May 21, 2015
Let’s Raise the Minimum Wage
By Mike McManus
Los Angeles raised its minimum wage this week from $9 an hour to $15 over
five years. The City Council voted 14-1 for the most significant victory so far
to help low income workers. Almost half of the city’s work force earns less than
$15 an hour, so the impact will be major.
Seattle and San Francisco have also set their minimum at $15, and that level is
being debated in Kansas City, Washington DC and New York.
I have long supported raising the federal minimum wage from its absurdly low
level of $7.25, which enables a full-time worker to earn only $15,800 a year. No
one who works full-time should be poor.
This is certainly a Scriptural position. “The righteous care about justice for
the poor, but the wicked have no such concern,” asserts Proverbs 29:7.
In January I praised 21 states who raised their minimum above the U.S., as
“deserving applause.” State minimum wage hikes meant nearly four million
Americans enjoyed more income according to the Economic Policy Institute. In
fact, 29 states with 60 percent of the population now earn more than the U.S.
Usually, it is not that much higher - $8.75 in New York State, for example.
No wonder the middle class has been shrinking. Those who earn between $35,000
(50 percent above poverty) and $100,000 have fallen by 10 percent since 1967.
Some did move into upper income levels. However, the Great Recession pushed
others into poverty. High-paying blue collar jobs have shrunk.
The bottom line: median household income, on average, has fallen 9% since 2000.
Therefore, it is essential to raise the minimum wage which has been frozen at
$7.25 for seven years. President Obama has proposed that it should rise in three
annual steps of $0.95 to $10.10, which is less than it would have been if the
1968 minimum had been indexed to inflation.
However, a Republican-controlled House has never considered it. Now that
Republicans also control the Senate, federal action seems hopeless.
Yet a Pew Poll reported 73 percent of the public approve a raise to $10.10. The
support crosses party lines, with 91 percent of Democrats, 74 percent of
Independents and 53 percent of Republicans approving Obama’s proposal.
Predictably, most business leaders oppose any raise. The Los Angeles Chamber of
Commerce says the increase could turn the city into a “wage island,” pushing
businesses to nearby places where they can pay less to employees.
Stuart Waldman, president of the Valley Industry and Commerce Association,
argues, “A lot of businesses aren’t going to make it. It’s a great that this is
an increase for some employees, but the sad truth is that a lot of employees are
going to lose their jobs.”
Is he right? Well, consider the impact of raising the federal minimum to $10.10.
The Congressional Budget Office, a non-partisan think tank of Congress,
estimates that 16.5 million low-wage workers would directly benefit from the
proposed federal increase. In addition, another 8 million workers who are
slightly above the minimum, would also enjoy a pay hike.
With how many lost jobs? A half million, says CBO. That’s about .03 percent of
total employment and only 3 percent of the 16.5 million who would be directly
affected. About 900,000 who are currently poor would be lifted into the middle
Many conservatives claim that those getting the minimum wage are teenagers
working at McDonald’s. In fact, 88 percent are adults, more than half are female
and most work full-time.
The wealthiest families, however, lose under the proposal. Their income drops .4
of 1 percent or $700 for families earning $180,000 due to reduced business
profits and slightly higher costs of goods.
The CBO analysis is in line with the thinking of most economists. A 2013 survey
by the University of Chicago’s Booth School of Business found that “leading
economists agreed by a nearly 4 to 1 margin that the benefits of raising and
indexing the minimum wage outweigh the costs.”
For example, Paul Krugman of Princeton notes that “The minimum wage is one of
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, the great preponderance of
the evidence from these natural experiments points to little if any negative
effects of minimum wage increases on employment.”
Therefore, it is time for Congressional Republicans to show compassion for the
millions on or near the $7.25 minimum wage.
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