“The Boost That Comes From Raising The Minimum Wage”: Au Contraire, Raising Wages Does Not Destroy Jobs
The standard argument — really, the only argument — against raising the minimum wage is that it will lead to job loss. The argument is beloved by die-hard opponents of raising the wage because it provides them with a veneer, however flimsy, of concern about the welfare of the working poor.
Economic studies have repeatedly shown that argument to be spurious. Now the latest survey of 350,000 small businesses from Paychex, a payroll provider company, and IHS, a business analysis firm, provides strong indications that the exact opposite may be true.
In April, the Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington — the state with the highest minimum wage in the nation, $9.32 an hour. The metropolitan area with the highest percentage of annual job growth was San Francisco — the city with the highest minimum wage in the nation, at $10.74.
This suggests that the relationship between a high minimum wage and job creation needn’t be inverse. If anything, it suggests that relationship is direct.
To be sure, the Bay Area economy is booming, but minimum-wage opponents would nonetheless have us believe that mandating the payment of close to $11 an hour must cause job loss at least in fast-food joints and Chinatown’s kitchens. San Francisco shouldn’t be creating more small-business jobs than any other city. It’s theoretically impossible.
So much for the theory. San Francisco is doing exactly that.
The compatibility of higher wage standards and job creation shouldn’t come as a surprise. A classic study of fast-food employment by former White House economic adviser Alan Krueger and Berkeley economics professor David Card demonstrated that raising the minimum wage does not lead to an appreciable decline in employment. Opponents of a higher wage have invoked a recent study by the Congressional Budget Office that argued a raise in the national minimum wage from $7.25 to $10.10, as President Obama has advocated, might cost up to 500,000 jobs. But even that study said that the raise would increase the wages of 16.5 million Americans — at least 33 times the number of those who might lose jobs — and elevate 900,000 people out of poverty.
What critics of a higher minimum wage ignore is that, by putting more money into the pockets of the working poor — a group that necessarily spends nearly all its income on such locally provided basics as rent, food, transport and child care — an adequate minimum wage increases a community’s level of sales and thereby creates more jobs. The Los Angeles Economic Roundtable recently concluded that raising the hourly minimum to $15 in Los Angeles County — the nation’s largest, home to 10 million people — would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs.
The Seattle City Council is expected to enact a proposal from Mayor Ed Murray, developed by a business-labor task force, to phase in a $15 citywide minimum wage over seven years. The progress of the measure is a testament not only to the fast-food workers nationwide who’ve been campaigning for $15 hourly pay from McDonald’s and other chains but also to local labor and community leaders. They injected that issue into last year’s mayoral election, winning a pledge from Murray to push for the $15 standard. With direct employee-employer collective bargaining close to a dead letter in the private-sector economy, the likely success of the Seattle measure points to a new model for bargaining, in which progressive governments respond to worker pressure by legislating the wage increases employees can no longer win in the workplace.
In a nation where most people’s wages have been stagnant or dropping for many years, and where the combination of globalization and de-unionization has stripped from workers the bargaining power they once possessed, the role of government in addressing wage issues has become more central than ever. By investing in job-creating public works, by raising the minimum wage, by lowering taxes on those corporations that give their workers annual productivity increases and raising taxes on those that don’t, government can take up the slack created by the suppression and near-disappearance of private-sector unions. But first, it must dispel the canard that raising wages destroys jobs. Now it can point to San Francisco and Washington as evidence that it doesn’t.
By: Harold Meyerson, Opinion Writer, The Washington Post, May 21, 2014
“A Mislearned Lesson”: McDonald’s Indigestible Excuse For Low Pay
When Henry Ford realized it was good business to pay employees enough to buy the products they built, it was a breakthrough, not only because the idea challenged the reflex to pay as little as possible, but because the product was a car. He was talking real bucks.
McDonald’s has mislearned the lesson.
In response to escalating protests by McDonald’s employees calling for higher wages and the right to form a union without retaliation, McDonald’s chief executive, Don Thompson, defended the company at the annual meeting on Thursday, saying that McDonald’s pays a competitive wage.
But what constitutes “competitive” in the fast-food industry is precisely the problem. Hourly pay averages about $9. The low pay is possible in part because employers rely on taxpayers to subsidize it through public assistance and on non-unionized workforces to swallow it. The competitive fast food wage, in short, is not enough to live on.
Mr. Thompson presumably knows that. But he is paid not to understand what the protestors are demanding because his own pay is based on profits that are derived in part by keeping worker pay low.
