Minimum wage and the American Dream

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Grand Rapids Herald-Review
By: Elana Warsen
November 17, 2013

The American Dream is based on the premise that individuals can elevate their financial circumstances through hard work. With a bit of effort, any of us can ascend the social ladder, morphing from pauper to prince with each patriotic punch of our timecards. According to the American Dream, individuals are rewarded relative to their effort. Rich or poor, whatever our station in life, we deserve to be there because we have earned it. If anyone among us is unhappy with his condition, he need only pull himself up by the bootstraps.

Sadly, for many Americans, the boot tugging leads nowhere. Like a practical joke, the soles are glued to the bottom rung of the social ladder. These Americans, who work hard and yet do not earn enough money to afford their basic needs, prove that the American Dream is an illusion, not reality. The plight of the working poor lays bare the expanse between the ideal of the American Dream and the reality of inequality in the United States.

A major failing of the American Dream is the simple fact that for many workers, earned wages do not amount to living wages. According to the Children's Defense Fund, about three fourths of Minnesota families living in poverty in 2009 had all available parents in the workforce. The families were working at full capacity, but not earning enough money to make ends meet - a very un-American statistic indeed. The Children's Defense Fund calculated the cost of essential requirements for a family of four in Minnesota and found that two adults would each need to earn $14.03 per hour to afford most basic needs. Unfortunately, minimum wage in our state is only $6.15 an hour, although most workers receive the federal minimum wage of $7.25 per hour. At best, fulltime minimum wage workers earn little more than half of the livable wage needed to support their families.

An estimated 93,000 Minnesotans work for $7.25 or less an hour. They work in the food service, retail, cleaning, and assisted living occupations, among others. These jobs are physically and mentally demanding and often require a high level of customer service. Sometimes they involve undesirable shifts and occupational hazards, adding risk of injury to the insult of substandard wages. We all use and value the services that minimum wage workers provide, yet the compensation for doing these jobs is less than what is needed to sustain the employee and his or her family.

Inadequate though it may be, the minimum wage is important. There is no saying how low wages would be without a law in place. Since its establishment in 1938 the federal minimum wage has been gradually elevated from $.25 to $7.25. It can be increased again if we will it to be so. Here in Minnesota there is currently an effort to pass legislation that would raise the state minimum wage for large employers to $9.95 an hour by August 2015. This would boost a fulltime employee's biweekly paycheck from less than $600 at the current rate of $7.25 per hour to nearly $800. Such gains would make possible significant improvements in family stability and wellbeing. It would also be a measure of justice for hardworking, poorly compensated Minnesotans for whom the American Dream has been more of a nightmare.

However, it's not clear that raising the minimum wage would deliver rewards to those who most badly need and deserve them. Some economists speculate that raising the minimum wage will actually displace current low-wage workers because the jobs will appeal to a broader range of prospective employees. For example, a high school student saving money for an iPhone might be willing to take a fast food job for $9.95 an hour but not for $7.25 an hour. At the same time, it is argued, employers required to invest more money in their employees would be all too eager to replace an employee who has significant family responsibilities with another employee who is an unburdened high school student.

There is nothing wrong with a high school student accepting a job for fair wages or an employer hiring the employee of his or her choosing. Nevertheless, the impact of these choices is unemployment for current low-wage workers. This possible outcome of raising the minimum wage illustrates that the playing field is not level. Some people are better positioned to take advantage of opportunities like higher wages, while others must make do with relatively little.

Working Americans who live in poverty are known as the working poor, and they fly in the face of everything we thought we knew about wealth and poverty in America. The correlation between effort and income is flawed. It is simply inaccurate to suggest that poor people are mainly unemployed, or that they just need to work harder in order to be better off. The truth is, even with the most disciplined spending habits, it is extremely difficult, if not impossible, to support a family on a minimum wage income.

We cherish the American Dream because we want to believe that everybody has an equal chance of succeeding in life. We wouldn't want to belong to a country where life trajectories are predetermined and unchangeable. Unfortunately, the American Dream is not the reality in the United States today. While the American Dream is a noble ideal to work toward, we must be careful not to believe that it is currently in effect. An insistence that the American Dream is alive and well blinds us to the reality of inequality in our midst. It serves to justify an inequitable distribution of wealth and opportunity with the false idea that everybody can make it if they try.

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About this Entry

This page contains a single entry by CFED published on November 18, 2013 2:32 PM.

Sluggish job market clips wings of young was the previous entry in this blog.

Minimum wage hikes hurt workers they try to help is the next entry in this blog.

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