Wages are too Low to Live On—What can be Done?
As mentioned in the previous post, payday loans aren’t a problem; they’re just the symptom of one. Minimum wage isn’t enough to cover the cost of living. It makes sense: the federal minimum wage hasn’t been raised since 2009. That means for seven years, inflation has reduced the buying power of those who earn the least. Although certain commodities have become cheaper, such as food or gas, expenses like rent are at ridiculously high levels. As seen in Nickel and Dimed by Barbara Ehrenreich, blue-collar workers had to take on multiple, menial jobs just to get by; forget HSA’s or retirement plans. This way of life is unsustainable and unjust; change needs to be made.
So, what can be done? Wages can increase, meaning a higher federal minimum wage. The idea is simple enough — companies are legally mandated to pay their lower-earning employees more. Although opponents say that the economy suffers, there is evidence suggesting otherwise.
Another idea is to abolish the minimum wage and implement a “universal basic income.” Introduced by left-wing groups, this universal income would be a sum of money to be given to all American citizens. I personally believe this income should be limited, either by having some sort of cut-off(only those making $XX a year or less are eligible), or modeling the handouts like our tax system(the higher your income is, the less you receive). Otherwise, this will be unfeasibly expensive. For those concerned that companies will lower workers’ wages, there is no need to worry. Although repealing minimum wage gives companies the power to lower compensation, they can only use it to an extent: if there isn’t enough incentive to work, who will? Thus, by responsibly implementing a universal income, all Americans will be guaranteed financial security.
As expected with such a radical idea introduced, there is dissent. Those who believe this endeavor would cause massive inflation don’t see the whole picture. There won’t necessarily be more money printed, existing money will just be circulated in a way that more ends up in the people’s pockets. In regard to those who criticize this idea’s price tag, by cutting certain costs(MILITARY), it’s possible to stay fiscally responsible. To those who claim that there will be no incentive to work: there will. This package should be large enough to supplement low-income workers, but not so large that they do not need a job. And finally, to conservatives: a universal income isn’t just half-baked, liberal nonsense. As stated in Freakonomics Radio, “it puts together all the different types of welfare into one tidy package.”
But, wages might not need to rise if the cost of living can decrease. And this means lower everyday costs, not just tax relief(especially since low-income earners pay little to no tax due to deductions and credits). One possible method to reduce cost of living is to encourage a new type of corporation to rise — one that advertises the “minimalist package.” Cable companies often advertise bundles filled with unnecessary services to earn higher profits, while phone companies traditionally encourage customers to buy 2-year contracts along with a phone. Companies that offer no more than what consumers desire will do a couple important things.
Most importantly, they’ll bring much-needed competition. This is a generalization, but giant corporations generally dominate their respective markets. The only way competition stands a chance is if it offers something new and innovative. In this case, offering minimal yet high-quality products such as cable with only a handful of channels, or cheap housing pods for rent, will certainly cause an impact. Even if these companies fail in the end, larger corporations will be pressured to offer these minimalist packages(in a similar way to how Hillary Clinton promises more progressive policies to attract Sander buffs).
It’s certainly embarrassing that a large number of American citizens are forced to take on multiple, blue-collar jobs in order to sustain themselves. However, this problem can be fixed. Minimum wage can be raised. A universal income can be introduced. The cost of living can be pressured downwards. Hopefully in the near future, payday loans will be obsolete, and citizens will be financially secure enough to pursue their own American Dream.