One of the goals President Barack Obama outlined in last week’s State of the Union address was a long overdue raise in the minimum wage. Obama proposed increasing the national minimum wage, which is currently an anemic $7.25 an hour, to $9.00.
While a measly
$1.75 increase would hardly be sufficient for most working-class Americans, the renewed attention to the minimum
wage the president generated is at least encouraging. The simple fact is
American workers in low-skilled jobs are not getting paid what they are worth.
Of course, even
if enacted, Obama’s proposed minimum wage hike would not take effect until 2015.
And, as already noted, $9 an hour, even for an individual worker, is not nearly
enough to make ends meet. According to The New York Times’ editorial staff,
economic measures—such as “purchasing power, average wages and productivity
gains”—dictate the minimum wage should be at least $10 an hour (“From the Bottom
Up,” 02/18/2013).
As it is,
candidate Obama campaigned on a minimum wage of $9.50 an hour in 2008. So the new goal of $9 an hour is low
even by Obama’s standards.
A quick note
regarding terms before moving on:
A higher minimum wage should not be confused
with a “living wage,” which is roughly defined as the hourly rate an individual
must earn to support one’s family if that person is the “sole provider and is
working full-time.” Unlike the fixed minimum wage, a living wage would vary from
state to state, based on overall living costs. For example, a living wage for
one adult and one child living in Portland, Maine, according to MIT’s online Living Wage Calculator,
would be $22.50 an hour. It would be $26.99/hour for one adult and two children;
$21.22 for two adults with two children; and $9.88 for one adult with no
children. (The minimum wage in Maine is $7.50.)
Regardless of
what kind of a wage we are talking about, the fact remains the United States has
the lowest minimum wage of all the industrialized nations in the world.
Australia,
France and Ontario, Canada all pay their workers a higher minimum wage—and most
of them also provide universal health care not tied to an employer to boot.
In fact,
according to Nobel Prize-winning economist, Joseph Stiglitz in his recent book,
The Price of Inequality (Norton, 2012), decades of
diminished worker wages have prevented the minimum wage from keeping up with
inflation. As a result, Stiglitz writes, “…the real federal minimum wage in the United
States in 2011 is 15 percent lower
than it was almost a third of a century ago, in 1980” (p. 242, italics
his).
Predictably,
penny-pinching business owners have already slammed Obama’s proposed minimum
wage hike.
A story in The Portland Press Herald last week
(“Maine critics say raising the minimum wage has risks,” 2/15/2013) quotes local “small business” owners who drag out
the tired conservative argument that higher wages inevitably lead to higher
unemployment.
“Opponents of
Obama’s proposal say that raising the federal rate to $9 an hour would prevent
employers from hiring more workers,” the story states. Staff writer Jessica Hall
then goes on to quote Jake Wolterbeek, owner of Jake’s Seafood restaurant in
Wells—a wealthy tourist town hardly representative of all of Maine—who bemoans
the prospective of having to give his entire staff a raise if the wage-hike were
enacted. Judging by the gridlocked traffic in Route One, Wells every summer, I
am more than confident Mr. Wolterbeek can afford it.
Actually, the
only thing “preventing” employers from hiring more workers would be a lack of
business--i.e. demand for their product. Basic supply-and-demand economics
suggests higher wages would mean workers have extra money to spend on luxuries
(like eating out at Jake’s Seafood, for instance). That’s more money that would
circulate in the economy, thus leading to greater overall consumer demand and,
therefore, more jobs. (After all, consumers, through their purchasing power, are
the true job-creators—not the wealthy as is often
claimed.)
Furthermore,
the argument that higher wages are a “job killer,” has been thoroughly debunked
by a range of economic studies. According to the Times Op-Ed a Federal Reserve Bank of
Chicago study concluded, “[A] $1 increase in the minimum wage results, on
average, in $2,800 in new spending by affected households in the following
year...”
Or, as NYT columnist, Paul Krugman writes in
the same issue, “…the main effect of a rise in minimum wages is a rise in the
incomes of hard-working but low-paid Americans—which is, of course, what we’re
trying to accomplish” (“Raise That Wage,” 2/18/13).
Now, if
Wolterbeek and the rest of the business elite are simply too cheap to pay their
employees a decent wage that reflects their labors’ worth… well, that’s another thing entirely.
Growing up in
Kennebunk (pre-Zumba-era), I had no trouble finding summer jobs at local
restaurants. I remember making close to $9 an hour washing dishes and preparing
desserts at the Arundel Wharf restaurant in Kennebunkport, a popular tourist
stop. As a teenager, that was good money for CDs, rock concerts and filling the
tank of my red Eagle Summit—my primary financial obligations at the time.
Problem is, some 15 years, a college education and a devastating economic
recession later, $9-$10 an hour is the starting pay for the few jobs currently
offered. Such a wage was fine when I did not have a monthly rent, a college
loan, a phone and electricity bill, and the like.
And those are
just my individual expenses. I cannot fathom how families with two or three
children make ends meet on such meager wages. I really
can’t.
Again, even if
enacted, Obama’s anemic increase would likely not make a significant difference
in working-class Americans’ wages. But the important thing is the issue has been
pushed back into the public dialogue. We need to ensure it stays there until
lawmakers get the message: Workers are the backbone of our economy. We deserve
to be paid what we are worth.
Adam Marletta is a writer, activist and coffee-fiend. He is the former chair and current secretary of the Portland Green Independent Committee and editor of the political commentary blog, Guerrilla Press. He lives in Portland, Maine and supports all things Green Party.
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