Trends

MintFamily With Beth Kobliner: A Penny for Your Thoughts on Minimum Wage

The Impact of the Minimum Wage Increase :: Mint.com/blog

Sunday night I went to a make-your-own salad spot that I’d never tried before to pick up a quick dinner.

(Lest you start to worry I am eating just leafy greens for meals, have no fear: This place has more fixin’s to heap on a bed of lettuce than there are toppings at Cold Stone Creamery. Think shredded cheddar instead of sprinkles.)

Anyway, I was at the register as the 20-something (just barely) cashier rang up my pesto salads to go.

She looked at me sheepishly and said, “I don’t have the three cents. Could we say I’ll owe it to you?”

No big deal, obviously. Though I must say that my dad would have certainly commented—jokingly—that back in his day, three cents really meant something.

Meaningful Change = A Penny

As I walked away from the counter, I remembered a great stat that I heard that morning from Democratic strategist Donna Brazile on ABC’s This Week during a debate about the Obama Administration’s recent push for a federal minimum-wage hike.

She said that if the minimum wage was increased to just a bit over $10—a meaningful change for millions of US workers—it would mean that customers at Walmart would pay one penny more for a DVD.

Is that possible?

I mean, would my three cent overage mean that the three young people working the counter or sprinkling feta on my arugula could see a modest boost to their income?

And would it be worth it?

Yes and yes, in my opinion.

To my journalistic delight, I was so happy to learn that Ms. Brazile was right on the money:

A penny is all it would take, according to UC Berkeley economist Ken Jacobs, to pay people a wage that would make their lives so much more livable.

His research shows that boosting the minimum wage to $10.10 at Walmart would cost Walmart shoppers an extra penny for every $16 spent on DVDs, for instance.

For a good article explaining his work—and an interview with Jacobs—check out this piece from Think Progress.

Minimum Wage is a Family Affair

Embarrassingly, I have been assuming that a boost for federal minimum wage (now at $7.25) would predominantly help teens.

I hadn’t realized that this is actually a big family issue, since the overwhelming majority of low-wage workers are adults, not teens, many of whom are using that money to support their families.

In fact, three quarters of workers earning the minimum wage are 20 or older.

So bravo to the Gap for announcing its plans to pay all of its US workers $10 by 2015! I’ll happily pay a penny more for my V-neck T-shirts.

And the next time anyone starts fretting about the impact of minimum wage costs being passed along to consumers, think to yourself: What would a Walmart shopper do?

How much would you pay on a $16 purchase to hike the minimum wage? Please let me know!

Beth Kobliner is a personal finance commentator and journalist, author of the New York Times bestseller Get a Financial Life: Personal Finance in Your Twenties and Thirties, and a member of the President’s Advisory Council on Financial Capability who spearheaded Money as You Grow. She’s currently writing a new book for parents, Make Your Kid a Money Genius (Even If You’re Not), to be published by Simon & Schuster. Visit her at bethkobliner.com, follow her on Twitter, and like her on Facebook.  

© 2014 Beth Kobliner, All Rights Reserved