While this scale places Austin as an affordable market, reports show that Austin has the highest average rent in Texas. (Weber and Dunbar 2013) The cost of living in Austin is steadily increasing, but the minimum wage is still low. According to Weber and Dunbar (2013), for residents in Austin living on the minimum wage, “    88 hours a week to afford a one-bedroom apartment, and111 hours for a two-bedroom. That’s equal to nearly three full-time jobs.” (Weber and Dunbar, 2013) More importantly, minimum wage is essentially cheap labor, which pushes people close to unemployment. This can be demonstrated with the statement that, “ If an employer needs someone to perform odd jobs, and he values the work at $2 per hour, he will not hire a person if the minimum wage is $7 per hour, thus keeping unemployment in low-wage brackets higher than it would otherwise be.” (Gillikin, 2014) Other problem includes the incentive to be on welfare programs because of the cost of living is too high for that person to afford on their minimum wage. The minimum wage is particularly high on minorities that are mostly employed in low waged jobs. This also includes women that are usually more employed in low waged jobs than men are. Many women that are the main providers have difficulty providing for their families if they have children, and other expenses that are more than their income.

The policy options that should be considered includes raising the minimum wage to a more acceptable level of pay. As the cost of living increases in Austin, as more and more people begin to move to Austin, the wages that the residents should earn should be more balanced. Other policy options could also mean inviting more major companies to set up shot in Austin. As a major city, the more companies that can provide better paying jobs is the better. With more jobs flooding into the local market, it helps to create more opportunities for graduating students to stay in the city, but also provide older residents with labor opportunities that wages range from mid to higher paying. Additionally, policy options that create a precedent where a certain number of jobs are available for incoming graduates, or for higher paying jobs would make a great policy change throughout the state.

The pros and cons of each policy changes includes the pros of raising the minimum wage which will be beneficial to not only the worker, but also the local economy as well. Not only do higher minimum wage helps in paying down the cost of living and other expenses, but it also allows workers to afford their basic needs, as well as save for the future. What has become more difficult in this decade is the complexity for this generation to be able to save for retirement. With a higher minimum wage, people are able to sit money aside to help them with their retirement plans. The cons could also mean that nothing really changes for the economy. With the cost of living raising, it might not be enough to raise the minimum wage to $15 an hour. Many businesses could also close because they wouldn’t be able to afford to keep paying their workers the higher costs. In regards to the second policy change in which more companies needs to move to Austin to provide the job market with more jobs, is an excellent idea. Not only does it make it better for the companies, but also creates more job opportunities for the workers in the job markets. The cons however could mean that many smaller companies can lose out to more qualified workers to larger companies. This can also create problems for smaller companies that can’t compete with larger companies that might offer the same services. The last policy change is to put the aside a range of jobs that pay mid to high in order to attract more people in the job markets. This can be a pro for graduating college students, and also more experience workers looking for higher paying employment. The cons however means that there will be more competition for these higher paying jobs which could create problems with the graduating students, and the older workers.

The recommendation would be to increase the minimum wage. This is the better policy change as it lets people be able to afford their expenses, as well as help them stay above the line of poverty. According to reports the current minimum wage places people at approximately $15,000 a year, and the poverty threshold for a household of two is $14,570. (Minimum-Wage, 2014) The reasoning behind this is that an increased minimum wage makes living more affordable, as well as more practicable for families with more than two people living in the homes.

The minimum wage is an important topic. Not only does it impact all people that work, but it hits minorities and women the hardest. The currently policy for minimum wage is outdated, and should be changed. In taking the step to make Austin a better place to live for all residents.

References

Austin Texas Cost of Living. (2012). Austin Relocation Guide. Retrieved from http://www.austinrelocationguide.com/2012/Austin-Texas-Cost-of-Living/

Federal & State Posters. (2014). U.S. Minimum Wage Directory. Retrieved from http://www.minimum-wage.us/state.php/?state=texas

Gillikin, Jason. (2014). Problems With Minimum Wage. Chron. Retrieved from http://smallbusiness.chron.com/problems-minimum-wage-2692.html

Texas Minimum Wage Law. (2013). Texas Workforce Commission. Retrieved from http://www.twc.state.tx.us/ui/lablaw/texas-minimum-wage-law.html

Weber, Andrew, Dunbar, Wells. (2013) A Minimum Wage Job in Austin Gets You a Two-Bedroom Apt. – And a 111-Hour Work Week. KUT. Retrieved from http://kut.org/post/minimum-wage-job-austin-gets-you-two-bedroom-apt-and-111-hour-work-week