$7.25 an hour is low and should be raised, to what and how is the question.
The political discourse says go to $15.00 and soon, but is also based on misleading rhetoric regarding who earns the minimum wage and how raising it would impact American families.
Opponents claim raising the minimum would cost jobs. I question that; workers are needed when they are needed and the march toward further automation will continue regardless.
On the other hand, raising the minimum will have consequences because of the ripple effect on other jobs especially in the absence increased productivity.
For example, the $7.25 wage is 1.24 of the poverty level. $15.00 is 2.56 so it’s reasonable to assume the official poverty level and all programs linked to means tested benefits will increase. Where does that leave unskilled workers?
Other examples, a starting teachers average hourly rate is 2.11 times the current minimum wage (using a full 2080 hourly work year), but only 1.02 times $15.00 an hour. For the average teacher in the US, the ratios are 2.56 and 1.24. With a $15.00 minimum wage average starting salary should go from $31,842 to $67,186. What does that do to property taxes and affordability of housing?
Look at the average salary in the US and you get 3.19 times today’s minimum, but only 1.54 the higher $15.00. Even more startling is that the ratio of median family income goes from 4.12 to 1.99. In other words, the household income would have to go from $62,171.2 to $128,544 to maintain the same relationship to the minimum wage.
All of this has major implications for the economy. It is unlikely that wages as illustrated will jump to the equivalent ratio for a $15.00 minimum wage, but there will certainly be pressure to raise wages in recognition of the new minimum.
Raising wages means higher prices for goods and services which means higher inflation. What does this mean for the worker still in a minimum wage job? It seems to me they have gained little or nothing and may lose ground if they lose eligibility for means tested benefits.
These are the possible consequences that are not considered or poorly thought out in the political rhetoric.