Why A One-Size-Fits-All Federal Minimum Wage Makes Zero Sense

President Joe Biden’s new $1.9 trillion COVID-19 relief proposal includes a surprising provision: raising the federal minimum wage to $15.

The fight for a higher minimum wage is not new, although it has been intensified by current events. The idea, more specifically, is to provide a “living wage.” Proponents argue that, currently, minimum wage workers cannot afford basic living expenses. But even if one assumes for the sake of argument that this is true and sets aside the fact that small businesses are already on the brink of collapse, it’s impossible to determine one suitable “living wage” for all parts of a vast and diverse country like the United States.

Costs of Living Differ Enormously

Beginning January 1 of this year, about 24 states have raised their minimum wage. According to the Economist, even after these 24 states raised their minimum wage, only three states are offering a minimum wage above the state's “living wage.” A living wage, in this case, is defined as “a theoretical income level in 2020 that allows an individual to afford adequate shelter, food, and other basic necessities.”

One important trend here is that out of the 24 states, only three states—New York, California, and Massachusetts—require a living wage of $15 or higher. In the rest of the country, the “living wage” is actually less than $15 an hour.

Additionally, the gap between states is staggering. Take, for instance, Arkansas and New York.

Arkansas has a living wage of between $10 and $11 per hour. New York, on the other hand, has a living wage of $15 and $16 per hour. This is not surprising, considering the fact that living in New York is much more expensive than living in Arkansas.

But it does make it hard to imagine any good reason the two states should have the same minimum wage. What would happen if Arkansas businesses were forced to offer the same level of wages as businesses in New York?

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