The debate of a $15 minimum wage is back in the news, and unlike other times when this debate has been brought up, it is more possible than ever before.
The Biden White House argues that a $15 minimum wage is a way to lend a hand to America’s working poor and a means to boost the U.S. economy. Just recently, the Congressional Budget Office (CBO) estimated raising the minimum wage could cost the U.S. economy 1.4 million jobs by 2025.
However, how does the minimum wage debate fair closer to home?
State Sen. Eddie Melton, D-Gary, has submitted a bill to raise Indiana’s minimum wage to $10 per hour from the current state minimum wage of $7.25, which has not increased since 2009. Under the Melton proposal, the minimum wage would immediately increase to $10 per hour, and be increased $1 per hour every year until the minimum wage reaches $15 per hour.
Gov. Holcomb’s administration wants to focus on increasing wages for all through means of funding workforce development skills. Statewide, the wage debate and solution could be determined by the end of the 2021 legislative session.
According to bestplaces.net, Bartholomew County’s average individual income is $27,623 per year, which is slightly below the national average of $28,555. The current poverty rate of Bartholomew County is 11.2%, which is higher than the national poverty rate of 10.5%. The cost of living in Bartholomew County is approximately 18% — lower than the national average.
With these statistics in mind, how would an increase in minimum wage look?
Bartholomew County’s neighbor to the east, Ohio, has a current minimum wage of $8.80 per hour that started at $8.55 per hour and is adjusted yearly for inflation. Under the current Ohio minimum wage law, the minimum wage of Ohio will be $13 per hour by 2025 and $15 per hour by the year 2027.
How has the wage impact affected the Ohio economy? Logan County, Ohio is comparable with similar population and industry to Bartholomew County. Since the minimum wage increase in the state of Ohio, Logan County has experienced the following:
- The average income is $23,900 per year, which is below the national average.
- The current poverty rate of Logan County is 10.5%, which is directly in line with the national average.
- The cost of living is 21% lower than the national average.
These figures tend to indicate that increasing the minimum wage incrementally has a very low impact on the overall economy in communities.
But is that truly the case?
Economies thrive on discretionary spending. The higher the discretionary spending, the stronger the economy.
For example, a family of four from Logan County, Ohio and a family of four from Bartholomew County, Indiana decide to go to McDonald’s and then to a movie. On average, the family of four from Ohio spends approximately $25 to $35 more that the family from Bartholomew County for that evening. Based on these two scenarios, those who support the increase of the minimum wage can say that the increase will seemingly not affect the overall cost of living in their local community.
Those who do not support the increase of the minimum wage can argue that the increase of the minimum wage will have a negative impact on the amount of disposable income spent in the local economy, thus presenting a revenue challenge to local restaurants, entertainment and leisure businesses in their communities.
Though there is evidence to lend support to both arguments, these conclusions are determined in a bubble. When determining the minimum wage, there are several questions that are certainly being answered individually.
But are these answers truly being synthesized to form a holistic conclusion to a real minimum wage solution?
The first question that needs to be thoroughly answered is: How was $15 per hour determined to be the proper dollar amount? Does that figure truly represent a living wage?
The second question that needs to be addressed is: Should there really be a “one-size-fits-all” minimum wage?
For example, Certified Medical Assistants, (a profession that requires certification in Bartholomew County) on average make less than $15 per hour. Should that person receive the same amount as a 16-year-old living at home with her parents or guardians truly need a “living wage” when her basic needs of housing, food, and health care are being supplied already?
Without a doubt, increasing the minimum wage would have an impact on Bartholomew County, and the impact will be as diverse as the county itself. With that in mind, the debate of the minimum wage should not solely be a political issue.
Wages are the foundation of a community, whether they be living or minimum or otherwise, and they require constant consideration. Due to its importance, this complex matter cannot be fixed with a simple solution.
Also, it may be time to realize that wages may not be a federal or even state issue. Former Speaker of the House Thomas “Tip” O’Neill once said that “all politics are local.”
Maybe, just maybe, in some ways all wages are local as well.
Trunnis Goggins is a full-time course instructor in the college of business at Western Governors University. He also serves as an adjunct instructor for business classes for both Trine University and Ivy Tech Community College. Trunnis has an earned PhD in Public Policy and Administration from Walden University. Send comments to editorial@therepublic.com.
