American Forum Op-Ed

AMERICAN FORUM
By Christine Owens

Two years ago this week, 4.5 million of America’s workers enjoyed a modest pay increase, as the federal minimum wage rose from $6.55 to $7.25 an hour. The increase was the final of a three-step boost enacted in 2007. Of those getting a bump in pay, more than three-quarters were adults, nearly two-thirds were women, and nearly half a million were single parents with children under 18.

Yet during the past two years, these working families have seen the real value of their wages fall. Minimum-wage earners working full-time make roughly $15,000 a year. Had the minimum wage rate kept up with inflation, their paychecks would have increased by $800 this year. Instead, our nation’s lowest-paid workers have had an even harder time providing basic needs for their families. This is one more reason that Main Street is having a tough time recovering from the economic calamity brought on by financial collapse.

CEO compensation grew 23 percent in 2010, while pay for the average American worker grew only half a percent. Minimum wage workers have fared even worse: Since the 2009 increase, the real value of the minimum wage has fallen 5 percent.

The decline in value of the minimum wage during the past four decades has been even more dramatic, as prices for goods and services have risen much faster than the wage floor. If the minimum wage had kept up with inflation since the late 1960s, it would be $10.38 today. Yet, roughly a quarter of the nation’s work force is now earning less than that.

Instead of keeping the minimum wage current, Congress has acted just three times in the last three decades to increase it. The deterioration of the wage floor has helped fuel a level of economic inequality not seen in this nation since the early 1900s—the era of sweatshops and robber barons. With more and more income and wealth being transferred from working families to the super-rich, our economy, our democracy and the American way of life are under threat.

Some will say this is not the moment to be concerned with the minimum wage. But restoring the value of the minimum is in fact a key building block of sustainable economic recovery.

Businesses and economists agree that lack of demand is the primary driver of the stalled recovery and high unemployment. Without customers lining up for goods and services, employers will not expand their production or their payrolls. Raising the minimum wage would put more money in pockets of the lowest earners who have little choice but to spend their wages immediately. The Economic Policy Institute estimates that raising the minimum wage to $9.50, as President Obama proposed during the 2008 presidential campaign, would generate more than $60 billion in new consumer spending.

Wielding outdated economic theories, opponents claim that raising the minimum wage will cost jobs and slow rehiring. The tired canard that the minimum wage causes unemployment recently received national attention when reporters revisited 2005 testimony in which Congresswoman Michele Bachmann argued that eliminating the minimum wage would wipe out unemployment entirely. This extremist view was roundly criticized, yet many corporate interests still promote the dogma that raising the minimum wage reduces employment.

While simplistic supply and demand theory suggests that employment will fall as wages rise, this 18th century model fails to capture the complexities of how the labor market works. Two decades of rigorous empirical research has revealed that increases in the minimum wage have not cost jobs or slowed rehiring, even during times of high unemployment.

Since the end of the recession, corporate profits have recovered and CEO compensation has skyrocketed. Corporations are sitting pretty on nearly $2 trillion in assets that they refuse to use to expand production or rehire because the rest of America has little cash of their own to spend on goods and services. Raising the minimum wage will help Main Street share in—and power—a robust economic recovery. It’s the least we can do for those with the least means to stay afloat and get ahead in a brutal economy.
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Owens is executive director of the National Employment Law Project
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Copyright (C) 2011 by the American Forum. 7/11

AMERICAN FORUM

By Tsedeye Gebreselassie

In 2006, Nevada voters did a really smart thing. Recognizing that their state’s minimum wage stayed flat year after year, despite rising costs of living, the people of Nevada voted to index their minimum wage rate to adjust annually with the cost of living. In the last few years, these small annual increases have helped thousands of working families make ends meet in a rough economy, while providing a modest boost in precisely the type of consumer spending our nascent recovery needs.

Rather than celebrate voters’ sound economic move, critics of the minimum wage see an opportunity to once again toss out their usual—and widely discredited—claims that a strong minimum wage is a “job-killer.” Counting on understandable anxiety about Nevada’s stubbornly high unemployment rate, opponents of the minimum wage have proposed state legislation that would begin a repeal process for the initiative passed by Nevada’s voters just four years ago.

