Burnard: Minimum wage senseWritten by Don Burnard | | firstname.lastname@example.org
President Barack Obama gave his State of the Union address on Feb. 12. I for one was glad to hear many of the proposals the president made. I thought they were common-sense proposals, many of them long overdue.
The suggestion to raise the minimum wage to $9 an hour was met with the standard GOP talking points that come up every time raising the minimum wage arises: It’ll cost jobs; Who’ll pay for it?; Young entry-level workers will be unable to get jobs; etc., etc., etc. Speaker of the House John Boehner gave an impassioned speech for the cameras about swamping out his daddy’s bar (so he knows entry-level jobs) and how this would cut out the bottom rungs on the ladder of success, thus impeding, presumably, the climb to become future millionaires and billionaires.
There’s only one problem with this. It isn’t true. These same old tired saws have been trotted out for as long as there has been a minimum wage, and studies have shown that the horror stories of what will happen don’t happen. Pat Garofolo of the political website Think Progress said in an article, “The history says that raising the minimum wage has little if any impact on job creation.” He points to a November 2010 study published in The Review of Economics and Statistics that found “no detectable employment losses from the kind of minimum wage increases we have seen in the United States.” Another study published in 2011 “found no impact on hours worked or employment levels.” Garofolo cites the seminal study of the minimum wage done by economists David Card and Alan Krueger, which found that job creation was actually strengthened by an increase in the minimum wage, and points out that this has been proven time and time again.
“[Sen. Marco] Rubio and [Sen. Paul] Ryan have it exactly backwards; raising the minimum wage results in higher wages and more purchasing power for workers, not job losses,” Garofolo wrote.
An example of this conundrum for Republicans can be found in that city they love to hate, San Francisco, which has a minimum wage of $10.55/hour. Its unemployment rate is 6.7 percent; in the rest of California, the rate is 9.8 percent. Kind of makes you think, doesn’t it?
The GOP and its rich backers would like you to believe that the minimum wage primarily affects teenagers looking to enter the workforce or find summer jobs. In actuality, 50 percent of people earning the minimum wage are over the age of 24, many with families. Based on a 40-hour-a-week job, or 2,008 hours a year, that comes to a whopping $14,558 yearly income on the current $7.25/hour minimum wage. How many readers out there think they could live on that, let alone support a family? This is also a women’s issue. 75 percent of minimum wage earners are women over the age of 24. Undoubtedly, a significant number of these women are single mothers. What kind of life can any of these wage earners expect to provide for their families?
The largest part of our economy relies on consumer spending, which accounts for 70 percent of the total. The money that would be paid to minimum wage workers would be put right back into the economy for everyday living expenses. This increases demand for durable goods, nondurable goods and services. This benefits every part of the spectrum of the economy. The millionaires and billionaires take the majority of their money and put it away in Swiss or Cayman Island bank accounts, which don’t benefit the economy of the U.S. at all. Well, maybe certain parts of the financial sector stand to benefit, but they’ve already shown that helping the economy is very low on their list of fun things to do.
Henry Ford believed that paying his workers a decent wage helped him in the long run because then they could afford to buy the cars they made, thus increasing his bottom line. An ever-growing number of economists seem to be rediscovering this theory. Across the board, conservative and liberal economists alike are calling to raise the minimum wage. The general consensus is that it should be raised to at least $12-$13/hour. In Australia, which has weathered the economic downturn better than most developed countries, has one of the lowest unemployment rates in the developed world. It also has a minimum wage of almost $16 (U.S.). Maybe it’s time to start thinking outside the box instead of blindly adhering to false talking points.
Email Don Burnard at email@example.com.