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There is No Controversy: Perspectives on Raising the Minimum Wage

Since 2009, the federal minimum wage has been $7.25 per hour. This translates to just over $15k a year, substantially lower than the official poverty line for a household of three, which is $19,790. Considering that we have 46 million people in poverty today, 20 million of which are in deep poverty (at or below half of poverty line), and another 40 million that if not for food stamps, EITC (Earned Income Tax Credit), and other forms of temporary assistance programs would be in poverty, it’s pretty astonishing that the Senate Republicans blocked a bill to raise the minimum wage to $10.10 from getting a vote. More shocking though, is the lack of indignation and outrage that one would expect from such a fallacious act.

Poll data consistently show a majority of 73%-78% of Americans support a minimum wage increase. Further, more than half of Republicans support the measure. Even Presidential Candidate and former Massachusetts Governor Mitt Romney recently came out in support of a minimum wage increase. Unsurprisingly, Republican leadership in the House of Representatives and the Senate have been the ones who vehemently oppose raising the minimum wage. They say it will force employers to reduce their workforce, and ultimately “kill jobs”. However, they are not interested in what the jobs pay, benefits, hours or their right to organize. It has become less and less unusual for them to take fundamental truths of public policy and make it seem like there is a serious debate about it going on. 

The strategy results in both sides getting equal opportunity to argue, and give us the illusion that we are 50/50 on this issue. Economic data and facts reveal why the debate should be more like 99 to 1. Many reports have indicated that if businesses small and big past all the extra costs of paying their workers on to their customers, the marginal price increase would be almost unnoticeable. Moreover, hundreds of economists and at least 5 Nobel laureates have favored a minimum wage increase, citing that turnover rates, training costs, and recruitment would all go down, and productivity would go up for the large corporations (who employ 2/3 of all minimum wage workers). Does this seem convincing? Wait, it gets better.

The World Economic Forum, the IMF (International Monetary Fund), and Davos, have all stated that at the macro level rising income/wealth inequality, which is directly related to wage policy, creates instability in the economy, and undermines growth. At the micro level, industry has come out and directly indicated that income inequality is a primary risk for their brand. Given the high level of income/wealth inequality, the U.S. is at especially high economic risk. However, this was not always true. Forty years ago, we had a higher minimum wage; indexed for inflation it would be $10.67 today, and indexed for productivity $22 an hour. This last stat always seems to puzzle people, as if someone did the math wrong. The U.S. sadly, there is no mistake; since the 70s there has been systemic wage repression. As the Swiss get ready on Sunday to vote for a $25 an hour minimum wage, the United States is ranked lowest among western countries.

In all, the continual denial of Republican leaders has serious consequences. Paradoxically, it’s not just millions of marginalized Americans, but the very corporate interests they represent at stake. It would be in the interest of all of us to tell those who blocked the vote last week, that 80% of our economy is based on consumer spending. Further, wages represent the purchasing or spending power of the majority of Americans. On top of that, this measure requires absolutely zero taxpayer dollars, and actually decreases public assistance spending by millions if not billions of dollars. Lastly, we have examples of states and cities across the United States that have a higher minimum wage than the federal minimum wage. Washington, the state with the highest minimum wage, $9.37, and San Francisco $10.74, both report among the highest growth and productivity rates in the country. The data speaks for itself. As does our inability as a nation to put the democratic process to work for millions of Americans. 
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