Last year, Minnesota upped its minimum wage for the first time in nearly ten years from $6.15 per hour to $8, increasing incrementally to $9.50 per hour by 2016, and by 2018 the wage will keep up with inflation.
The process to finalize that legislation wasn’t easy. But it was important to Minnesotans across the state that workers who perform necessary duties to keep society functioning are able to afford to feed their families.
However, a study from the Berkeley Center for Labor Research and Education titled, “The High Public Costs of Low Wages” recently found that nearly 75 percent of people helped by public assistance are members of a family with at least one working adult. The study concluded that as a result, taxpayers end up having to foot the bill that compensates for the difference between minimum wage and what is necessary to survive, mainly in the form of government assistance.
The subheadline of the report reads: “Poverty-Level Wages Cost U.S. Taxpayers $152.8 Billion Each Year in Public Support for Working Families.”
Ken Jacobs, a co-author of the report said the subsidies, which come from taxes, are the “hidden cost of low-wage work.” Taxpayers end up paying the difference, Jacobs said, between what corporate employers pay and what is required to cover essential living costs.
A lawyer with the National Employment Law Project, Sarah Leberstein, testified before lawmakers recently about low-wage employers and the effect of their business model:
The low-wage business model practiced by many of the largest and most profitable employers in the country not only leaves many working families unable to afford the basics, but also imposes significant costs on the public as a whole.
The report also found that hourly wages of the median American worker were only 5 percent higher in 2013 than they were in 1979, while the wages of low-income earners were 5 percent lower in 2013 than in 1979.
In other words, the lowest-earning workers in the country have actually seen their wages decrease in the past 36 years.
The New York Times profiled a few low-wage workers to see how the study’s findings correlated to working Americans. Those profiles revealed heartbreaking stories of home health care workers working seven days a week only to end up choosing between paying rent or putting gas in the car to drive to work, full-time fast food employees relying on multiple government programs to help them get through the week, and even professors with doctorates needing financial assistance to keep their families fed.
The study found that the estimated cost to taxpayers for picking up the tab employers leave with their low wages each year is more than $150 billion.
That price tag might not seem like a significant number when it’s applied across the country, but in context: the Mall of America cost $650 million to build, meaning the amount of money the government allocates per year to make up for the difference corporations impose on employees by not paying them living wages is equal to the amount of money it would cost to build 195 Malls of America. Every year.
That’s the cost of minimum wage when the wage is too minimal to provide adequate necessities to survive.
When hard-working Americans find themselves struggling to pay the bills and maintain a roof over their heads despite earning the minimum wage, while huge corporations like McDonald’s skate away with subsidies to keep their business competitive, it’s an abuse of power.
The rest of the country shouldn’t have to foot the bill that corporations fail to pay in the name of keeping business costs down.
By paying workers wages that would keep them off of government programs, businesses would take better care of their employees and reduce a heavy burden off of hardworking Americans whose taxes are going to the deficit corporations left. Not to mention paying a living wage for hard works the right thing to do.
That is how we should do business in the U.S.