Minimum Wage Raise is the Least We Can Do to Civilize America

August 30, 2012

Mark Weisbrot
Sacramento Bee (CA), August 30, 2012
McClatchy Tribune Information Services, August 28, 2012
Bellingham Herald (WA), August 30, 2012
Bradenton Herald (FL), August 30, 2012
Hanover Evening Sun (PA), August 30, 2012
Anchorage Daily News (AK), August 30, 2012
Duluth News-Tribune (MN), August 31, 2012
Wichita Eagle (KS), August 31, 2012
The Gulf Today (Bahrain/UAE), September 1, 2012
Wapakoneta Daily News (OH), September 1, 2012
Salinas Californian (CA), September 1, 2012
Lawton Constitution (OK), September 2, 2012
Kokomo Tribune (IN), September 2, 2012
Nashua Telegraph (NH), September 2, 2012
La Crosse Tribune (WI), September 2, 2012
Denver Post (CO), Septmeber 2, 2012
Marshfield News-Herald (WI), September 3, 2012
Sturgeon Bay Door County Advocate (WI), September 3, 2012
Fond du LAC Reporter (WI), September 3, 2012
Stevens Point Journal (WI), September 3, 2012
Wisconsin Rapids Tribune (WI), September 3, 2012
Wassau Daily Herald (WI), September 3, 2012
Sheboygan Press (WI), September 3, 2012
Oshkosh Northwestern (WI), September 3, 2012
Manitowoc Herald Times Reporter (WI), September 3, 2012
Appleton Post-Crescent (WI), September 3, 2012
Green Bay Press-Gazette (WI), September 3, 2012
Las Vegas Sun (NV), September 3, 2012
Youngston Vindicator (OH), September 3, 2012
Louisville Courier-Journal (KY), September 3, 2012
Northwest Arkansas Times (AR), September 3, 2012
Arkansas Democrat-Gazette (AR), September 3, 2012
Omaha World-Journal (AR), September 3, 2012
Arizona Daily Star (AZ), September 3, 2012
Duluth News-Tribune (MN), September 3, 2012
Keene Sentinel (NH), September 4, 2012
En Español

The federal minimum wage is just $7.25 an hour and hasn’t been raised in three years.  But a raise is much more overdue than that.  If we look at the minimum wage 44 years ago, and simply adjust it for inflation, it would be more than $10 today.

This is another ugly symptom of what has gone wrong in America over the past 35-40 years.  From 1979-2007 about 60 percent of the income gains have gone to the now infamous 1 percent at the top, with the majority of those gains going to the top 0.1 percent – people who made, on average, $5.6 million per year.

But some of the worst effects of giving more to those who have most have affected people toward the bottom of the income ladder, and there is no excuse for it.  Productivity – the amount that a worker produces in an hour has more than doubled over the past 44 years. When the minimum wage doesn’t rise, or falls in terms of its purchasing power, it means that these millions of low-income workers are not sharing in the gains from improved technology, knowledge and organization.

There is currently legislation before Congress to raise the federal minimum wage from its current $7.25 an hour to $9.80, over three years. After that it would be indexed to inflation.

Contrary to prevailing myths about who would benefit from a proposed increase in the minimum wage, 88 percent of the 28 million workers affected are not teenagers.  As the Economic Policy Institute has shown, the majority are full-time workers, and on average they earn about half of their families’ income.  And 28 percent of the nation’s 76 million children would have a parent who would benefit from the raise.

Another oversized myth promoted by the fast-food industry and other low-wage employers is that raising the minimum wage hurts workers by increasing unemployment. Although it is theoretically possible to raise minimum wages enough to cause employers to hire fewer workers, there is hardly any indication from economic research that the proposed increase in the minimum wage would have this effect.  Employment in the overall economy depends on aggregate demand or spending, which is determined – especially in our currently weak economy – by macroeconomic policy (including the Federal Reserve, and fiscal policy).

And raising the minimum wage doesn’t only cut into profits, it also increases demand in the economy by moving income to workers who spend more than those who receive profit.  The Economic Policy Institute estimated that the proposed increase in the minimum wage would actually increase employment.

In Brazil, the minimum wage was raised by 60 percent in real terms by the country’s most popular president, Lula da Silva – a former metal worker and union leader – as Brazil’s economy moved toward record-low levels of unemployment. Across South America, other left governments including Argentina, Ecuador, Bolivia, Venezuela and more have significantly reduced inequality while increasing economic growth.

What a shame that the hemisphere’s richest country, where it would be so much easier to lift up the working poor, has moved in the opposite direction.  It means that the U.S. political system is actually more corrupt and less democratic in very important ways than those of our developing country neighbors to the south. The vast majority of Americans would favor an increase in the minimum wage, as well as restoring the rights of labor to organize unions. But our financial elite have a veto over what we want to vote for, in large part because of our system of legalized bribery – i.e. the financing of political candidates’ elections.

Raising the minimum wage is about the minimum that we could do to reverse America’s retreat from civilization at home.

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