Amid all the fiscal libertarian doom and gloom over raising the minimum wage, a heaping dose of mistrust was layered onto Americans about how much is enough and how much is too much. These arguments against raising the federal minimum wage over the next few years are terribly naive and they rely on gut-feelings on what poor people or teenagers deserve rather than what that level of income should look like.
Economists like Robert Reich are more friendly withe their inflation math than I have been but that is because he derives his optimal level of minimum wage income from 1968’s value rather than my own which gets closer to the late 1950’s. My math puts inflation value of the early 1960’s at around $10.66 in 2013 dollars (I honestly haven’t re-worked the math since last year) and Reich’s math from 1968 puts the inflation value of minimum wage at $10.56 in 2014 dollars. But Reich did more than my own simple math by giving a justification for a $15 an hour minimum wage which goes above my own suggestions by over a dollar in that same time-frame. So here are the 7 reasons why we should raise the minimum wage to $15/hour according to Reich.
While inflation rate for 1968 dollar values would put current minimum wage over $10/hour, worker productivity has doubled since that time. Workers in our era are twice as valuable yet paid much less than that generation. People who are in their 50’s and 60’s now had a much different work day which was half as demanding of the current workforce.
If we measure for inflation as well as productivity gains from 1968, the minimum wage should at least be $15/hour (if not more).
#2 The $10.10 Proposal Isn’t Enough
While teenagers used to have the lion’s share of the minimum wage jobs in this country, in recent decades that has changed drastically. Nearly 60% of all minimum wage workers are past their early 20’s and the age demographics in that larger group are well rounded and representative of just about every stage of life a human can have. The number of teenagers in those jobs is even less when you remove the 18+ demographic from the remaining 40%.
$10.10 is just not enough for someone to be the “major breadwinner” for their families. It is a hard argument to win that anyone could afford to take care of two children while earning only $1600 a month.
#3 We ALL Pay When Employers Don’t
Medicaid, food stamps, and subsidized housing come from all Americans when employers pay below a living wage. Reich mentioned how McDonald’s even recommended to their employees to use government assistance to make-up for what they don’t pay. That didn’t give them a very good public image and so they put their other foot into their mouth by suggesting a second job with a budget pamphlet they gave to employees.
#4 Initial Raises In Wages Are Rocky But Fruitful
States like Oregon, Washington, and others who raised their state minimum wage with inflation did have some stagnation in growth for a small window of time after implementing the changes. However, the phase-ins weren’t as terrible as some made them out to be and businesses not only adapted, many of them grew. With more spending in their own local economies from workers with better pay, more demand was created which then led to a growth in jobs rather than a loss.
Out of all the states who have edged their minimum wages closer to the appropriate $10.56 amount, there has been nothing but prosperity. The only argument now is whether there is a ceiling to that growth. Washington has been reporting solid growth this year in jobs while their local economies have been given a partial lift for the extra spending. This is in sharp contrast to a successful example of the “right to work states” like South Carolina which had solid job growth without affecting wages, but poverty levels have increased in those states, implying a bigger burden on taxpayers for subsidizing their low wages.
#5 Profits Will Be More Affected Than Prices
That one is just a free market reality of competition for customers. Those employers and employees won’t make your burger and fries take the brunt of their wage increases. It is much more likely that the company will shave a small amount from their profits.
Walmart is an easy target because their total workforce being raised up to at least $15/hour would mean that they still could gain over $100 billion a year in gross profits. I have seen that one twisted around on Facebook to imply that the company makes only a quarter of their $128 billion in profits, but that is obviously misinformation to prove a point on how destructive minimum wage raises could be for a company of that size.
#6 Starting At $10.10 While Bargaining Is Stupid
Okay, so maybe inflation doesn’t justify $15/hour, and maybe we can overlook worker productivity for a moment while bargaining with republicans who will most definitely drag their heels on any wage raises. Watching the dusty old farts on CNBC’s The Sqawk Box, you’ll see republicans who are desperately trying to find a solution to the lower wages without ever raising the wages at a federal level… because republican.
You don’t start your bargaining below the number adjusted for inflation, you should start by asking for more first. It is crucial to approach these debates with a buffer that allows democrats to at least have room to give to what can be considered more fair than what we have now and slightly closer to what a teenager in the 60’s would have made (which would be about the same as some “managers” in our current era). Start with 15 and work down to $10.56… and if you can’t convince them there, then go with $10.10 as your final give. That should be the bottom line and not a negotiable number or this legislation will do too little to help Americans over the next decade.
#7 It’s Moral And Patriotic
Patriotism and morality have a large part of this. If you consider that 95% of all economic gains are going to the top 1% of Americans, this doesn’t seem to fit into a republic or a democracy. That is more akin to an oligarchic economic policy which undermines our country worse than monthly terrorist plane attacks could. When you make an excuse about how the poor are too low-skilled to matter or that they deserve as little as possible, you are saying that you are willing to pay those shortfalls for the poor while giving the profits to a select few.