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Is Minimum Wage a Solution To COVID Hardship?

Sam Taylor

Posted on December 3, 2020 16:56

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As COVID-related difficulties seem to grow perpetually worse, some have suggested a raised minimum wage: an economic boost for low-income workers. But is this solution viable?

As the grueling months of the COVID-19 pandemic near a year of prolonged hardship, the question of how to reduce its severity becomes ever more pressing. Some, whether honest or politically motivated, have proposed a raised minimum wage as the solution — or at least a part of the solution. For instance, International Labour Organization Director-General Guy Ryder (what a title) states, citing an ILO report, "minimum wages have significant potential to reduce both inequality and poverty [and] can … play an important role in creating a recovery that is human-centered."

Certainly, Ryder's statement is credible: studies suggest that, in one way or another, minimum wages benefit low-income workers — the people hit hardest by the pandemic. The real question is, what sort of minimum wage can provide the greatest benefits to the lower-class and alleviate some of the suffering wrought by this virus? 

Customary in modern, left-wing politics is the concept of a raised federal minimum wage: an increase in the baseline wage rate that applies to the entire nation. The rationale behind this liberal nostrum is simple: if we want a nationwide reduction in poverty, inequality, and economic inequity, it makes sense to implement a nationwide policy. But unfortunately, reality doesn't match this superficial intuition.

As case-studies demonstrate, there exists a maximum value at which a minimum wage can exist without being a net loss to low-income workers. If the wage exceeds this maximum, more harm to laborers occurs (in the form of lay-offs, industry failure, and other forms of structural unemployment) than benefits. What's more, the precise value of the maximum varies between states, counties, and communities.

A national minimum wage is thus an overly-simplified solution to a complex problem. As opposed to accounting for the intricacy of the labor market, it professes the implausible notion of an economic "fix-all," applying the same raised wage rate to a plethora of diverse communities with differing needs.

The alternative seems to be a series of minimum wage raises implemented on the state and local level, adjusted to accommodate the unique state of the communities they oversee. While some may hesitate to endorse this view, on the basis that it hasn't garnered nearly as much popular (and politicized) attention as a raise in the federal minimum wage, it has been prescribed by a number of labor market specialists (see the link in paragraph four) and implemented in several states struggling with the effects of pandemic (e.g., New York and Florida).

Nonetheless, many states have yet to produce raises in their minimum wages, despite the rampant poverty they've gradually incurred over the last nine months. Given current economic evidence, it's apparent that this trend must be rectified. Though a simple raise in local minimum wages won't eradicate the prodigious hardship brought about by COVID-19, it remains a salient tool in governments' humanitarian arsenals: a tool that should be utilized more.

Sam Taylor

Posted on December 3, 2020 16:56

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Target is boosting its minimum wage to $15 an hour starting July 5 for hourly U.S. workers. It will also give frontline workers...

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