America’s Wage Crisis

Source : HBR.org

Why is it that Northern European countries such as Germany seem to be so rich and we are still trillions of dollars in debt?

America’s economy is not progressing. Our funding is going to all the wrong places and to make matters worse, some of our politicians want to regress America back to the 1960s by repealing acts and legislations that were settled in the sixties.

According to the CIA World Factbook, we are about $390 billion in debt. That officially makes us the poorest country in the world. I must also mention that we still have over $17 trillion of external debt, which is the more debt than any other country.

Yes, we are poorer than Greece and Italy combined. Together, they have around $3 trillion of debt and both of their balances are positive, creating a positive balance of $43 billion. Compared to us, Italy and Greece seem to be prospering. Even Russia, with all its economic sanctions as a result of the Crimean Crisis, has a positive balance and less external debt than us.

So what exactly are we doing wrong? Why aren’t we progressing or working to get rid of our debt? I’m not going to blame Barack Obama for all this debt because he is trying his best to actually get rid of it. In fact, before George W. Bush became president, Bill Clinton ended his terms with an actual positive balance.

Since the beginning of American history, we have always been a step behind. We were the last of the more advanced countries to get rid of slavery and only recently have we made gay marriage accepted nationwide. When Canada had gay rights in 2005, we had the “Don’t ask Don’t Tell” Act, basically restricting gays from coming out. The only redeeming quality of this act was it decreased violence towards gays, as no one was allowed to ask about it.

Even in terms of women’s rights, black rights, and the right to have an abortion, we were always behind other countries.

However, although we lack progress and are in terrible debt, it is still very impressive that we have managed to get this far considering we are such a young nation of only 240 years. We are expected to be this great, rich place, where dreams can happen, but we are far from it.

People immigrate to America only to be given minimum wage jobs, discrimination, and no benefits whatsoever. They have nothing. No shelter, no healthcare, no money. Yes, you can make it big in America, but the chances of it is nearly impossible. People of color, in addition to women, have to work so much harder than the average white man to make any money.

The situation is so bad here that the middle class has basically disappeared. 51% of American workers make less than thirty thousand dollars per year according to Michael Snyder of the Washington Blog. What’s even worse, though, according to Snyder, is that 38% are making less than $20,000 per year. That means 38% of American adults are only receiving minimum wage jobs.

The way the economy works is that if the people are richer (and not just the 1% who get 99% of the money), then the economy is richer, but with these conditions, our economy is only going to worsen. No one in the lower class (which now makes up 51% of America) is able to get money because everything is too expensive due to inflation and low paychecks.

With less money, fewer people can afford stocks and bank interest rates will stay low. The worst part is, the working class with the least amount of money are working the hardest of all in their often back-breaking, manual labor, minimum wage jobs.

In order to save our economy and improve our great nation, the rich must give to the poor – not just any rich person, but only the business owners by raising their minimum wage to a liveable wage. Currently, these wages basically starve employees.

“Do I pay the rent or do I buy food for myself?” It’s one or the other. Those are decisions that three-fourths of minimum wage workers are asking themselves. Isn’t it sad that three quarters of minimum wage workers are adults in their 20s, 30s, and 40s, and yet, they don’t make enough money to keep a small one bedroom apartment and feed themselves?

There are families with children whose parents make less than a hundred dollars. They have to provide for not only children, but also keep their houses/apartments and be able to provide enough food for their children. Even single mothers and fathers somehow have to live on this starvation wage, which cannot support themselves or their family.

Something is wrong with society when businesses don’t provide their employees enough to buy their basic necessities, especially when many of them have families.

Then again, higher wages would cost the businesses and the consumers even more. With higher wages, employers are required to spend more money on keeping their employees and as a result, they have to raise their prices.

But think about this: consumers are able to afford the products they buy whereas the employees can’t oftentimes which is why they took the job. Also, the business owners, if successful, get all the profits from everything that they sell, at least in places that don’t offer a commission. Therefore, it really isn’t too much of a problem for the companies to raise wages a couple bucks, is it?

Although, when the wages are higher, more taxes are put on the employer and the employees for those few extra bucks. Then, people start losing their jobs or in the least the benefits that came with it. Also, if the smaller businesses did not have a lot of money to begin with, a high increase in wages could be absolutely detrimental.

The economy is always changing, however, and so are the demands, so a wage hike isn’t the only cause of a failing business and a loss of jobs. As the economy rollercoasters up and down constantly, there are always going to be people losing their jobs and places going out of business. And as demand changes, some businesses cannot cater to the people’s needs anymore while others rise up in the market, selling millions.

As for tax increase, successful companies, especially ones that make it into the Fortune 500, aren’t really affected by it. These big corporations could continue hiring workers and give their employees raises and the only result would be that they didn’t make as much money as they did last year.

Still, the taxes also increase for the employees. An employee who used to have a 15% tax taken out of their paycheck could now have a 20% tax taken out. However, one of the Democratic presidential candidates plans on giving these employees a tax break, so they could truly make more wages.

Regardless, wage increases could also be done by increasing earned-income tax credits, which is basically money earned by people who make lower wages. It is a bit of a strain on the federal government, but at least, neither the corporations, nor the employees suffer.

Oren Cass of the New York Times who wrote an article titled “A Smarter Way to Raise Paychecks,” however, believes that if the government redirects some of its funds from lesser effective anti-poverty plans and creates a subsidy which would pay people by the hour based on how much they work. It could help low wage earners get more money without having more taxes added onto the workers’ paychecks, nor making the businesses lose profits.

Cass further said in his article, “from the workers’ perspective, this policy looks much like a minimum wage increase. From the economy’s perspective, it looks like the earned-income tax credit,” meaning that both the corporations and the employees will be happy.

In order to progress, make our people richer, and happier, this is what we have to do. Without these actions, we will continue to be halted in our progression. Hopefully, some of us could make a difference, become politicians, part of Congress, hold strikes, or become political activists ourselves.

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