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Published on Tuesday, July 24, 2012 by Common Dreams
Economists and Workers Both Say: Raise the Minimum Wage
Economists insists it makes good fiscal policy and small business owners rally alongside workers
- Common Dreams staff
Marking the third anniversary since the last national minimum
wage increase, low-paid workers and living-wage advocates across the
country on Tuesday are calling out for a renewed focus on the paltry,
sub-poverty earnings that millions of Americans are expected to get by
on.
Advocates of the increase argue that if the minimum wage had kept up
with inflation since 1968, its historical high point, it would now be
over $10.50 per hour. Marches and rallies are planned, according to McClatchy,
at congressional district offices and at businesses that pay low wages.
In Chicago, protesters will hold a trolley tour of low-wage employers,
while activists in Pittsburgh will rally for higher wages outside City
Hall. Similar events are planned in dozens of cities, including New
York, Washington, Miami, Kansas City, Mo., Sacramento, Calif., and
Philadelphia.
"We're having this national day of action to get a message to our
elected officials that we are serious about how the minimum wage is not a
livable wage," said Cathy Kaufmann, deputy Ohio director of the Fight
for a Fair Economy, part of SEIU, or the Service Employees International
Union.
At $7.25 an hour, the current minimum wage comes to just $15,080 a
year for full-time work -- a figure still below the official poverty
line.
Recent studies by the Center for Economic and Policy Research shows
that the "minimum wage is now far below its historical level by all of
the most commonly used benchmarks – inflation, average wages, and
productivity."
And Holly Sklar, director of the Business for a Fair Minimum Wage
project, adds that though "worker productivity grew 80 percent from
1973 to 2011" the average worker's wage -- adjusted for inflation --
"fell 7 percent."
In a column highlighting the economic inequality engendered in the
minimum wage and calling for its increase, economist Dean Baker and CEPR
co-director writes: "At the current rate of $7.25 an hour, a full-time
year-round worker would have gross pay of less than $15,000 a year. This
is less than half of what the average Fortune 500 CEO makes in a day.
It would be hard enough for a single person to survive on this income,
imagine trying to support a child or even two on this money."
Advocates of the increase argue
that if the minimum wage had kept up with inflation since 1968, its
historical high point, it would now be over $10.50 per hour. This, they
say, despite the fact that today’s low-wage workers are older and better
educated than in the past. Had the minimum wage also risen in step with
low-wage workers’ age and educational attainment since 1968, it would
even higher in 2012, approaching $11 per hour.
Opponents of minimum wage increases have long argued that such
adjustments impact hiring, but much economic research contradicts such
claims.
"Increases to minimum wage have not produced the loss of jobs in the ways that opponents of these types of proposals predict," said Jeannette Wicks-Lim, an assistant research professor at the University of Massachusetts' Political Economy Research Institute.
Wicks-Lim said the recent research shows minimum wage laws enacted in
the past "have not had a negative impact on workers' job
opportunities."
“Businesses don’t expect the costs of energy, rent, transportation
and other expenses to remain constant, yet some want to keep the minimum
wage the same year after year, despite increases in the cost of
living,” said David Bolotsky, founder and CEO of UncommonGoods and a
member of Business for a Fair Minimum Wage. “That kind of business model
traps workers in poverty and undermines our economy.”
Supporters will lobby for a provision of the Rebuild America Act,
introduced in the Senate this year by Senator Tom Harkin (D-Iowa),
calling for the federal minimum wage to be increased to $9.80 per hour
by 2014.
In June, Congressmen Jesse Jackson, Jr. (D-Ill.), John Conyers
(D-Mich.), and Rep. Dennis Kucinich (D-Ohio) introduced the “Catching Up
to 1968 Act of 2012” (H.R. 5901) – legislation to raise the federal
minimum wage to $10 per hour.
In the Republican controlled House, the bill has gone nowhere.
* * *
Small business owners made the following statements in
support of Tuesday's action and the call for an increase of the minimum
wage:
David Bolotsky, Founder and CEO of UncommonGoods in Brooklyn, New York,
said, “Businesses don’t expect the costs of energy, rent,
transportation and other expenses to remain constant, yet some want to
keep the minimum wage the same year after year, despite increases in the
cost of living. That kind of business model traps workers in poverty
and undermines our economy. The minimum wage should require that all
businesses pay employees a wage people can live on.”
Camille Moran, Owner of Caramor Industries and Four Seasons Christmas Tree Farm in Natchitoches, Louisiana,
said, “A minimum wage increase is long overdue. It’s not right or smart
for any business to pay a wage that impoverishes not only working men
and women and their families, but also impoverishes our communities and
our nation. Boosting the wages of low-paid workers who could then
purchase the goods and services they need is the best medicine for our
ailing economy.”
Julie Paez, Owner of Big Bad Woof pet supply stores in Hyattsville, Maryland and Washington, DC, said,
“Paying employees a living wage makes good business sense. It helps
keep qualified employees – cutting down on training expenses – and helps
foster company loyalty, which, in turn, produces higher sales and
increases customer retention. It's a win win.”
