As the discussion of whether to raise the minimum wage presses forward, we need to realize that one of the greatest threats to our nation is the loss of our middle class. The increasing gap between the rich and the poor is not good for the rich or poor.
Because we are a consumer-driven economy, our economy relies on people buying products. I once tried to explain this to my 12-year-old son in terms of sneakers since he loves basketball and always wants the most popular sneakers. A rich person, over their entire life, might buy 50 pairs of sneakers, though they may be more expensive brands and versions. In contrast, the poor person might buy just a handful of the most inexpensive. However, neither of these models is sustainable, economically. What we need is a strong middle-class with thousands of people buying reasonably-priced sneakers. That creates the stable market our capitalist system is based on. However, whether it's sneakers, refrigerators, or houses, the data is clear – our wages are not keeping up with inflation and cost of living, and our middle class, and their budgets, is shrinking. Our economy will pay the price.
In the early 20th century, Henry Ford realized the importance of paying good wages, even though his goal was to make cars as cheaply as possible. His $5-a-day wage was almost double the prevailing wage of his time. This salary helped create blue-collar middle-class workers at Ford who could purchase the cars they made. It also reduced Henry Ford's turnover at his company, which offset the higher wages in the company's ledger.