Minimum wage: The effect on low-income families

By Morgan Bettencourt

February 11, 2016

Mrs. Devoe, Block 2

Minimum wage: The effect on low-income families

2016 started out as a year of change for fourteen of the fifty states. Raising the minimum
wage by not even a dollar was a step in the right direction for this country. With that being said,

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the United States economy is one of the largest in the world. The $17.41 trillion US economy is
approximately 22.44 percent of the gross world product. The United States is an economic
superpower that is highly advanced in technology, infrastructure and natural resources. However,
the US economy is only one of the largest, falling shortly behind China which has a $17.63
trillion economy. The United States, competing with China for the number one spot, should
decrease the unemployment rate, and increase minimum wage for citizens. Not only will
changing the economy benefit citizens, but will allow the United States to regain its past title of
the best economy in the world. Citizens of this country are demanding a change in the economy,
which includes decreasing the national debt and homelessness, and raising minimum wage.
Raising minimum wage would not only strengthen businesses and the economy, but lift
individuals out of poverty and homelessness as well.
Across the country, the minimum wage as well as the unemployment rate, varies
depending on which state one resides in. Since 2013 the unemployment rate of teenagers in
Rhode Island decreased by ten percent, starting at 25.3 percent and currently placed at 15.3
percent, or 153,000 citizens (Cooper). Teenagers in Rhode Island are more interested in joining
the workforce ever since the minimum wage rose from $8.00 to $9.00 in 2013. However,
according to Kevin Hassett of the American Enterprise Institute, Raising the wage will make it
more expensive to hire younger, and low-skill workers. There are better ways to help the poor
(Pethokoukis). Research published in 2010 by economists Joseph Sabia and Richard Burkhauser
concluded that if the federal minimum wage were increased, only 11.3% of workers who would
have positive effects from the raise are actually a part of a poor household (Pethokoukis) The
two economists believe that only a low percentage would gain from the increase because some
who live in poverty do not work and would not be affected by the raise in hourly wages. Sabia

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and Burkhauser also stated, Why not support increasing the minimum wage? Because it will
make it more expensive for businesses to hire young and low-skill workers at a time of crisislevel unemployment. Because it will not alleviate poverty. Because there are much better
alternatives to help poor families, and because the minimum wage is a dishonest approach that
hides the true cost of the policy (Pethokoukis). Sabia and Burkhauser make a vigorous point
when they say it will be more expensive for small businesses to hire low skill workers. For years,
individuals have talked about how there are better alternatives to helping the poor. However,
nothing is getting done about the situation and there are more people living without a home every
night. Raising the wage would be a step towards minimizing homelessness.
Although minimum wage being low is positive for small businesses, the low income is
detrimental to families. Small businesses should not be the main priority in the fight to raise
minimum wage, considering there are over 550,000 people homeless every night in America.
Declining wages have put housing out of reach for many workers. Consider that at least
minimum wage is required to afford a one or two bedroom apartment. Normally, for people with
a decent income, 30 percent of income is used to pay for housing (Living Wage Calculator for
Washington County). For people in poverty, 50 percent of their income goes towards housing,
resulting in sacrifices in other essential areas such as healthcare and savings (Living Wage
Calculator for Washington County). People who make a low income and pay for housing can not
save large amounts of money, in case of an emergency, one incident would leave them towards
bankruptcy.
The majority of homeless individuals in America are homeless because of home tragedies
such as a flood or a fire, and bankruptcy as well. When someone is left without a home or
somewhere to sleep at night, one of the last resorts is public housing assistance. According to the

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National Coalition for the Homeless, housing assistance can make the difference between stable
housing, precarious housing, or no housing at all. However, the high demand for assisted housing
clearly exceeds the supply our country can provide. Only about one third of the poor households
can receive help from the federal, state, or local government. The average wait to receive
housing assistance is approximately 35 months. Federal support for low-income housing has
fallen 49% from 1990 to 2014 (Cooper). By the time a family receives notice that they will get
government housing, it may be useless to the family because the government took so long.
According to HomeAid, a leading non-profit organization that builds and renovates
multi-unit shelters for Americas temporarily homeless families, most people misjudge the
homeless. Much of the population believes that homelessness is caused by depression, untreated
mental illness, post traumatic stress disorder, physical disabilities, drugs and alcohol. Although
these things are a part of why people are homeless, the largest proportion of homeless individuals
are homeless due to tragic events (Homeaid). To put it another way, if an individual was to see
a homeless man on the street, more than half of the time this individual would think the homeless
man was a drug user or alcoholic. In reality, this man lost his house on a foreclosure due to being
laid off from his job, for example. With this in mind, over 15% of the homeless have lost their
homes to foreclosure this past year. Second to foreclosure is house fires, floods, and natural
disasters. Three and a half Million homeless Americans have been thrust into homelessness by a
life altering event, or series of events, that were unexpected and unplanned.
The worth of minimum wage means everything to a low class worker, especially one who
relies on welfare to run their household. In 1968, minimum wage was $1.60 which would be
$10.90 today. However, housing, food, transportation and more, were all cheaper in 1968. The
worth of minimum wage has decreased by 24 percent since then. According to the Raise the

