The Case For An $11 Minimum Wage

Author: June 29, 2013 7:00 pm

Sign the petition(s) at the bottom of this article to ask both Congress and the White House to address this issue.

In 1968, minimum wage was $10.71. Since then, it has decreased by 32 percent, resulting in millions of Americans working full-time hours and yet being unable to feed their families without assistance. Escaping poverty became, and is, a struggle. Of course, that isn’t true — the minimum wage in 1968 wasn’t $10.71. It was $1.60. However, $1.60 doesn’t have as much buying power as it used to, and when adjusted for inflation (as of today, June 29, 2013), that number is $10.71. Minimum wage was designed to increase with inflation. It has not done so. Note that minimum wage follows inflation, not the other way around. Even if businesses were impacted and needed to raise prices (you’ll see below that businesses are not adversely affected by a minimum wage increase), the people making more money would need less government aid — if they can’t make enough money to live, the community will pay for it one way or another.

Unfortunately, there are now many obstacles to getting that done. First of all, there’s this strange thought floating around that for some people to be high on the ladder of success, others have to be wallowing in the mud. That simply isn’t true. As productivity has gone up, so too has the average quality of life, because the endless capitalistic struggle is supposed to have an purpose — competition-driven progress. The miserable poverty being inflicted on those at the lowest rung of working income (note that these people are working, being productive!, and yet are still in poverty) hampers competition.

There is no question these people need the extra money. Nobody is saying that. However, there are many that repeat the same tired myths again and again; a minimum wage increase will kill jobs by raising costs, will hurt young workers, or would hurt small business. None of those hold water with careful examination, and that’s why this is the case for an $11 minimum wage.

The Myth: A Minimum Wage Increase Will Cause Job Loss

It sounds plausible, right? After all, employers, by definition, have to pay their employees, so of course the minimum wage being raised would increase their costs. That’s logical. The problem is, that’s segmented logic — it doesn’t take into account the extra revenue coming back to businesses because of the increased spending power of the working poor. Back in February, famed economist Paul Krugman said similar in a piece for the New York Times:

Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs. But there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many “natural experiments” here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.

Why is this true? That’s a subject of continuing research, but one theme in all the explanations is that workers aren’t bushels of wheat or even Manhattan apartments; they’re human beings, and the human relationships involved in hiring and firing are inevitably more complex than markets for mere commodities. And one byproduct of this human complexity seems to be that modest increases in wages for the least-paid don’t necessarily reduce the number of jobs.

The left-leaning nonprofit Media Matters For America has also compiled a list of academic studies disproving the myth that minimum wage increases cause job loss, and, in some cases, actually has a small positive effect on net jobs. See below:

CEPR: Hiring Response To Minimum Wage Hikes “More Likely To Be Positive Than Negative.” In a March 2011 report, the Center for Economic and Policy Research concluded that wage increases are more likely to result in more, rather than fewer, jobs: [PDF]

They go on to cite the Center for American Progress:

Multiple Studies Found Either No Effect On Employment Or An Increase In Employment Resulting From Minimum Wage Increases. From the Center for American Progress:

University of California, Berkeley, economist David Card and Princeton economist Alan Krueger’s seminal study of the effect of the New Jersey 1992 minimum wage increase comparing fast food industry employment in New Jersey and Pennsylvania found no negative employment effect. In fact, it found stronger employment growth in New Jersey. While there was no national recession at the time, New Jersey’s unemployment rate was 8.7 percent in parts of 1992. … [6/7/11]

Another study cited, this one from UC Berkeley, specifically targeted the restaurant industry, although the authors argued that their findings were applicable in other industries as well.

The Myth: A Minimum Wage Increase Will Hurt Young Workers

Another one. This one is, really, just an extension of the job loss one, because it’s thought that anything adversely affecting low-wage workers will disproportionately affect young workers. Underlying that is the belief that a large percentage of low-wage workers are the youth in the workforce. That’s somewhat true, although in reality, we have to account for the 75 percent of people in the minimum wage workforce that aren’t teenagers, as well, and face the fact that $7.25 simply isn’t livable.

