Picture this: You are a single parent of two, you work 40 hours a week plus occasional overtime at a minimum wage paying job, you struggle to put food on the table to feed your family, and then you receive a call from the bank saying that your home is being foreclosed. This is the situation faced by thousands of Americans every year due to low income and wealth inequality. The federal minimum wage (FMW) as of April 2014 is $7.25, which is not enough to keep a family of two above the poverty line. There are certain questions on this topic that should be addressed, such as why is poverty and wealth distribution an issue in the United States today? Should the FMW be raised and why? How would raising the FMW affect American families? What are the benefits of raising the FMW, as well as the drawbacks? Finally, what is ultimately the best path in regards to the FMW? This paper asserts that raising the federal minimum wage would hold predominantly positive benefits for low and middle class families, lessening the poverty rates. The increase would help lessen wealth inequality between the upper and lower class citizens of America.
Before we dive into why raising the FMW is important in helping poverty, we should first examine how poverty is defined and researched. Firstly, the federal government identifies poverty by using "a set of money income thresholds that vary by family size and composition.” Knowing that the 2010 U.S. Census states the average American household size to be 2.58 people per household, we can round to the figure of three people per home. According to 2014 U.S. guidelines, a family of three meets the standards to be in poverty if their annual income is less than $19,790 while a full time FMW worker makes $15,080 annually, only enough to support one full person as the threshold for two people is $15,730. By using these guidelines and thresholds, we know that 46.5 million people were living in poverty as of 2012.
There are two primary sources for measuring poverty, the official measure by the U.S. Census Bureau and the Supplemental Poverty Measure (SPM), which includes factors not included in the official measure such as government benefits and taxes. Reports are written on both measures by the Census Bureau, giving the public its information on the issue of poverty. There are some important differences to note between the two, such as the matter of measuring needs. The official measure uses “three times the cost of a minimum food diet in 1963 in today’s prices,” while the SPM uses “information about what people spend today for basic needs- food, clothing, shelter, and utilities.” As the official measure came out of President Lyndon B. Johnson’s “war on poverty” in the 1960’s, many of the ways information is measured are more relevant to today through the SPM, which states that the population in poverty is actually higher than noted, at 49.7 million.
Historically, the FMW has been rising to meet the needs of the workers at the time. In...