I contend the minimum wage is more of a philological benchmark then a tool for solving issues of inequality. While the idea is considered politically popular raising it without considering the negatives would be a mistake. Sadly, that is often the way Washington works. This issue has been framed in a way that makes saying no difficult. Does any politician standing for reelection want to do the right thing and say "no" to "giving poor downtrodden hard working" Americans a raise? This attitude is what got us in the bind we find ourselves in today. Apparently this trend is also still active in Europe and Britain. The reality is as long as people in other parts of the world will work for less we are shooting ourselves in the foot.
A recent article In the BBC announced that in the UK the National Minimum Wage will increase by 19p an hour to £6.50. The new rates will be implemented in October and will benefit a million workers. The UK Business Secretary said he had accepted the recommendation from the Low Pay Commission that the minimum wage should increase by 3%. The increase is higher than the consumer prices index (CPI) rate of inflation, at 1.9%. This means UK workers will be seeing the biggest cash increase in their take home pay since 2008.
What I found most interesting in the article, it went on to say the rate for workers between 18 and 20 years old wages will go up by 10p to £5.13 an hour, a 2% increase and the rate for those aged 16 and 17 will rise by 7p to £3.79, also a 2% rise. This staggered minimum wage attempts not to lock out the young from ever getting their foot in the door. Even more telling of this is that apprentices will earn an extra 5p an hour, taking their wages to at least £2.73. It appears the system in the UK at least makes an effort to keep the door open to younger and less skilled workers who seek real jobs.
The economic reality and reason I consider this so important is that with so few Americans actually paid the minimum wage a higher wage moves the bar and blocks entry to low level jobs. It makes these jobs even more scarce and causes them to be eliminated or disappear. To some workers a salary may represent what they as a person are worth, but in many ways it reflects more on the value of our currency, what it will buy in society and whether a person should or needs to work. A major issue that many Americans and our government continues to ignore is how much the cost of living varies throughout the country.
The cost of a house in California or in a coastal city is far greater than the same house in the Midwest, often demand in certain locations reflects a geographical preference. This should be reflected more in government social programs and they should be skewed to encourage people to relocate to less expensive areas rather than feed money into local economies already showing high demand. Current payouts from these programs remove incentive for those receiving "generous" government payments to seek work in low cost areas because it is relatively easy to make ends meet. In many ways it is the government that has made it to easier to not work.
Through its safety net of social programs and subsidies government has done unmeasurable long-term harm to the lower ranks of society by muddying barriers to the shrinking middle class. Inequality is not as much an issue between the poor and being middle class. The focus should be centered on how the elite have highjacked a majority of the pie. The fruit of our labor now flows to very few. Raising wages on the low end may make a few people feel better but when it come to addressing the crux of our problem it is like putting lip-stick on a pig as you take the animal to the butcher.