Not only is a decent minimum wage the right thing to do for our lowest-wage workers, but also for taxpayers. In Illinois, for example, where the minimum hourly wage is $8.25, the state has documented that its fast food workers cost Illinois taxpayers $368 million in public assistance annually (www.progressillinois.com/posts/content/2013/10/15/low-wage-fast-food-job...). And there’s the rub: profitable corporations count on us, the taxpayers, to subsidize their lowest paid employees, so that stockholders and corporate executives can reap good earnings. We live under an economic system where the profits are privatized and the costs are socialized, i.e. society at large helps pick up the tab.
The federal minimum wage, created in 1938, rose fairly steadily for decades, reaching its peak buying power in 1968. It might amaze you to learn that the 1968 minimum wage of $1.60 would be $10.74, adjusting for inflation in 2013 dollars—well more than the current federal minimum. Meantime, despite wages that have not kept pace, economic output per capita, adjusted for inflation, has doubled since 1969, helping companies’ profits through increased productivity (static.cdn-seekingalpha.com/uploads/2013/12/5/saupload_Real-GDP-per-capita-since-1960-log.png). Last year, corporations, already fully recovered from the recession by 2010, reached all-time high profits in the third quarter of 2012, while during the same quarter, workers’ wages dropped to a record low.
It is time to invest in workers, who, if they were able to be more self-sufficient, would not need to turn so often for assistance from public funds. Furthermore, raising the purchasing power of our lowest paid workers would help not only them, but also would set a new bar for others who make more than the minimum and would benefit the economy at large by increasing consumer spending. A 2011 study by the Chicago Federal Reserve Bank finds that for every dollar increase in the minimum wage, that minimum-wage, hourly worker spends an additional $2,800 in consumer products for his or her household over the following year (www.chicagofed.org/digital_assets/publications/working_papers/2007/wp200...).