The Minimum Wage is Subsidizing Large Corporations

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Feb 9, 2016 (San Diego) The Discussion of the economy and social programs should have wages at the center of it. Why? When corporations pay their workers minimum wages, and have them rely on public assistance, we are subsidizing those corporations.

So how much are we talking about when we raise wages? According to the Economic Policy Institute raising wages to just $12.00 dollars an hour would reduce spending in public assistance by $17 billion. This is not precisely something to sneeze at.

It would also have other effects. There is a pent up demand for goods and services that would be served, and that would inject billions into the economy in spending for services. This would crate an economic engine.

David Cooper also writes that “for better or worse, public assistance programs have become increasingly tied to work.” He also writers that “For every $1 that wages rise among workers in the bottom three wage declines, spending on government assistance programs falls by roughly $5.2 billion. This estimate is conservative, as it does not include the value of Medicaid benefits.”

This is critical, since this reduction in public spending can translate into other services. It also means that beneficiaries now have more money to spend on services they need.

This is not a minor effect and It is fiscally sound. To increase wages will lead to a better quality of life for those workers as well. We have seen a stagnation in wages over the last 3o years, with an incredible increase in productivity. The argument made by companies is that low wages are ok. But the argument from policy makers should be that it is fiscally sound to reduce the reliance of workers on public assistance. One obvious solution is to raise the minimum wage nationwide.

 

 

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