Let’s quickly dispense with these “job-killing” claims. Real-world experiences with minimum wage increases have produced little evidence of job losses. The decade following the federal minimum wage increase in 1996-97 ushered in one of the strongest periods of job growth in decades. Analyses of states with minimum wages higher than the federal floor between 1997 and 2007 showed that their job growth was actually stronger overall than in states that kept the lower federal level. And just last winter, a rigorous study finding that increasing the minimum wage does not lead to job loss was published in the Review of Economics and Statistics. Economists at the University of Massachusetts, University of North Carolina, and University of California compared employment data among every pair of neighboring U.S. counties that straddle a state border and had differing minimum wage levels at any time between 1990 and 2006. Analyzing employment and earnings data of over 500 counties, they found that minimum wage increases did not cost jobs.

Yet, critics of the minimum wage are undeterred by the facts, continuing to put the blame for the current recession and high joblessness rate squarely on the shoulders of our nation’s lowest-paid workers. This would be laughable if it weren’t so offensive—and the potential consequences of this shell game so tragic.

It doesn’t take an economist to tell you that the factors causing this recession have very little to do with how much or how little businesses must pay their frontline staff. Indeed, if we’ve learned anything these past couple of years, it’s that relying on rampant financial speculation and irresponsible lending practices to generate the spending that drives our economy, rather than investing in good jobs at good wages, is no way to run an economy. That’s why a robust minimum wage is a cornerstone of any recovery strategy, because it puts money into the pockets of low-income families who will spend it immediately, increasing consumer spending without adding to the deficit. According to the Economic Policy Institute, the small bump in the federal minimum wage in 2009 generated $5.5 billion in new consumer spending.

Over the last 40 years, the real value of the minimum wage has eroded substantially, lagging far behind rising living costs. At its peak in 1968, the federal minimum wage was worth more than $10 an hour in today’s dollars. When Nevada indexed its minimum wage in 2006, it joined many other states—as of today, 10 in all—to ensure that the purchasing power of these wages does not erode over time. On the federal level, minimum wage earners went 10 years without an increase until Congress finally raised the minimum wage in 2007. Repealing Nevada’s minimum wage indexing law might very well lead to the same result.

Gebreselassie is a staff attorney at the National Employment Law Project.

Copyright (C) 2011 by American Forum. 4/11

AMERICAN FORUM

By John Shepley

As a small business owner, I support legislation to increase Maryland’s inadequate minimum wage because it makes good business sense. It’s an important part of our economic recovery and economic progress. I know businesses can pay a better minimum wage and still make a profit -- it helps the business prosper.

Opponents of this legislation like the Maryland Chamber of Commerce, the Maryland Retailers Association, and the Restaurant Association tell you the time is not right to increase the minimum wage because the economy is weak. What they don’t want you to remember is that for them the time is never right. In 2005, they opposed legislation to raise Maryland’s minimum wage from $5.15 an hour to $6.15. They opposed federal legislation to raise the minimum wage in 1996, in the middle of the longest economic expansion in our nation’s history. Then president of the Maryland Retailers Association, Tom Saquella, cut to the chase when he said about their opposition in 1996, “A lot of it’s philosophical.”

So let me cut to the chase: If my business, a small nursery in rural Harford County, can profit and grow when paying a wage that people can thrive on, then there’s no reason any viable business cannot do that too. Unless, that is, their philosophy is getting in the way of good business sense.

Claims that a higher minimum wage will cost Maryland jobs and hurt our local economy are rubbish. The real hard evidence, such as a comprehensive study published in the November 2010 Review of Economics and Statistics, shows minimum wage increases do not increase unemployment.

I challenge anyone who thinks the minimum wage shouldn’t be raised, to try living on it. The minimum wage is now just $7.25 an hour, or $15,080 for full-time, year-round work. Today’s minimum wage has far less buying power than it had in the 1960s.

How is it good business to pay a wage so low your employees are continually stressed because they can’t make ends meet and are looking to leave at the first opportunity? Businesses that pay lower wages almost always have higher turnover. Instead of paying adequate wages, the owners are paying to recruit and train new workers who aren’t as productive as a more stable workforce.

The cost of a higher minimum wage is more than offset by increased productivity and cost savings from reduced turnover. At Emory Knoll Farms, we know we can count on employees: They look after the quality of our products, they understand and anticipate our customers’ needs, and I can count on our people to step up when our business needs demand a little extra. Our employees know we’ll stick by them when times are tough, and they will stick by us.

