A new analysis points out that a raise in the minimum wage would boost the economy and provide relief for the the working poor.
—
A new analysis points out that a raise in the minimum wage would boost the economy and provide relief for the the working poor.
According to the Economic Policy Institute, the Fair Minimum Wage Act of 2013, a bill introduced by Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) that would raise the federal minimum wage in three incremental increases of $0.95 from its current level of $7.25 per hour to $10.10 per hour, would affect 27.8 million workers, directly or indirectly distributing $35 billion in additional wages over the phase-in period to the working class.
The documented spending habits of the working poor indicate that this money would most likely be put back into the economy, as low-income people living with little financial cushion tend to spend more as discretionary income accumulates.
The EPI report assessed that the national economy would grow by about $22 billion during the beginning stages of the Fair Minimum Wage Act, resulting in about 85,00 new jobs created as a consequence of increasing affluence in the blue-collar pocket. While conservative economists argue that a raise in the minimum wage would make employers reluctant to hire more workers, the resulting growth of such a wage hike on the overall economy would overwhelm such a contraction in the labor force.
Craig Jelinek, the C.E.O. of Costco, agrees. “Paying employees good wages makes good sense for business,” he said earlier this year, calling for a federal minimum-wage increase. (Costco pays a starting wage of $11.50 an hour in all states where it does business.) “We know it’s a lot more profitable in the long term,” Jelinek said, “to minimize employee turnover and maximize employee productivity, commitment and loyalty.”
He should know; he started his career as a checkout boy.
The research shows that after adjusting for inflation, the minimum wage today—$7.25—is worth $2.00 LESS than in 1968! If the minimum wage had stayed on par with U.S. average wages of non-supervisory workers alone, it would be up to $10.89 an hour, and if it had kept on pace with skyrocketing productivity, which made workers exponentially more efficient and profitable, the minimum wage would be a whopping $18 an hour.
As it stands, that’s nearly half a century of wage increases that were simply pocketed by employers, who would’ve still run a profitable business with an indexed model. This conscious managerial decision increased the disparity between rich and poor by an ever-widening margin, exploiting the future gains of workers for company profit and sabotaging the growth of the greater economy.
This is how in 2013, someone with full-time employment can still NOT afford to get by, forced by inadequate, outdated compensation models to seek government assistance and survive on taxpayer handouts.
Meanwhile, these impoverished, fully employed workers continue to be publicly vilified as lazy for needing government assistance or demanding a living wage, while the real bandits lobby against minimum wage increases that would correct this injustice and put a halt to their reckless profiteering and the dependence of their underpaid workers on our hard earned tax money.
Since the EPI’s previous report on a minimum wage increase last March, five states have raised their state minimum wages: California, Connecticut, New Jersey, New York, and Rhode Island. The increases in these states underscore the broad recognition that the current federal minimum wage is too low.
“A lot of states and even a lot of municipalities have all boosted their minimum wages out of a recognition that the federal minimum wage is just too low,” David Cooper, an economic analyst with EPI and the author of the report. “Because Congressional action is so hard to come by these days, they’re not going to wait.”
Last november, President Barack Obama announced his support for the Fair Minimum Wage act, joining millions of Americans who recognize today’s minimum wage isn’t enough for a family of two to live above the poverty line.
“Here’s the bottom line,” U.S. Labor Secretary Thomas E. Perez said last November. “No one who works a full time job should have to live in poverty.”
Watch The Case To Raise The Minimum Wage:
This post originally appeared at Occupy Democrats
By Marcos Da Silva
—
Photo: AP/File
“and if it had kept on pace with skyrocketing productivity, which made workers exponentially more efficient and profitable, the minimum wage would be a whopping $18 an hour.” Why would you compare _minimum_ wage to _average_ productivity? If minimum wage is $7/hr, but the increases in productivity come from workers earning, say, $15/hr or more, why should the minimum wage earners get a raise for a productivity increase for which they aren’t responsible? It’s a deliberately dishonest comparison. The EPI paper hinges on “productivity” statistics, which are fundamentally murky – and a minimum wage increase multiplier, which is fundamentally wrong… Read more »
I like the “idea” of better “minimum wages”. But two things stand in the way: that lowers the number of overall jobs that will be available, and b, the so called Obama-care provision that means that if a person only works 30 hours a week, the employer won’t have to carry health coverage. Meaning that more workers will work LESS hours, and so what could have been 40 hours at current minimum wages becomes 30 hours at a LOWER wage, with less benefits. How does that make economic sense? Instead, the focus should be on creating a government and business… Read more »