Not that it really matters what percent of minimum wage workers are teens — multiple studies have shown a negligible effect on youth employment after a minimum wage increase [Institute for Research on Labor and Employment PDF]. The ability of states to independently raise their minimum wages has allowed for easy study for economists, making this one of the most-reviewed topics of all time, and to quote Paul Krugman again, “…just about everyone except Republican men believes that the lowest-paid workers deserve a raise. And they’re right. We should raise the minimum wage, now.”

You know what really hurts youth employment? Economic recessions and other broadly negative phenomena, as also mentioned by Media Matters

Via the Economic Policy Institute:

Figure B illustrates how teen employment is driven far more by larger labor market employment trends than by any effects of minimum wage changes. The black lines in Figure B mark times when Congress increased the minimum wage to keep up with inflation. The two-step increase in 1990 and 1991 occurred during a period of deterioration in the labor market, and the teen employment share dropped. The two-step increase in 1996 and 1997 occurred during a strong labor market, and the teen employment share increased. The three-step increase in 2007, 2008, and 2009 occurred during a weak labor market, and the teen employment share fell.

Myth: A Minimum Wage Increase Will Hurt Small Businesses

The simple truth about this myth is that the opposite is true. States with minimum wage increases have actually seen employment by small businesses rise, as the impoverished in the area, with purchasing power increased, usually spend locally. The Center for American Progress [PDF], Fiscal Policy Institute [PDF], and New York Times have all published evidence that minimum wage increases are good for small businesses.

The Center For American Progress specifically was considering what a minimum wage increase would mean in Ohio. Their summarized findings:

  • Employment in small businesses grew more (9.4 percent) in states with higher minimum wages than federal minimum wage states (6.6 percent) or Ohio.
  • Inflation-adjusted small business payroll growth was stronger in high minimum wage states (19.0 percent) than in federal minimum wage states (13.6 percent) or Ohio.

More data became available in 1998, allowing further analysis. Between 1998 and 2003:

  • The number of small business establishments grew more in higher minimum wage states (5.5 percent) than in federal minimum wage states (4.2 percent) or Ohio.
  • Small business retail employment grew more in higher minimum wage states (9.2 percent) than in low minimum wage states (3.0 percent) or Ohio.
  • Retail payroll grew more in higher minimum wage states (12.3 percent) than in low minimum wage states (6.4 percent) or Ohio.
  • States with high and low minimum wages had similar growth in number of restaurants, restaurant payrolls, and restaurant employment.

Let’s face it, America. The minimum wage is no longer what it was supposed to be — it hasn’t even kept pace with inflation, much less worker productivity. A case could be made for a much higher minimum wage than what we want you to petition for (see below) — Senator Elizabeth Warren and others have repeatedly asked where gains in productivity are going to, while purchasing power of the working class remains stagnant.

To those wondering why we’re settling on $11, we say: baby steps. If you want to advocate for a higher wage, fine, but let’s get this done first.

To those still questioning the wisdom of a minimum wage increase, know that even conservative think thanks have advocated for a higher — up to $12 — minimum wage. It’s only because President Obama has endorsed a wage increase that the rhetoric is being molded by partisanship rather than concern for our citizens.

If you support a wage increase to those below us, please spread the following images, and change your social media profile picture to the green $11/hr. image (see below petition links). When people ask you why, forward them this article. Unlike other social media campaigns, however, we’d love to turn this into something real. That’s why we’re contacting progressive organizations and asking them to support our campaign. Many have committed already — Addicting Info, Young Progressive Voices, and Occupy Democrats are already supporting the $11/hr. campaign, along with dozens of Facebook pages.

Follow the Raise The Minimum Wage page by clicking this link and clicking “like.”

SIGN THE PETITIONS to show the White House and Congress that we need to address this immediately.

Link to the White House petition.

Link to the MoveOn.org petition to be delivered to Congress.

“Raising the minimum wage is a win-win for workers, business, and the economy. Pres. Obama brought it up during his State of the Union address earlier this year, to the delight of many. Yet Congress hasn’t acted. We can’t let a proposal that would substantially improve the life of millions of American workers and their families fall by the wayside.” – Rafael Rivero, founder of the $11/hr. campaign, in a statement to Addicting Info‘s Justin Acuff.

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This article was published by Addicting Info and reposted with permission on Young Progressive Voices.

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