How is it good business to pay a minimum wage with less buying power than it had in the 1960s? Doesn’t that weaken the consumer demand at the heart of our local economy? I know people at the lower end of earnings tend to spend 100% of their after-tax income. They put it right back into local businesses buying food, clothing, car repairs, and other necessities of living. That money spent locally adds more jobs and boosts our economy. Moreover, a higher minimum wage boosts the sales tax and personal income tax base.

How is it good for Maryland taxpayers to have a minimum wage so low it increases the strain on our social safety net? Many state governments have reported on the public health care burden from underpaid employees of big national retailers – Massachusetts, for example, found that in 2009, Wal-Mart had more than 5,000 employees receiving health insurance coverage through state public assistance programs. The state’s cost for these Wal-Mart employees and dependents is conservatively measured at $16.6 million.
The Chesapeake Sustainable Business Alliance, made up of local and independent businesses, has signed the Business for a Fair Minimum Wage statement in support of raising Maryland’s minimum wage to $8.25 this July, $9 in 2012 and $9.75 in 2013 – and adjusting it beginning in 2014 so it does not fall behind the rising cost of living. Local and sustainable business owners know our fortunes are entwined with the fortunes of our employees and customers.

The right thing to do for Maryland workers and families is to move the minimum wage to a level where people can do more than “just survive.” Raising the minimum wage will move us towards a more stable and sustainable Maryland economy.
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Shepley is co-owner of Emory Knoll Farms Inc., a wholesale nursery in Harford County. He is also chairman of the Chesapeake Sustainable Business Alliance, made up of local, independent and sustainable businesses in Maryland.
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Copyright (C) 2011 by the American Forum. 3/11

José J. Rodriguez

FLORIDA FORUM

By José J. Rodríguez, and Paul Sonn

Since January 1, more than 180,000 of Florida’s lowest-wage workers -- people caring for the elderly, serving food at the local diner, and cleaning and securing our office buildings -- have been denied an annual cost of living adjustment required by law. Acting in violation of the Florida Constitution, the state failed to implement a legally mandated 6 cent increase in our minimum wage for 2011.

Paul Sonn

Back in 2004, Florida voters overwhelmingly supported a constitutional amendment -- by a lopsided 78 to 22 percent margin -- creating a state minimum wage and indexing to inflation so that it keeps pace with the rising cost of food, clothing, electricity and other necessities. Voters realized that without such protection, the ability of minimum wage earners to provide for their families would fall each year as prices rose but the minimum wage remained stagnant.

On New Year’s Day, seven states with laws like Florida’s -- Arizona, Colorado, Ohio, Montana, Oregon, Vermont and Washington -- increased their state minimum wages to keep pace with inflation. Florida did not.

That’s why we recently filed suit on behalf of minimum wage workers against the Agency for Workforce Innovation (AWI), the state agency responsible for setting the minimum wage rate every year, for refusing to properly increase the state minimum wage to $7.31 to take into account last year’s inflation.

The problems started last year. Florida’s laws, constitution and Supreme Court all make one thing crystal clear: the state minimum wage goes up when there is inflation, but never goes down. Despite this clear obligation, however, for 2010 AWI wanted to lower the minimum wage by 15 cents, from $7.21 in 2009 to $7.06. However, two things kept that erroneous wage cut from actually affecting Florida’s workers last year. First, the Agency never published the 2010 rate so no one knew about the mistake. Second, the federal minimum wage was still higher at $7.25.

This year, AWI’s mistake is affecting hundreds of thousands of working people since $7.31, where our 2011 minimum wage should be, is higher than the federal level. AWI has instead kept the Florida minimum wage 15 cents too low and failed to announce the correct increase.

A 6 cent raise may not sound like much, but for Florida’s lowest-paid workers it adds up. A full time minimum wage worker would see about $128 more per year. And unless it’s corrected, the impact of the error will snowball in future years, leaving Florida’s minimum wage permanently 15 cents lower than it should be.

The state’s failure to raise the minimum wage not only defies the constitution and the will of the voters, it also hurts low-wage workers and the statewide economy. The key to getting our economy back on track is boosting consumer spending and raising sales so businesses can grow and start rehiring again. By failing to raise the minimum wage, the purchasing power of the lowest paid workers falls, as does their consumption. If minimum wage workers make a few more dollars a week they will likely put this money immediately back into the local grocery store, barber shop or gas station, thus buoying demand for goods and services.