Of course, if the political economy were functioning as it is supposed to – with Congress imposing reasonable boundaries on businesses, markets and the economy – workers wouldn’t have to get their bosses to understand what it’s like to live on $9 an hour, because Congress would make sure that no one had to.
The McDonald’s workers are asking for $15 an hour. That sounds like a lot compared to the current minimum wage of $7.25 an hour and compared to the Democratic proposal to raise the minimum to $10.10. But it’s actually closer to where the minimum wage would be today if it had kept pace over the years with growth in labor productivity.
McDonald’s workers are not asking for too much. Democrats are asking for too little and Republicans won’t even go along with that.
By: Teresa Tritch, Taking Note, The Editors Blog, The New York Times, May 23, 2014
“If We All Lose Together, We Practically Win Together”: Oklahoma Governor Mary Fallin Makes It Illegal To Establish A Minimum Wage
In a move that fits seamlessly into the GOP’s War on the War on Poverty, Oklahoma governor Mary Fallin (R) has signed a bill into law that prohibits cities in the state from establishing mandatory minimum wages or vacation and sick-day requirements. The new law’s proponents claim that such a ban is necessary for economic homogeneity across the state, as allowing different municipalities to have different minimum wages could draw work disproportionately away from or towards certain cities. In essence, it seems that the logic goes something like this — if we all lose together, we practically win together.
According to Rep. Randy Grau (R-Edmond), the bill’s main supporter in the House, the ban provides ”safeguards that protect small businesses and consumers,” while raising the minimum wage “could derail local economies in a matter of months.” According to Grau, without a “level playing field” across the state, it seems that economic prosperity would all but perish. Currently, Oklahoma’s minimum wage stands at $7.25, equal to the federal level.
The bill was officially passed by Oklahoma’s House of Representatives on Tuesday.
Oklahoma’s new law comes only two months after Governor Fallin, the chair of the National Governors Association, led a national conference of governors that clashed over President Obama’s proposal to increase the national minimum wage to $10.10. In February, Obama signed an executive order that required federal contractors to pay their employees $10.10 an hour. But Gov. Fallin, along with many of her Republican colleagues, found the minimum-wage hike to be poor planning.
Claiming that the market would “take care of itself,” Governor Fallin insisted that a higher minimum wage was not only unnecessary, but actively harmful to the American economy.
“I’m not for increasing the minimum wage because I’m concerned it would destroy jobs, especially for small-business owners,” she said at the time. Her concerns were quickly echoed by GOP leaders, who latched onto a Congressional Budget Office report that said raising the minimum wage by nearly $3 could reduce jobs in 2016 by about 500,000. Of course, the CBO also found that approximately 45 million Americans would fall below the poverty line in 2016 if the minimum wage were to remain at its current level. That finding was handily ignored.
Many critics say that Fallin’s new measure unfairly targets Oklahoma City, where proponents of Obama’s $10.10 wage are collecting signatures to support the increase. The author of the initiative petition, lawyer David Slain, told the Associated Press that he was disappointed that state lawmakers “would vote in such a way to take the right of the people to decide minimum wage.”
In a press release on Monday, Governor Fallin insisted that increasing the minimum wage is not the path out of poverty that Democrats suggest it is, stating:
“Most minimum-wage workers are young, single people working part-time or entry-level jobs. Many are high school or college students living with their parents in middle-class families. Mandating an increase in the minimum wage would require businesses to fire many of those part-time workers. It would create a hardship for small business owners, stifle job creation and increase costs for consumers, and it would do all of these things without even addressing the goal of reducing poverty.”
Governor Fallin, once again, seemed to ignore the CBO’s report that such an increase could boost collective earnings by $31 billion for 33 million low-wage workers and bring an estimated 900,000 people out of poverty. But who’s counting?
By: Lulu Chang, The National Memo, April 15, 2014
“We Need To Be More Ambitious”: Why The Minimum Wage Should Really Be Raised To $15 An Hour
Momentum is building to raise the minimum wage. Several states have already taken action — Connecticut has boosted it to $10.10 by 2017, the Maryland legislature just approved a similar measure, Minnesota lawmakers just reached a deal to hike it to $9.50. A few cities have been more ambitious — Washington, D.C. and its surrounding counties raised it to $11.50, Seattle is considering $15.00
Senate Democrats will soon introduce legislation raising it nationally to $10.10, from the current $7.25 an hour.
All this is fine as far as it goes. But we need to be more ambitious. We should be raising the federal minimum to $15 an hour.
