Whether slinging hash at a fast-food franchise in Peoria Heights or clocking in day labor booked out of a downtown office, minimum-wage workers need better pay.
The country needs a better minimum wage – and one that includes everyone who works for a living.
Coming back from its August recess, the 113th Congress is expected to debate the federal budget as it returns to Washington, and working people, the dwindling middle class and the minimum wage will surely be addressed.
After all, the minimum wage has been stuck at $7.25 an hour since 2007, when Congress last voted to raise it (even then, after a decade!).
Some states are higher, such as Illinois, where the minimum wage is $8.25 an hour.
Despite that increase more than five years ago, inflation has eroded the minimum wage’s value. Restoring it to what it was worth in 1968 would require an increase to about $10 per hour.
This isn’t new. Fifty years ago, organizers of 1963’s March on Washington for Jobs and Freedom had 10 demands. One was “a national minimum wage that will give all Americans a decent standard of living.”
The arguments of the opposition are old, too. Critics say that a minimum-wage increase would hurt business, raise prices and even harm the working poor, who’d suffer from layoffs, joblessness and a tightened labor market. Conservative groups like the Employment Policies Institute – founded by restaurant lobbyist Rick Berman, with a vested interest in low-paid employees – have written that raising the minimum wage would cost the country jobs.
Such logic seems to echo Southern employers of the 19th century: “Don’t make us pay our slaves! It’ll hurt our business!”
Several respected studies minimize claims of negative effects from a raise.
A 2004 study of available literature, “The Effect of Minimum Wage on Prices,” analyzed a wide variety of research on the impact. From the University of Leicester, the study found that firms tend to respond to minimum wage increases not by reducing production or employment, but by raising prices modestly.
A ground-breaking study in the 1990s by Princeton’s Alan Krueger – current chair of the White House Council of Economic Advisers – and David Card examined the results of a New Jersey law raising the minimum wage, comparing the outcomes in the fast-food industry to those in the bordering state of Pennsylvania, where wage laws went unchanged. The data indicated “no evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants in the state.”
Politically, such action is not just sensible; it’s popular. Generally, recent polling showed that most Americans – regardless of political-party affiliation – support an increase of the minimum wage to $10.10; specifically, a recent Gallup poll found that 71% of Americans support President Obama’s proposal to increase the minimum wage to $9.
Obama in his 2013 State of the Union address called for raising the minimum wage to $9 per hour, which in adjusted terms would put it back at its early 1980s level. However, 100 economists signed a pledge supporting a proposal by Rep. Alan Grayson (D-Fla.) to raise it to $10.50.
Richard Kirsch of the progressive Roosevelt Institute sympathizes with fast-food workers who’ve been protesting low pay and demanding $15 an hour.
“If you look at a pretty basic economic living standard, that’s about what one person has to make just to support themselves,” Kirsch said. “We can’t really move the economy forward when a growing sector of the workforce isn’t making enough to support their families.”
Douglas Hall, director of the Economic Analysis and Research Network at the nonpartisan Economic Policy Institute, said, “The average non-supervisory wage [is] $20.14, so half of that would be $10.07 — which, coincidentally, is very close to the $10.10 figure that Sen. Harkin (D-Iowa) and Rep. Miller (D-Calif.) have been proposing.”
Besides the influence of business on Capitol Hill, raising the minimum wage may be difficult because of the lack of power of its main beneficiaries.
“Minimum wage workers tend to be young,” the Bureau of Labor Statistics said. “Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the federal minimum wage or less.”
Three and a half million workers make either minimum wage or less – that’s about $15,000 a year, well below the poverty line for a family of two – and millions more Americans make something only slightly above it. Raising the minimum wage to $10.10 would mean higher wages for the 21.3 million Americans who make even less.
(That’s right. Some people make less than the statutory MINIMUM. According to the Pew Research Center, almost 2 million Americans earn an hourly wage lower than the minimum, including “tipped workers” many domestic workers, plus workers on small farms, some seasonal workers and some disabled workers.)
Also, it must be conceded that the federal Earned Income Tax Credit (EITC) provides many low-income workers with what could be seen as a pay subsidy. However, taxpayers are underwriting this support, not private firms. So a raise in the minimum wage might, in theory, lift some of that burden off taxpayers’ backs and shift it to corporations that make money.
In Galesburg on July 24, Obama said, “When middle-class families have less to spend, businesses have fewer customers. When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. When the rungs on the ladder of opportunity grow farther apart, it undermines the very essence of this country.”
The nation needs a new bottom rung that’s strong enough to let working people step up and climb.
The country needs a better minimum wage, one that includes every working American.
Contact Bill at Bill.Knight@hotmail.com; his twice-weekly columns are archived at billknightcolumn.blogspot.com