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Why Don’T Poor People Just Buy More Money?

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When thinking about poverty in the world, one tends to think of a dirty child or a starving adult woefully ignorant of how their situation compares to their western counterparts. In the west, we have a vastly different view of poverty; we don’t view it as a side effect of our way of life; but rather as their choice of living. What separates the haves from the have-nots? There have been many different ways our country has tried to boost the economy from trickle-down economics, stimulus checks, and even tax breaks to name a few. My hope is to invite you into this world.

Why Don’t Poor People Just Buy More Money?The issue of class in America is one that as of late, has been a popular one. With the “living wage” movement arguing for an increased minimum wage that is properly adjusted for inflation and the average cost of living. We have been a part of these conversations if not the issues themselves. While a difficult subject to talk about, social class is more than just a talking point for the media or political debates; it’s how we separate ourselves. We will examine the effects of minimum wage and the benefits and drawbacks of raising it.

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Economist Andrew Soergel’ s thoughts upon increasing the minimum wage is that while there is a mountain of evidence that suggests that wages are stagnant, there are equally as many reasons to increase them. Though new technologies make factory workers and other low skilled occupations obsolete it also creates a new demand in the labor force for those who can maintain these machines and in other areas. With this in mind, Andrew Soergel still urges for an increase in the livability of wages, more Earned Income Tax credits, and the decrease of exporting labor driven occupations to overseas markets.

This story is all too familiar as one reads through the text of chapter 3 in (Re)Writing Communities and Identities. Sarah Garland outlines the relation between money and education she states that wealth redistribution faces opposition however, the Earned Income Tax Credit of lower income family’s children did lead to higher test scores. Garland quotes Jane Waldfogel saying “…if you give more money to families it’s going to benefit the kids” (Garland, 2015).

John Whidbey states that having a low minimum wage helps in a surprising way to boost people’s income while raising it and for some, would be more painful than helpful. The benefit of it is that workers can get away with having more hours and it also makes it easier for others to be hired at a part time rate. The unintended consequence of raising it however is daunting; those with fixed incomes such as salaried workers would be worked even more and while some would certainly benefit from the raises in wages, there would be eventual job loses to keep profits. With these outcomes in mind one might ask, “Do the needs of the many outweigh the needs of the few?” An increase of the minimum wage to $10.10 or $9.00 the job loss would range from 500,000 to 100,000 workers losing their jobs while 16,500,000 to 7,600,000 people would reap the substantial benefits of the federal minimum wage raise.

Though that appears that higher wages would help more people out and the economy it would also raise the prices at businesses which would affect us in a negative way. Daniel Aaronson, Eric French, and James MacDonald are researchers at the Federal Reserve Bank of Chicago and the Department of Agriculture whom published a paper on how restaurants respond to minimum wage increases. They went onto use CPI data and examined the 1996–1997 federal minimum-wage increase. Based on the information they found there was a 10 percent increase in the minimum wage raises, overall restaurant prices approximately 0.7 percent. In the world we see higher wages as more money to spend on the things we have the “I want” urge for or as more money to pay are bills with. We see the raise as a big help but so do businesses, they see it as a great way to raise prices on their sale items because they know people will have the money to spend due to the wages raise.


  1. Soergel, Andrew. “Pay Wars.” U.S. News & World Report, U.S. News & World Report, 28 Mar.2016, Accessed 8 Mar. 2017.
  2. Garland, Sarah. “When class became more important to a child’s education than race.”(Re)Writing Communities and Identities, 2nd ed., Fountainhead Press, Fountainhead, TX, 2015, pp. 129–136.
  3. Whidbey, John. “Minimum wage: Updated research roundup on the effects of increasing pay.”Journalist’s Resource, Harvard Kennedy School’s Shorenstein Center and the Carnegie-Knight Initiative, 8 Dec. 2016,
  4. Sherk, James. “$15 Minimum Wages Will Substantially Raise Prices.” The Heritage Foundation.N.P., 12 Sept. 2016.


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