The big news in Ann Arbor today is the Presidential entourage that can be found on Hoover Street, the site of the Intramural Sports Building where President Barack Obama is speaking about his proposed increase in the federal minimum wage. The President’s proposal is to increase wages to $10.10 across the country in order to increase the ability for families to escape poverty. The jump is significant – a 39% increase from the current rate – and could drastically change the scope of the job market.
I have written a few posts about this proposed increase in wage (you can find the most recent one here). However, rather than continuing to examine the President’s plan, I want to offer a new resolution to the issue. First, it is important to realize that the United States is a vast and diverse country. Trying to pinpoint a single fair living wage for those in Manhattan and those in rural Iowa is impossible. Simply look at the cost of living map below to realize how a single wage point wouldn’t make sense.
So if $10.10 across the board isn’t the answer, what is? There is a definite need, at least in the majority of areas in the U.S., to increase the minimum wage. It’s simply not feasible to live working 40 hours a week at a weekly gross income of $290. To some extent, the current system is performing as it should. 13 states voted to increase their wages at the start of 2014. However, a solution is needed to solve the urban vs rural disparity. One reasonable answer is to leave it in the hands of the local city governments. If the city of Ann Arbor and its residents determine that a $10 wage is right for the community, it makes sense to change it. In the meantime, the neighboring city of Ypsilanti, where costs of living are lower, could go on offering wages at an $8 level. This allows the natural supply and demand forces of each individual market to work and find the equilibrium price point.
In a complex United States economy, it simply isn’t possible to solve problems with a “one-size-fits-all” solution. It is important that our government allows the system to work, and for local issues to be solved with localized solutions. While our President’s efforts to help bring struggling families above the poverty line is valiant, the true solution is to encourage cities to find the wage that is right for them and give them the tools to do so.