Minimum wage

“It propels people out of poverty.”

“It’s a job killer.”

Whether you are an entrepreneur, small business owner, CEO of a Fortune 500 company, college student or soon-to-be retiree, the minimum wage debate will surely impact your life, and depending on who you ask, it can either be a friend or foe. It’s been decades since minimum wage was instituted into American economic policy, and the debate still rages on every time there is a discussion on whether or not the current rate should increase.

Minimum wage was introduced by President Franklin D. Roosevelt’s 1938 Fair Labor Standard Act following the Great Depression and has since become the bedrock of the United States labor system. Before that, workers were at the mercy of their employers with no legislation to protect them from exploitation such as long hours, poor working conditions or low pay. The wage back then was 25 cents an hour, established to maintain a minimum standard of living.

Today, the current federal hourly minimum wage is $7.25 per hour, which is $290.00 for a 40-hour week or $15,080.00 a year. (Some states offer more than $7.25, due to legislation introduced during the Clinton presidency which allows individual states to set their own rates.) Since 1938, the federal minimum wage increased 22 times, last updated in 2008. The current minimum wage rate is re-evaluated yearly by Congress based on a Consumer Price Index, which is intended to raise the rate coinciding with inflation.

Who is the typical minimum wage worker? According to data compiled by the Bureau of Labor Statistics (BLS), most minimum wage earners are between the ages of 16 and 24. About one-third are unmarried singles and 27% are married couples. 65% are in service occupations, with 50% in food preparation and serving related field.

Estella K., 68 of Borough Park is one such worker. She works full time as a saleslady in a clothing store collecting slightly over the minimum wage. Although she was a professional dental assistant back in Russia, language barriers and licensing issues have forced her to accept a retail position. “I haven’t taken a vacation since coming to this country. All I do is work, work, work and it’s never enough for even savings or extra stuff,” she says.

The Debate

The classic argument for raising the minimum wage is the belief that it will increase revenue and reduce poverty. After all, if people have access to more money, they will be more likely to buy, spend, and invest thereby boosting the economy. The Economic Policy Institute confirms this assumption stating that a minimum wage increase from the current rate to $10.10 would inject $22.1 billion net into the economy and create about 85,000 new jobs over a three-year phase-in period.

It’s not just a monetary issue. Advocates believe that the increase is a civil/human rights issue, which will aid in race and gender inequality, creating more equitable income distribution for disadvantaged groups.

There may also be a direct correlation between wages and crime. According to a 2016 study by the Executive Office of the President’s Council of Economic Advisors, “Higher wages for low-income individuals reduce crime by providing viable and sustainable employment… Raising the minimum wage to $12 by 2020 would result in a 3 to 5 percent crime decrease and a societal benefit of $8 to $17 billion dollars.”

There’s good reason why many oppose an increase, however. According to Washington Research Follower James Sherk in his 2013 Testimony before the Health, Education, Labor, and Pensions Committee, a higher minimum will have the opposite effect reducing wages and overall employment while encouraging relatively affluent workers to leave the labor force. “Minimum wage increases often lead to employers replacing disadvantaged adults who need a job with suburban teenagers who do not,” he says.

As research fellow in labor economics at The Heritage Foundation,

A survey conducted by Express Employment Professionals, the nation’s largest privately held staffing firm, confirmed this prediction after polling 1,213 businesses and human resources professionals. They concluded that 38% of employers who currently pay minimum wage would lay off some employees if the minimum wage increased to $10.10, and 54% said they would decrease hiring levels. Estella’s boss agrees with these findings, telling The Jewish Echo that if he were forced to increase her pay, he would have to let her go despite her excellent work ethic. He also admits that he gets weekly requests from illegal immigrants offering to accept the job for lower pay, which he finds increasingly tempting.

