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Aspects of the Minimum Wage Conversation

minimum wage machineWhat, you may ask, is depicted here? It’s an artwork called “Minimum Wage Machine, (Work in Progress),” a simple but elegant interactive demonstration by which anyone may comprehend the implications of those words. Here is the explanation provided by Blake Fall-Conroy, creator of the device:

The minimum wage machine allows anybody to work for minimum wage. Turning the crank will yield one penny every 4.97 seconds, for $7.25 an hour (NY state minimum wage). If the participant stops turning the crank, they stop receiving money.

Wow, virtual reality at its finest! What if one of these could be placed in the lobby of every office building in Washington and in the chambers of the House and the Senate? Wouldn’t it be instructive if every bureaucrat and elected official could have a taste of what (per the Bureau of Labor Statistics) 3.6 million at-or-below-federal-minimum workers experience every day?

We don’t see that happening any time soon, but in the meantime, here are some aspects and facets of the current struggle to raise the minimum wage in the United States.

How small business owners feel

The CBS MoneyWatch report on this question, written by Erik Sherman, states:

According to a poll of 500 small business owners conducted on behalf of Small Business Majority, an advocacy group, 67 percent of these firms favor boosting the minimum wage from the current rate of $7.25 an hour and adjusting it annually as the cost of living rises… Two-thirds also agreed with the following statement: ‘Increasing the minimum wage will help the economy because the people with the lowest incomes are the most likely to spend any pay increases buying necessities they could not afford before, which will boost sales at businesses.’

The poll, conducted by Greenberg Quinlan Rosner Research, also found that 85% of the surveyed small businesses already pay more than the federal minimum. So those who argue that while big corporations may not feel the hit, small businesses would suffer drastically, appear to be mistaken.

Giving a little background, the Associated Press notes that:

The minimum wage has become an issue since President Barack Obama proposed during his State of the Union address in February that the federal minimum be raised to $9 from $7.25 an hour. Democrats in Congress introduced a bill to raise the minimum to $10.10 an hour in March, but it was rejected by the House.

The survey, commissioned by a group called Small Business Majority, was carried out in early March, a month after the President had addressed the question.

And what about those tips?

For Bloomberg, journalist Jeanna Smialek interviewed an individual in a position to both speak from personal experience and to see the big picture. Gina Deluca quit being a food service industry server two years ago and started a blog called Wiser Waitress. It was an interstate relocation that changed her life. In California, even workers who got tips had to be guaranteed at least $6.75 per hour, even if their tips didn’t bring them up to that.

But when she moved to New Mexico, Deluca was shocked to learn that her wages could fall as low as $2.13 per hour — the federal minimum for workers who get tips. But wait, there’s more. Deluca says on the Wiser Waitress “About” page:

I found that there were many employers abusing the tip credit. Not only were they taking the tip credit, thus allowing them to pay servers a small tiny wage of $2.13, they were also requiring these servers to share tips with back of the house employees, sometimes the whole staff. And unfortunately , these employers were not the exception as I found the practice to be widespread and prevalent.

Smialek writes:

Legislation in Congress this year would raise the $2.13 base for the first time since 1991. The move would help many of American’s 2.3 million servers, advocates of an increase say, as well as manicurists, bellhops and other workers who rely on tips for much of their earnings. It could also spur firings and reduced hours as thin-margin businesses grapple with higher costs, say some restaurant owners and economists.

Worse and worse

Where have we heard that before? And get this: While the nation has changed from a manufacturing economy to a service economy, with more people than ever forced to settle for low-level, non-union employment, the situation for people in tipping jobs is much more severe than it has been in the recent past:

The cash base was 50 percent of the regular national minimum until 1996 legislation froze the lower rate at $2.13. It now amounts to 29 percent of the full minimum, which has been raised four times since.

Does raising the minimum wage cause some jobs to be eliminated because businesses just can’t afford to pay? Depends on whose survey results you look at. Please see Smialek’s article for more details, and last week’s House the Homeless blog post.

And, for an even better solution that could change the lives of millions of workers, please get acquainted with the Universal Living Wage.

Reactions?

Source: “Small businesses back minimum wage hike,” CBS News, 04/24/13
Source: “Small business owners support increase in federal minimum wage…,The Washington Post, 04/23/13
Source: “Waitresses Stuck at $2.13 Hourly Minimum for 22 Years,” Bloomberg, 04/25/13
Image by Blake Fall-Conroy.