Finally there's some good news for the millions of Americans who must to live on pay at or close to the legal minimum wage. Eight states are raising their minimum wage on January First, in line with state laws requiring the minimum to keep pace with inflation.
The raises to come are modest by any measurement. But any increase must be welcomed as desperately needed and hopefully as a major start toward increasing the minimum wage everywhere to a level that will provide a decent living to all working Americans, many of them living in poverty or near-poverty.
The minimum wage is just as important now as it was in 1938, when the wage law was enacted as part of the Fair Labor Standards Act, with a promise of guaranteeing workers “a standard of living necessary for health, efficiency and general wellbeing.”
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The federal rate was set at 25 cents an hour, with states and local governments free to set their own minimums, as long as they are above the federal rate.
Today's rates are much higher, of course, although barely adequate. The federal rate is $7.25 an hour, only about $15,000 a year for full-time workers before taxes and other deductions. Eighteen states, more than 100 cities and counties and the District of Columbia have higher rates, but their rates also are clearly inadequate.
During his 2008 election campaign, President Obama proposed raising the minimum to $9.50 an hour by 2011. But even though that would merely adjust the minimum wage for inflation, Congress and the White House have done little to make it happen.
Some of Obama's Republican opponents in Congress actually have called for the minimum wage to be abolished, largely because their big money backers in the restaurant business, who employ about 60 percent of all minimum wage workers, are against it, as are many other business and corporate interests.
Congress' failure to act has left it up to the states. The eight that are raising their rates on New Year's Day include Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington. Their rates will increase by 28 to 37 cents an hour to between $7.64 and $9.04. The National Employment Law Project (NELP) calculates that will bring nearly 1.4 million full-time minimum wage workers an extra $582 to $770 per year.
Another 400,000 will get raises as pay rates are adjusted upward to reflect new minimum wage rates. It's not just individual workers who will benefit from the raises. Like all low-wage workers, they must spend virtually every cent they earn, thus raising the overall demand for goods and services and the hiring of new employees to help provide them.
NELP estimates that the increased consumer spending generated by the raises will add $366 million to the gross domestic product and create the equivalent of more than 3,000 full-time jobs. Other estimates indicate that every dollar increase in wages for workers at the minimum creates more than $3,000 in new spending after a single year.
And we shouldn't forget that those earning the minimum include many of our most valuable yet needy and exploited workers. Most work in the service or retail fields, as domestics providing home health care for the elderly and other household services or caring for the children of working mothers, for example. Others work in agriculture.
Many can't find full-time jobs even at the bare minimum. More than one-third are the main or sole support of their families. Almost two-thirds are women, many of them single mothers. One-third are African-American, Latino or Asian. Many are recently arrived immigrants. Only a few belong to unions or have other protections aside from the law.
But wouldn't a minimum wage increase cause businesses to cut back their hiring, as opponents of minimum wage raises claim? No. Studies show that even during times of high unemployment, raising the minimum does not lead to a loss of jobs. Actually, the number of jobs has grown after each of the 19 times the federal minimum has increased over the past 73 years.
Consider this, too: Taxpayers are providing billions of dollars in subsidies to employers of minimum wage workers, since much of the money paid out in public assistance goes to families whose working mothers do not earn enough to be self-supporting. Private charities provide additional millions in aid.
There's no doubt employers are shifting a significant part of their labor costs to the general public, and no doubt that welfare costs could be reduced substantially if the minimum wage they had to pay was raised to a decent level.
Think of the benefits to society generally if the minimum wage workers who now must depend on government assistance could earn enough to make it on their own.
Think of the benefits to employers. As several studies have shown, raising workers' pay raises workers' morale and with it, their productivity, while decreasing absenteeism and replacement costs.
Think of the benefits to small retail businesses. Opponents of a minimum wage increase say they'd be hurt the most by a higher minimum wage, but it's far more likely they'd be among the greatest beneficiaries. For minimum wage workers have no choice but to spend most of their meager earnings in neighborhood stores for food and other necessities.
Tiffany Williams of the Institute for Policy Studies says raising the minimum wage “would be a step toward restoring dignity for millions of workers, enabling many ordinary working Americans to become part of the economic recovery rather than its collateral damage.”
Hard to argue with that, or with Christine Owens, NELP's executive director, who says the minimum wage increases “represent bright spots on an otherwise bleak economic horizon. Workers' buying power is the secret weapon in the fight to get our economy back on track. States are taking action to protect that critical buying power. Congress should follow their example to realize those benefits for the national economy.”
Let the minimum wage raises in eight states be just the beginning of raises in all states. Let all Americans have the right to a decent living.
Copyright © 2011 Dick Meister