New York is the home of a legislative movement called The Fight for $15, with workers demanding a minimum wage of $15/hr. The initiative began back in 2012 when 200 fast-food workers walked off their jobs demanding higher wages and union rights. Today, the movement has grown globally to over 300 cities and six continents. Jack Hutchins, director of communications for the Business Council of New York State, told the Daily Signal that the movement’s agenda is “too much, too fast.” Hutchins warns businesses will have to cut hours, hire and keep fewer employees, reduce benefits, and increase prices to accommodate the resultant cost increases.

Associate Professor of Management and Human Resources at Duane University, Timothy G. Wiedman asks, “If a $15/hour minimum wage can be painlessly achieved simply by fiat, why stop there?  Why not set New York City’s minimum wage at $20 per hour — or even more?  If your common sense leads you to believe that a $20+ per hour minimum wage is ‘just too much’ (especially for young, inexperienced, low-skilled workers with limited levels of education), what would make you so sure that a $15 per hour minimum wage is the ‘right’ number?”

Is Minimum Wage the Answer to Jewish Poverty?

”Today the minimum wage worker who, where I live in Northbrook, Illinois earns $8.25 an hour, or an annual wage of $17,000, clearly falls into the category of insecure or ‘at risk.’ A society that does not ensure that an individual who works a full-time job can earn a living wage is not fulfilling its moral obligations. It is not just, “says Rabbi Sidney Helbraun of Temple Beth-El.

In New York, more than 410, 000 Jews are eligible for government programs, according to Dr. Gerhard Falk, a sociology professor and author who has written on the topic of Jewish poverty. He maintains that these programs as well as increasing the minimum wage are ineffective in combatting poverty and merely a band-aid on a much larger crisis.

Chief Executive Officer of Met Council on Jewish Poverty Alan Schoor agrees that minimum wage is inadequate for families in the Jewish community to afford the necessities. He says that SNAP benefits may be available; however, many families often find that their SNAP benefits run out after three weeks. Met Council attempts to help “through its network of kosher food pantries, we supply the poor and near-poor with kosher food to fill both this gap week and at other times during the year when food is needed, “he says.

Dr. Falk maintains that for some communities like Brooklyn, NY where housing and tuition are quite high, an increase in the wage can be detrimental to the local economy causing many small businesses to close and people to be out of work. He recommends Jewish families branch out of congested areas like NY and LA and settle in more economically feasible locations.

Jewish poverty is deeper than lacking food or money; there is an element of shame and silence to it as well. “85% of Jews have a college education. Taking aside the ultra- Orthodox Chassidim, most Jews are middle-class homeowners that earn a decent living. The ones that are poverty stricken are invisible in the sense that they do not participate in Jewish communal affairs such as dinners and auctions since they cannot afford such extravagant events. They are embarrassed and do not attend such functions making them inactive members of the community. There is also this false assumption that ‘all Jews have money,’ which just adds to their shame,” explains Dr. Falk, who says the number of poor Jews might even be higher than estimated.

Poverty is a complex issue with many variables, but certainly, education is the cornerstone of any solution. It is wonderful that we have organizations implemented to assist the needy, and government programs are a lifesaver for many, but they don’t address or correct the root of the problem. Of course, there are those that will be chronically poor due to disability, mental illness or certain unfortunate life situations, but certainly instilling education is imperative in combating this issue; increasing or keeping the minimum wage stagnant is only one component in this multifaceted debate. Most agree that the current wage, at least in states like NY and NJ, does not coincide with inflation, but increasing it may harm those that need it most. In the delicate scale that is the US economy, the debate continues to rage.

Facts about Minimum Wage

New Zealand was the first country to implement minimum wage laws way back in 1894.

Saudi Arabia, United Arab Emirates, Hong Kong, Chile, Denmark and Singapore are among the rare but few developed countries that don’t prescribe to minimum wage laws.

Five southern states have no minimum wage laws, including Louisiana, Mississippi, Alabama, Tennessee, and South Carolina.

62% of minimum wage workers are women and 38% men, according to 2014 data analyzed by the Pew Research Center.

Data courtesy of Time.com