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Minimum Wage Act, the plan is to raise the minimum wage to $12.00 by 2020 (Cooper). In this
case, each year a $1.00 bonus would be added to the minimum wage. Setting an automatic
increase to hourly wages starting in 2021 will make sure the hourly wage keeps pace with the
increase in rising wages overall. Another point the Minimum Wage Act made was to gradually
phase out the subminimum wage for tipped workers, which is frozen at $2.89. Low-wage
workers, like all workers, deserve an incremental and predictable raise each year so they do not
fall further behind. In 1968, the minimum wage stood at 52.1 percent of the median wage. By
2014, the ratio had fallen to 37.1 percent (Cooper). Across the country, there are complaints
about how too much of Americas money is going towards welfare. America needs to solve the
excessive need for welfare by raising minimum wage because if people are making more money,
there will be less of a demand for welfare.
Of course raising minimum wage would help families in need, but minimum wage has
also not changed with inflation, while the cost of housing followed inflation. If hourly wages
followed inflation, the minimum wage would have been $21.72 in 2012 (Fairchild). Presumably,
that high of a wage is not realistic. However, $9.00 an hour is far from what workers really
deserve. In 2011, more than 66 percent of Americans surveyed by the Public Religion Research
Institute supported raising this figure to $10.00 (Survey). In 2013, minimum wage was $7.25
calculating to about $15,000 a year for someone who works 40 hours a week. As a minimum
wage worker, making enough money to afford housing, is crucial. In order to afford housing
while making minimum wage, many are overworking themselves which leads to stress and
health problems.
There would be a drastic change if the United States did raise the federal minimum wage
and made it more of a living wage. Imagine the difference if a single mother of three made

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$35.74 hourly compared to $9.00 hourly. The difference would be a single mother now being
able to provide healthcare, nice housing, food, clothes, and childcare for her children. A living
wage is a wage that is high enough to maintain a normal standard of living, which means that
one can comfortably afford all necessities for living. An average price yearly for three kids in
child care is $20,000 a year. Under those circumstances, a mother with three kids making
minimum wage is only making about $20,000 a year (Living Wage Calculator for Washington
County). The three children will need to be placed in childcare while their parent is working,
making it almost impossible to live off this low-income while paying for the child care. If one is
making a living wage they will not need any government assistance, including EBT food stamps,
increased tax returns, or government housing.
What this fight to raise minimum wage comes down to is how the increase will surely
help the economy. Eighty-nine percent of those who would benefit from a federal minimum
wage increase are age 20 or older; 56 percent of these are women (Cooper). Previously stated,
many individuals believe that a minimum wage increase would be detrimental to small
businesses. However, according to the United States Department of Labor, 3 out of 5 small
business owners actually support an increase to $12.00 an hour. Paying employees a higher wage
sharply reduces employee turnovers, or people quitting. This will later save a small business
training costs in hiring new employees (Minimum Wage Mythbusters). If the government
decides to raise the federal minimum wage, in the long run it can save $46 billion over the course
of ten years.
It is astonishing that a country remembered by its great opportunities and freedom, can
have such a high rate of unemployment and economic issues. In February 2013, President
Obama called on Congress to increase the minimum wage. In order to do this, he informed

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Congress that over 63 percent of American citizens supported an increase in minimum wage.
That same year, the federal minimum wage was raised to $7.25. In order to increase the wage,
the next President needs to take a national vote from the opinion of the citizens. Everyone in
America is talking about how the economy is crashing, complaining that although it has become
better since the Great Depression, it is not where it should be in this decade. It is now time for
the citizens to take a stand if they truly believe low income workers deserve more. In 2016, it is
shocking how many homeless individuals there are in this country, and America has all of the
power in the world to change this issue. It comes down to the fact that an hourly income can
make or break someones entire life. Living paycheck to paycheck is not enough money in order
to live a comfortable and stable life. Change in the United States economy needs to start soon, or
the numbers of homelessness and foreclosures are going to skyrocket and leave America in a
similar situation to how it was during the Great Depression.

Works Cited
Cooper, David. "Raising the Federal Minimum Wage to $10.10 Would Lift Wages for Millions
and Provide a Modest Economic Boost." Economic Policy Institute. Economic Policy
Institute, 19 Dec. 2013. Web. 13 Jan. 2016.
"FACT SHEET: Its Time to Raise The Minimum Wage." FACT SHEET: Its Time to Raise The
Minimum Wage. Economic Policy Institute, Jan. 2014. Web. 13 Jan. 2016.
Fairchild, Caroline. "Minimum Wage Would Be $21.72 If It Kept Pace With Increases In
Productivity: Study." The Huffington Post. TheHuffingtonPost.com, 13 Feb. 2013. Web.
06 Jan. 2016.
Inequality and Economic Growth - Equitable Growth." Equitable Growth. The Economist., 12

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Mar. 2014. Web. 20 Dec. 2015.
"Living Wage Calculation for Washington County, Rhode Island." Living Wage Calculator -.
MIT., 2015 Web. 19 Dec. 2015.
Minimum Wage Mythbusters." - U.S. Department of Labor. U.S. Department of Labor., n.d.
Web. 22 Dec. 2015.
Pethokoukis, James. "There Are Better Anti-poverty Tools than the Minimum Wage - AEI." AEI.
American Enterprise Institute, 30 Aug. 2013. Web. 13 Jan. 2016.
Strain, Michael R. "Why We Shouldn't Raise the Minimum Wage." AEI. Los Angeles Times, 10
Mar. 2013. Web. 12 Jan. 2016.
"Survey | 2011 American Values Survey." Public Religion Research Institute. Public Religion
Research Institute, 2013. Web. 13 Jan. 2016.
"HomeAid." HomeAid. Homeaid., 2007. Web. 09 Jan. 2016.