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Wednesday, February 13, 2013

The rich don't make too much; the poor and middle class don't make enough

I'm glad the debate over the minimum wage has been thrust back into the headlines because of President Barack Obama's call to raise the federal minimum wage to $9 per hour from the current $7.25 during last night's State of the Union address.

People are already making definitive sounding claims about what it would mean or what it wouldn't, including Speaker of the House John Boehner, who has said it would destroy jobs, particularly for those at the bottom of the wage scale.

But there is a ton of research that says that is not true.

Either way, it is an important conversation to have.

Some of us have been lamenting the growing divide between the rich and poor, but that's not really the problem. It really doesn't matter how much the richest among us make - as long as the middle class and poor also see their incomes rise. The problem is not inequality, it is stagnant wages at the bottom of the economic scale.

That's a big problem because it actually hurts economic activity - there are many more poor and middle class Americans than rich ones, meaning their collective buying power is greater - and it also ends up hurting the government's bottom line in the form of fewer tax dollars being collected and more funds having to be dedicated to fighting the results of poverty.

The problem is that for the past few decades, most of the wealth created has gone straight to the top. Again, that's not necessarily an inequality problem, it is an unbalanced economic growth problem. Yes, we should be happy when the richest among us do well because they can hire people and invest and contribute to charity. But if they are getting most of the benefits - and they do, especially because of a crazy tax system that hits work harder than wealth - that isn't good for them or any of us. Maybe a minimum wage hike is or isn't the way to solve this problem. Maybe a change in the tax code, or a combination of those and other measures is the answer.

Whatever it is, it is in all of our best interest to find it.

Myrtle Beach, for those who are wondering, has the lowest annual wages in the nation. The area also happens to be the epicenter of South Carolina's largest and most important industry, tourism. Is there any wonder why we receive more in federal dollars than we send to Washington or why it is so hard to come up with a sensible formula to fund all of our schools equally?

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