Floridians are looking to their new governor for leadership. As his administration begins an assessment of state agencies and departments, a top priority should be reviewing the Agency on Workforce Innovation’s blunder on the minimum wage. Rather than forcing the courts to fix the error, Governor Scott should uphold the constitution and help boost Florida’s economy by giving Florida’s low-income workers the raise they are due.
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Rodríguez and Sonn are co-counsel representing minimum wage workers who have filed suit against the state of Florida for failing to raise the 2011 minimum wage. Rodríguez is an attorney with Florida Legal Services. Sonn is legal co-director at the National Employment Law Project.
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Copyright (C) 2011 by the Florida Forum. 3/11

MISSOURI FORUM

By Lew Prince

The Republicans in the Missouri Legislature are trying to overturn the clearly expressed will of the people in order to give gigantic welfare checks to some of America’s biggest corporations.

Nearly 1.6 million Missourians voted to raise the minimum wage in 2006. Only 501,657 voted against the proposition. That’s a three to one margin.

To put this in perspective, in the same election, Democrat Claire McCaskill beat Republican Jim Talent by less than 49,000 votes. That means over a million Republican-leaning voters saw the need to raise the wages of the poorest working Missourians. According to exit polls, the minimum wage proposition was favored by Democrats, Independents and Republicans; liberals, moderates and conservatives; urban, suburban and rural voters; low-income, middle- and high-income voters; and voters of all ages.

Missourians voted overwhelmingly to raise the minimum wage and protect the working poor with a cost of living adjustment. This tiny adjustment amounts to pennies an hour. The COLA gives families that are barely keeping their heads above water a fighting chance when prices rise.

Republicans are pushing legislation to undo the cost of living adjustment and prevent the minimum wage from going above the federal rate of $7.25. Why would Missouri Republicans want to hurt workers who today are making just $15,080 if they are paid for 40 hours a week, 52 weeks of the year? Why would they want to hurt the most vulnerable workers in our state?

They say it’s to help small businesses. Well, I’ve run a small business in Missouri for 32 years and I say, BUNK!

Higher minimum wages help Missouri businesses, large or small, compete with gigantic national and multinational chains. Local businesses compete by being part of the community -- from hiring our neighbors to sponsoring youth leagues – and by providing service that gigantic multinational chains with their feed-more-profits-to-headquarters policies can’t match. In order to do this I need well-trained, long-term employees. I have to pay them more to keep them. My customers know my employees and are loyal to my business because of those employees.

Large Missouri companies like Schnucks and Dierbergs, who pay decent union wages, have to compete with predators like Wal-Mart who pay the lowest wages they can get away with. Why would the Republicans Rin the Missouri legislature want to side with multinational retailers and gigantic restaurant chains in their competition with Missouri businesses?

The minimum wage is a full dollar higher in Illinois -- $8.25 instead of $7.25. That means, for every hour worked in Illinois an extra dollar stays in the state and helps the local economy. Why do the Republicans in our legislature want to see that money end up at Wal-Mart headquarters in Bentonville, Arkansas or Wall Street or in some off-shore bank account instead of buying groceries and car repairs and paying rent here in Missouri?

What’s worse is Missouri taxpayers already subsidize these out-of-state corporate giants.

Did you know that according to the Missouri Healthnet Employer Report, in the 1st quarter of 2009 (the latest data available) Wal-Mart alone cost Missouri taxpayers $4.2 million in Medicaid costs. Casey's General Store cost Missouri taxpayers $884,104 while Tyson Foods, Dollar General and Target combined for another $1.4 million? Why are Missouri taxpayers subsidizing a company like Wal-Mart, the fountain of wealth for America’s richest family?

Who knows how many of these underpaid employees qualify for Food Stamps and other subsidies. These are the costs we pay while large companies and their lobbyists fight against a meager few cents an hour in raises for their Missouri employees for whom those pennies add up to milk or medicine for their children. Remember these same companies pay a dollar more minimum wages per hour in Illinois and still turn huge profits there.

It's time for all of us to write, call, or email our state legislators and remind them that they work for us, not multinational giants. Tell them to keep their hands off the minimum wage we voted for.
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Prince is managing partner of Vintage Vinyl, an independent music store with 24 employees in St. Louis. He is also a member of Business for Shared Prosperity.
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Copyright (C) 2011 by the Missouri Forum. 2/11