Here are seven reasons why:
1. Had the minimum wage of 1968 simply stayed even with inflation, it would be more than $10 an hour today. But the typical worker is also about twice as productive as then. Some of those productivity gains should go to workers at the bottom.
2. $10.10 isn’t enough to lift all workers and their families out of poverty. Most low-wage workers aren’t young teenagers; they’re major breadwinners for their families, and many are women. And they and their families need a higher minimum.
3. For this reason, a $10.10 minimum would also still require the rest of us to pay Medicaid, food-stamps, and other programs necessary to get poor families out of poverty — thereby indirectly subsidizing employers who refuse to pay more. Bloomberg View describes McDonalds and Walmart as “America’s biggest welfare queens” because their employees receive so much public assistance. (Some, like McDonalds, even advise their employees to use public programs because their pay is so low.)
4. A $15/hour minimum won’t result in major job losses because it would put money in the pockets of millions of low-wage workers who will spend it — thereby giving working families and the overall economy a boost, and creating jobs. (When I was Labor Secretary in 1996 and we raised the minimum wage, business predicted millions of job losses; in fact, we had more job gains over the next four years than in any comparable period in American history.)
5. A $15/hour minimum is unlikely to result in higher prices because most businesses directly affected by it are in intense competition for consumers, and will take the raise out of profits rather than raise their prices. But because the higher minimum will also attract more workers into the job market, employers will have more choice of whom to hire, and thereby have more reliable employees — resulting in lower turnover costs and higher productivity.
6. Since Republicans will push Democrats to go even lower than $10.10, it’s doubly important to be clear about what’s right in the first place. Democrats should be going for a higher minimum rather than listening to Republican demands for a smaller one.
7. At a time in our history when 95 percent of all economic gains are going to the top 1 percent, raising the minimum wage to $15 an hour isn’t just smart economics and good politics. It’s also the morally right thing to do.
Call your senators and members of congress today to tell them $15 an hour is the least American workers deserve. You can reach them at 202-224-3121.
By: Robert Reich, The Robert Reich Blog, April 9, 2014
“Not Much Of A Deal”: The Trouble With The Minimum-Wage “Compromise”
Senate Democrats had originally planned to move forward this week on legislation to increase the federal minimum wage to $10.10, but it was delayed in part so the chamber could tackle extended unemployment benefits, which may pass later today.
The delay, however, also carried an unintended consequence: the prospect of a “compromise” on the issue, spearheaded by Sen. Susan Collins (R-Maine).
Democratic leaders so far are sticking to the $10.10-an-hour wage they’re proposing, while many Republicans, including more moderate lawmakers, say they are likely to filibuster the bill.
But the moderate Maine Republican says she’s leading a bipartisan group of senators hoping to strike a deal.
Collins hasn’t released the details of her proposal, which makes sense given that the talks are still ongoing, but Roll Call’s piece suggests she’s open to a minimum-wage increase, so long as it’s smaller. By some accounts, the Maine Republican is eyeing a $9/hour minimum wage, up from the current $7.25/hour, which would be phased in slowly over three years.
But Collins also hopes to trade this modest minimum-wage increase for a partial rollback of the employer mandate in the Affordable Care Act and some small business tax cuts.
The senator is calling her plan “a work in progress.”
One might also call it “something that won’t happen.”
Greg Sargent had a good piece on this yesterday, noting that Dems don’t seem to have much of an incentive to drop their target minimum-wage threshold.
For one thing, Democratic aides point out, the idea of such a compromise may be fanciful. Even if it were possible to win over a few Republicans for a lower raise, you’d probably risk losing at least a few Democrats on the left, putting 60 out of reach (Republicans would still filibuster the proposal).
Indeed, the office of Senator Tom Harkin – the chief proponent of a hike to $10.10 – tells me he’ll oppose any hike short of that…. Labor is already putting Dems on notice that supporting a smaller hike is unacceptable.
Even the balance of the so-called “compromise” is off. As Collins sees it, Republicans would get quite a bit in exchange for Democrats making important concessions on their popular, election-year idea.
That’s not much of a “deal.”
Complicating matters, even if Dems went along with Collins’ offer, there’s no reason to believe House Republicans would accept any proposal to increase the minimum wage by any amount.
It sets Senate Democrats up with a choice: fight for the $10.10 minimum-wage increase they want (and watch Senate Republicans kill it) or pursue a $9 minimum-wage increase they don’t want (and watch House Republicans kill it).
Don’t be too surprised if the party sees this as an easy call.
By: Steve Benen, The Maddow Blog, April 3, 2014
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