Lew Prince, Managing Partner of Vintage Vinyl in St. Louis, Missouri, said,
“The evidence that trickle-down economics doesn’t work is all around
us. People are falling out of the middle class instead of rising into
it. Putting money in the hands of people who desperately need it to buy
goods and services will give us a trickle-up effect. Raising the minimum
wage is a really efficient way to circulate money in the economy from
the bottom up where it can have the most impact in alleviating hardship,
boosting demand at businesses and decreasing the strain on our public
safety net from poverty wages.”
Marilyn Megenity, Owner of Mercury Cafe in Denver, Colorado,
said, “We opened our doors in 1975, and I know that raising the minimum
wage is not only affordable to restaurants and other businesses – it’s
crucial for our economy. It's important that all employees be able to
make a decent wage, in order to pay rent and all the other costs of
living. Our government needs to take charge of this now, just as it did
in the past. We cannot continue a minimum wage that keeps even people
who are working full time, year round in poverty.”
Brian England, Co-Owner of British-American Auto Care in Columbia, Maryland,
said, “Have you ever wondered why every time you visit some businesses
the staff has changed? Well chances are it is because they only pay an
inadequate minimum wage. Instead of paying a fair wage, they are
inviting costly constant turnover and unreliable customer service. In
raising the minimum wage, we should be moving people away from just
surviving. We should be moving working Americans as far away from
needing the social safety net as possible. Raising the minimum wage
raises everyone up.”
Jim Wellehan, President of Lamey Wellehan Shoes in Auburn, Maine,
said, “Our family business is nearly a hundred years old, and clearly
our country does better when all believe that their hard work will bring
good results for them and their loved ones. Now, as Bloomberg
BusinessWeek Magazine reports, the USA has higher income inequality and
lower social mobility than most industrialized countries. If you are
born poor, you are quite likely to die poor. Raising the minimum wage is
a step to correcting this worsening situation. And the ability of a
broad segment of our society to have a bit more spending money will
benefit every area of our economy. Our increasingly unequal economic
structure has no long-term viability.”
Joseph Rotella, Owner of Spencer Organ Company in Waltham, Massachusetts,
said, “As a small business owner and an American, I support proposals
to raise the federal minimum wage to at least $9.80 by 2014, because I
strongly support workers being able to earn a living wage. America
should be a country where no one who puts in a fair day's work can't
afford to make ends meet, and no business owner who offers a living wage
has to be undercut by competitors who do not. Not only is increasing
the minimum wage the right and fair thing to do, but it will also help
stimulate our struggling economy by putting more money into the hands of
workers who need to spend it.”
Top Opinion
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Raising the minimum wage based on the substance of the article makes sense!
+15If Congress wanted to make it happen, you know raise the minimum wage they could, but understanding the goal of the right wing is to tank the economy, it's more likely that a unicorn will become a household pet.
Feel good nonsense.
“The minimum wage law is most properly described as a law saying that employers must discriminate against workers who have low skills,” said Nobel Prize-winning economist Milton Friedman.
He was right.
State Teen Unemployment Minimum Wage
He was right.
The Employment Policies Institute has released a new report detailing teen unemployment in the various states for April of 2012. Based on that data, I created the spreadsheet below listing the states from highest teen unemployment to lowest and indicated which states have higher an elevated minimum wage (red for states above the federal minimum, blue for states at or below).
What the spreadsheet shows is a strong correlation between higher levels of teen unemployment and a higher minimum wage. Of the top 5 states in terms of teen unemployment, four have minimum wages higher than the federal standard. Of the bottom five states for teen unemployment, just one has a minimum wage higher than the federal standard.
Going further, of the 20 states with the lowest teen unemployment just 4 have a minimum wage above the federal level. Of the top 20 states for teen unemployment, nine have a minimum wage above the federal minimum.
Obviously, there are a lot of economic factors that go into une...
Feel good nonsense.
“The minimum wage law is most properly described as a law saying that employers must discriminate against workers who have low skills,” said Nobel Prize-winning economist Milton Friedman.
He was right.
State Teen Unemployment Minimum Wage
He was right.
The Employment Policies Institute has released a new report detailing teen unemployment in the various states for April of 2012. Based on that data, I created the spreadsheet below listing the states from highest teen unemployment to lowest and indicated which states have higher an elevated minimum wage (red for states above the federal minimum, blue for states at or below).
What the spreadsheet shows is a strong correlation between higher levels of teen unemployment and a higher minimum wage. Of the top 5 states in terms of teen unemployment, four have minimum wages higher than the federal standard. Of the bottom five states for teen unemployment, just one has a minimum wage higher than the federal standard.
Going further, of the 20 states with the lowest teen unemployment just 4 have a minimum wage above the federal level. Of the top 20 states for teen unemployment, nine have a minimum wage above the federal minimum.
Obviously, there are a lot of economic factors that go into unemployment numbers, but the strong relationship between a higher minimum wage and elevated unemployment rates among young and low-skill workers cannot be denied.
