0

Minimum Wage on the Front Burner

Living Wage

MINIMUM WAGES (hourly):

  • Fought for by President Franklin D. Roosevelt 1938 — 25 cents, which would be more than $4 now
  • In 1974 — $2 per hour
  • Now — $7.25
  • Proposed by President Barack Obama in State of the Union Address — $9.00 per hour
  • How much it would need to be, if equivalent in spending power to 1974 — $9.31 per hour

These are a few of the pertinent facts presented by Angelo Young for International Business Times, before going on to demolish several anti-minimum-wage arguments. He quotes Roosevelt’s 1938 speech:

Do not let any calamity-howling executive with an income of $1,000 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves, tell you […] that a wage of $11 a week is going to have a disastrous effect on all American industry. Fortunately for business as a whole, and therefore for the nation, that type of executive is a rarity with whom most business executives heartily disagree.

Strong words! Young says:

It’s not likely that the debating points will change under Obama’s call to pass wage-increase legislation. His proposal to link the federal wage increase to the rising cost of living will definitely be met with Roosevelt’s ‘calamity-howling.’

What with one thing and another, the minimum wage topic did not, for a while, reside on the front burner of the national stove. That there should even be a minimum wage is still not an idea espoused by all, but as House the Homeless discussed last week, acceptance has made great strides.

It’s a debate that has been in progress for 75 years, and the last 39 years have been especially rough, cost-of-living-wise, Young says, and adds:

[…] [W]ages have not kept up with America’s cost of living, making it more difficult for the working, taxpaying bottom-bracket earners in this country to pull themselves up by their proverbial bootstraps […] working Americans in lower income brackets who live paycheck to paycheck, where any fluctuation […] means much more than just canceling premium cable subscriptions.

To that list at the top of the page, we could add:

  • Amount that Sen. Elizabeth Warren asks why workers are not paid — $22 per hour

Michael Rathbone explains:

Sen. Warren probably is referring to [a] study by the Center for Economic and Policy Research that showed what the minimum wage would be if it had kept up with increases in worker productivity… The study […] talks about average productivity. Average workers do not earn the minimum wage. This study does not track changes in the productivity of workers who make at or below the minimum wage. Isn’t it possible that the largest increases in productivity have been among more skilled employees who already earn above the minimum wage?

This is not exactly an anti-minimum-wage argument, but Freakonomics co-author Steven Levitt has an interesting take on it. In The Huffington Post‘s capsulization of his recent Q&A session via Reddit, Levitt says:

Honestly, I don’t think the minimum wage matters all that much to the economy.

Why? Because relatively speaking, the number of minimum-wage workers is small, with about 5.2% of hourly workers making the minimum or below. The article notes:

Some studies have reinforced President Barack Obama’s argument that raising the minimum wage would boost the economy. Raising the minimum wage by $1 would give households comprised of minimum wage workers $2,800 per year more to spend, according to a 2011 study from the Federal Reserve Bank of Chicago cited by CNN.

There is a corny but true parable which has many versions. This one one was adapted by the Starfish Greathearts Foundation:

An old man had a habit of early morning walks on the beach. One day, after a storm, he saw a human figure in the distance moving like a dancer. As he came closer he saw that it was a young woman and she was not dancing but was reaching down to the sand, picking up a starfish and very gently throwing them into the ocean.

‘Young lady,’ he asked, ‘Why are you throwing starfish into the ocean?’

‘The sun is up, and the tide is going out, and if I do not throw them in they will die.’

‘But young lady, do you not realize that there are miles and miles of beach and starfish all along it? You cannot possibly make a difference.’

The young woman listened politely, paused and then bent down, picked up another starfish and threw it into the sea, past the breaking waves, saying, ‘It made a difference for that one.’

It’s not accurate that only 5.2% of workers would benefit from a minimum-wage raise. There is more to it. But putting that aside, even if the lives of only 5.2% of workers were improved, like the starfish, it would make a difference for them.

Reactions?

Source: “State of the Union 2013: Obama Calls For $9 Minimum Wage,” International Business Times, 02/14/13
Source: “The $22 (An Hour) Question,” Show-Me Daily, 03/31/13
Source: “Freakonomics’ Steven Levitt: The Minimum Wage Doesn’t Matter ‘All That Much’ ,” The Huffington Post, 02/19/13
Source: “Sex Trafficking,” WomanStats, 10/17/12
Image by Barbara Ehrenreich