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View From the Hill: Minimum Wage Increase: Would it Really Help?

By Lance Waybright, National Grange Intern (View From The Hill Blog 3/7/13)

  MARCH 7, 2013 --

During President Obama’s State of the Union Address, he touched on numerous points of where he would like to see the country headed on issues such as gun-rights, environmental protection, and raising the minimum wage to $9 an hour.

“The minimum wage is below the poverty line;” something many minimum wage proponents say and believe is unethical. However, economists have made clear the dangers of raising the minimum wage and how the minimum wage protects those who are employed and hurts those seeking employment.

The minimum wage became law in 1938 as a way to protect the poor and to secure them an income that one could survive on. Had congress continually updated the rate of the minimum wage with inflation over the last 40 years, the minimum wage would need to be $10.60, which is significantly more than today’s $7.25. Oregon and Washington have the two highest state minimum wages at $8.95 and $9.19. About 19 other states have their state minimum wage set higher than the federal rate, and another 10 states have their rates set to be automatically adjusted with the federal rate.

Raising the minimum wage is a popular idea amongst those in the political arena because their actions are seen as helping the poor. However, less than 2% of Americans older than 25 earn minimum wage. Raising the minimum wage reduces the number of opportunities available to younger or less skilled workers. Increasing the minimum wage also encourages youth to drop out of school and doesn’t do anything to change the value of the workers’ labor except making it more expensive to produce goods and services.

How will this affect agriculture? Most minimum wage employers have nothing to do with agriculture (i.e., fast food restaurants and big box stores). The average annual salary for a farm employee for 2,350 hours is $28,260, which calculates out to be $12 an hour; well above the Obama’s suggested increase. There are certainly farm employers that pay their staff above the federal minimum wage rate, as well as farms that pay below. Fruit and vegetable growers, as well as other horticulture businesses, often employee migrant workers (sometimes those with H-2A working permits) during harvesting season and pay them at or near minimum wage. With margins already tight and having to compete with foreign imports that have access to far cheaper labor, a $1.75 increase in the minimum wage could be an added burden.

It will be interesting to see how Congress will vote in regards to raising the minimum wage. As noted earlier, most people earning minimum wage aren’t agriculture workers but rather young unskilled individuals working at fortune 500 companies that are very profitable. Overall, most of agriculture is already paying their staff more than Obama’s suggested minimum. However, no decision made in D.C. will go without negative impacts. Those who pay their staff minimum wage and pay for the rest of their labor with the use of fringe benefits may need to contact their accountants. As the saying goes, another day another dollar.

-Lance Waybright
National Grange Intern

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