Minimum wage outrage

The federal minimum legal wage is $5.15 per hour. That stinks! A full-time, minimum wage worker receives only $10,300 per year before taxes. By the end of this year, the value of the minimum wage will be close to its lowest level in 50 years. No wonder more than three-quarters of Americans believe increasing the minimum wage is an important priority.

You’d think increasing the minimum wage would be a no-brainer. But this summer, when New York’s Legislature voted to join 12 other states in raising the minimum wage, Republican Gov. George Pataki vetoed the measure. As this is being written, New Yorkers are pressuring the state Senate to override Pataki’s veto.

In Washington, Sen. Edward Kennedy (D-Mass.) has introduced legislation to raise the federal minimum wage from $5.15 to $7 by April 2006, restoring it to 1968 levels. What would this accomplish?

• Raise the wages of over 16 million workers — almost 15 percent of the workforce.

• 623,000 single mothers and over a million married couples with children would benefit.

• Most of the workers (72 percent) who would benefit are adults (20 and over). Most are full-time workers.

• While Black and Hispanic workers would especially benefit from raising the minimum wage, about 60 percent of those benefiting would be white.

How could anyone be against this? The Herald Journal in Spartansburg, S.C., found a way. “Increasing the minimum wage would hurt those low-wage workers by taking away their jobs. … Congress should truly help the poor and refrain from raising the minimum wage.” You can read similar opinions on editorial pages around the country.

Amy Chasanov from the Economic Policy Institute (EPI) answers these and similar arguments: After the last increase in the minimum wage in 1996-97, “Unemployment went down – not up – for workers across the boards, including those on the lowest rungs of the economic ladder. Wages and incomes increased for everyone,” including low-wage workers.

Richard V. Burkhauser, chairman of the department of policy analysis and management at Cornell University, argues that only some minimum-wage workers are supporting families, and only 19 percent are single parents with children. He implies that, even if single parents deserve a raise, most of the others — especially teenagers, don’t.

I worked minimum wage jobs in the 1960s and 1970s, getting $1.25-$1.60 per hour — about $6.50 in today’s dollars. I still remember how angry I was. How could I save for college on $1.25 per hour? Since then, college costs have risen twice as fast as the minimum wage, and continues to rise at double-digit rates. No wonder so many kids are working full time while attending school. If Professor Burkhauser ever had to work for minimum wage, I’m sure he’s forgotten what it felt like.

Finally, Burkhauser argues that for workers who support families, it would be more efficient to increase the earned income tax credit (EITC), rather than the minimum wage.

That’s outrageous! The EITC is an important lifeline for low-income families. But he’s asking taxpayers to further subsidize poverty wages paid by McDonald’s and Wal-Mart. I’d rather make these giant corporations pay a decent wage, and have my tax money go for other things — like hiring young people for rehab projects in our cities, or maintenance in our national parks, or to staff summer camps and after school programs for younger kids.

Almost 70 years ago, urging passage of the original minimum wage legislation, President Franklin Roosevelt said, “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By living wages I mean more than a bare subsistence level — I mean the wages of a decent living.” Today, $7 per hour isn’t nearly enough, but it’s better than $5.15.

I searched both presidential candidates’ websites for “minimum wage.” John Kerry supports raising the minimum to $7 by 2007, and, more important, wants to index it to inflation, so the minimum will rise automatically with the cost of living.

On the Bush website, I could find only one reference. In a July 14 meeting with supporters in Wisconsin, he assured a businessman that “If there is a minimum wage increase” (my emphasis), it will be “reasonable” and he will make sure small businesses aren’t penalized. Bush made it clear that, if he is forced to allow a small increase in the minimum wage, he will make sure that working-class taxpayers foot the bill through more corporate tax breaks.

The author can be reached at economics@cpusa.org.