Far from helping entry-level workers, the minimum wage hurts them by acting as a defacto tax on low-wage workers. And anything you tax, you get less of.
Better more jobs at a lower wage than fewer jobs at a higher wage." http://sayanythingblog.com/en...
and
http://www.minimumwage.com/wp...
I love how some people are saying that "prices will go up if you pay people more!" That's simply untrue, well, to a point. The fact that they would rather wait for prices to rise rather than wages to rise says something about them, since the two would be intertwined by their logic. But the only reason prices would increase is if businesses decide that they want more money, which would be ridiculous. If this were 1950, I could see them being concerned about their profits, since they made *only* 50x the amount of a non-owner. However, today CEOs and executives make 500x the amount of profit! So if anything, the WAGES are lagging behind!
With minimum wage at $7.25 per hour, the minimum wage earner grosses $290 per week, or just over $15,000 per year.
If that person is the sole wage earner and pays $840 per month for housing, they're paying just over $10,000 for rent annually.
Do they even have that much to spend?
If married, and they are the sole wage earner, they are paying 10% federal taxes. If single, it jumps to 15%.
So, lets say they're a single parent and deduct $2062. That leaves them with $13018 in spendable income. But wait, they still have to pay $935 into Social Security.
That leaves them with $12083. Oh yeah, then there's the Medicare tax of 2.9%, or $437, which leaves them with $11646.
I almost forgot their state tax. That varies of course, but let's look at MN where I live. Yaaay, the minimum wage earner makes less than $23100, so their state income tax is only 5.35%. That's only an additional $807 deduction. So now we're sitting pretty with an annual net income of $10839.
NO PROBLEM! This leaves $839 per YEAR, or $69 per month, for UTILITIES, FOOD, CAR OR MASS TRANSIT, GAS, INSURANCE, DAY CARE, CLOTHING, TOOTH...
With minimum wage at $7.25 per hour, the minimum wage earner grosses $290 per week, or just over $15,000 per year.
If that person is the sole wage earner and pays $840 per month for housing, they're paying just over $10,000 for rent annually.
Do they even have that much to spend?
If married, and they are the sole wage earner, they are paying 10% federal taxes. If single, it jumps to 15%.
So, lets say they're a single parent and deduct $2062. That leaves them with $13018 in spendable income. But wait, they still have to pay $935 into Social Security.
That leaves them with $12083. Oh yeah, then there's the Medicare tax of 2.9%, or $437, which leaves them with $11646.
I almost forgot their state tax. That varies of course, but let's look at MN where I live. Yaaay, the minimum wage earner makes less than $23100, so their state income tax is only 5.35%. That's only an additional $807 deduction. So now we're sitting pretty with an annual net income of $10839.
NO PROBLEM! This leaves $839 per YEAR, or $69 per month, for UTILITIES, FOOD, CAR OR MASS TRANSIT, GAS, INSURANCE, DAY CARE, CLOTHING, TOOTHPASTE, TOILET PAPER, SHAMPOO, DEODORANT, DISH SOAP, SCHOOL SUPPLIES, STUDENT LOAN REPAYMENTS, AND MANY OTHER LITTLE INCIDENTALS NEEDED FOR DAY TO DAY LIVING.
Naaah, I don't see any reason to raise the minimum wage. Why don't these lazy azzes just get a better job?
Then everyone will be wealthy, right?
If 30 years of total failure by trickle-down economics was unsuccessful in teaching the conservatives how the economy works, how are we to expect them to come to the realization that giving people more money to spend will actually increase economic activity?
Anyone against raising the minimum wage should try to live on it for a year.
http://www.epi.org/publicatio...
Key quote:
"The argument that state minimum wages have had a substantially negative effect on a state’s labor market is an extreme repackaging of the perennial claim that minimum wages do more harm than good because they cause many low-wage workers to lose their jobs. While this argument was once more prevalent among economists, recent studies with improved methodologies have reached the opposite conclusion. In general, there is no valid, research-based rationale for believing that state minimum wages cause measurable job losses. Making the extreme case that the job losses are severe enough to show up in a noticeably elevated state unemployment rate is a wild extension of a largely unfounded theory."
So, let me boil down to an even more key quote that starts refuting you at your 5th word above (inflation):
"In general, there is no valid, research-based rationale for believing that state minimum wages cause measurable job losses."
However, our idea about limiting top salaries is interesting as it IS true (IMHO) that the difference between lowest and highest wages has gotten too high, but I'd like to see some projections of it's effects before deciding about it. I'd also foresee HUGE problems getting it passed, as Republicans (perhaps rightly) would see government dictation of maximum salaries to be extremely liberty-reducing, anti-competitive, anti-capitalistic, socialistic (if not Communistic), and anti-American. Now, it's true they say that about minimum wage, but their ideas are a harder sell on that since we've actually HAD a minimum wage for decades, and there is NO sign that we are in imminent danger of installing a Presidium and Secretariat.
The Free Market is always right.