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Let’s Talk About Minimum Wage

Less than a year ago, emboldened by his recent victory over Mitt Romney, U.S. President Barack Obama declared his goal to increase the minimum wage to $9.00 an hour. Pundits, politicians, and ordinary people agreed that the statement was most likely political posturing and had little realistic chances of coming into effect. In the past year, however, the conversation over income inequality has exploded, with thousands of workers protesting across the country for wages as high as $15.00 an hour. As the president prepares his State of the Union address, and with income inequality certain to be a centerpoint, let’s take a look at the wage debate and see why raising the wage is something that should have been done accomplished long ago.

First, the basics: the federal minimum wage is currently $7.25 an hour, though states are allowed to raise it as they wish (certain conservative-leaning states, such as Georgia and Wyoming, have found ways to actually lower it below that for businesses with few workers). 3.6 million workers work at or below the federal minimum wage, while millions more work at their own state’s respective minimum wage (ranging from $5.15 in Georgia to $9.32 in Washington). A static minimum wage (not protected against inflation) as low as it currently is represents significant problems for low-income workers. Shockingly, a single parent working full time at a minimum wage job earns barely $15,000 a year, $3,400 below the federal poverty line for a family of three. It seems evident that a full-time worker should have enough income to support themselves and their family, but in the United States, purportedly a place where hard work and sacrifice leads to success, working hard lands you in poverty.

The situation was not always like this. Prior to 1981, minimum wage earners could provide for their families and lived above the poverty line. With the economic malaise of the late 70’s treading into his term, Ronald Reagan froze wage increases to fight inflation, yet never raised them again, despite massive increases in cost of living. In the three decades since, full-time minimum wage workers and their families have lived below the poverty line. Beyond the fact that it should be personally offensive to everyone that full time workers in “the greatest country on Earth” live in poverty, these workers fundamentally deserve an increase in wages. Since 1979, productivity rose 63.8% among U.S. workers, while they themselves only saw an hourly wage increase of 7.5%. Even President Obama’s suggested increase to $9 an hour would just barely lift workers and their families out of poverty, leaving them in fear of medical incapacitation, injuries, or economic downturn. Clearly something has to be done, and those on both sides of the aisle seem to have a solution: for conservatives, the minimum wage should stay where it is and taxes should be slashed on the wealthiest Americans to encourage job growth. Liberals, meanwhile, have a plan that actually works.

On the heels of recent protests and research in favor of the idea, Representative George Miller and Senator Tom Harkin introduced the Fair Minimum Wage Act natural hgh of 2013, which suggests raising the minimum wage to $10.10 an hour over the next three years. Crucially, the bill also indexes minimum wage for inflation, ensuring that the increase is not rendered pointless after a few short years of price increases. Just two weeks ago, the Economic Policy Institute issued a letter, signed by seven Nobel-prize winning economists and hundreds of leading economic scientists, urging Congressional leaders to pass the bill.

The letter argues that the bill would have a direct positive impact on more than 17 million workers, while also boosting the wages of those just above the minimum as well. Eric Maskin, a Nobel laureate who signed the letter, spoke with the Bouillon about the potential impact of the bill. “The new minimum wage will put more money in the hands of people who are likely to spend it—and so it will have a stimulating effect,” Dr. Maskin stated, while also arguing that “the preponderance of the evidence suggests that raising the minimum wage won’t affect unemployment much at all.” With 76% of adults in favor of increasing minimum wage, broadening support from the economic research community, and statistical evidence showing why it is both merited and imperative, minimum wage should be increased now.

The time for merely talking about minimum wage increases ended thirty years ago. No one should have to live in poverty, and the fact that Ronald Reagan, the supposed champion of the “hard work leads to success” mantra, pushed minimum wage workers into poverty, is both morally atrocious and poor policy. Republicans fight wage increases on the notion that unemployed workers will be hurt, yet fight desperately to ensure that those same unemployed receive limited benefits. But enough about conservative hypocrisy; what we need is inspired workers, and a youth excited about the prospect of entering the job market and convinced of the fact that working hard leads to success, not poverty. America was founded on the notion that if you work hard, live honorably, and respect others, then you will thrive and prosper and, most importantly, your children will prosper as well.

There is an old conservative mantra that says “a rising tide lifts all boats,” suggesting that a growing economy, however unequal the growth may be, is good for everyone. But what the rich can’t see from the command deck of their yachts is that not everyone has a boat, and that if you’re not even above the surface, a rising tide doesn’t lift you at all. The notion that unfettered growth for the top 1% and stagnation for the rest of us is somehow beneficial is extremely dangerous, because ideas like that are what destroys the very fabric of the union.

President Obama will declare at some point tonight that the “state of our union is strong;” but if we can’t even ensure that our hardest workers have enough food to put on the table for their families, then I have severe doubt that “strong” is the correct word in that statement.

 

-Harry McAlevey

 

Image: Attribution Some rights reserved by David Guo’s Master

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