Legislative misunderstanding of minimum wage
Governor Tom Wolf has proposed raising Pennsylvania’s minimum wage to $12 an hour. But a headline two weeks ago in the Gettysburg Times told us that “Local legislators oppose minimum wage hike.” According to the article, “Minimum wage workers in Pennsylvania will be waiting a bit longer for their first raise in more than a decade. State senators overwhelmingly approved a plan late Wednesday to hike the state’s minimum wage from $7.25 to $9.50 over two years. However, Pennsylvania’s House of Representatives tabled that measure until it reconvenes on December 16 or beyond. The minimum wage bill is not on that chamber’s already published agenda for that date.”
Over the last 45 years, minimum-wage workers have not shared the benefits of a growing economy. As productivity has increased and the economy has expanded, businesses’ ability to generate income and raise overall living standards has grown dramatically. Unfortunately, the minimum wage has been allowed to stagnate – its value has fallen 30% since 1980 – keeping the lowest-paid workers from sharing in this increased prosperity. Raising the minimum wage would help reverse the ongoing erosion of wages that has contributed significantly to growing income inequality. (Another factor is declining union membership – but that’s a subject for another column.)
It is a common misconception that since low-wage workers who would benefit from a raise in the minimum wage are mostly teenagers working part time/after school to earn spending money, fast-food workers, and other service workers do not need a raise. Organizations and lawmakers opposed to raising the federal and the state minimum wage still use this argument.
In reality, the average age of the workers who would benefit from an increase in the minimum wage is 35; 88% are at least 20 years old; 35.5 percent are at least 40 years old; 56% are women; 28% have children; 55% work full-time (35 hours per week or more); and 44% have at least some college education. Only 14% are part-time workers (those working less than 20 hours per week).
For union leaders and workers’ advocates, raising the minimum wage is a no-brainer. It would help millions of Americans make ends meet, perhaps get them off public assistance programs such as food stamps and housing assistance. According to a study by the Economic Policy Institute, a parent who is paid the minimum-wage and works full time, year round does not earn enough to be above the federal poverty line. The Bureau of Labor Statistics reports that more than 10 million Americans qualify as the “working poor.” That means they spent at least half the year in the labor force yet still live below the poverty line. That includes 4 percent of all full-time workers. More than seven million children live in homes whose income would increase if we raised the minimum wage.
Until the 1980s, earning the minimum wage was enough to lift a single parent or a family of two or three out of poverty. In fact, a minimum-wage income in 1968 was higher than the poverty line for a family of two adults and one child. Today’s minimum wage is not enough for single parents to reach even the most basic threshold of adequate living standards. Nearly a quarter of those who would benefit from a higher minimum wage have a total family income of less than $20,000.
At the same time, raising the minimum wage would provide a modest stimulus to the entire economy: increased wages lead to increased consumer spending, which contribute to GDP growth and modest employment gains. Recent research shows that, despite skeptics’ claims, raising the minimum wage does not cause the loss of jobs. In fact, throughout the country, a minimum-wage increase would create jobs. Like unemployment insurance benefits or tax breaks for low- and middle-income workers, raising the minimum wage puts more money in the pockets of working families, thereby boosting their spending power. Economists generally recognize that low-wage workers are more likely than any other income group to spend immediately any extra earnings they receive on previously unaffordable basic needs or services.
Increasing the federal minimum wage to $10.10 would give an additional $51.5 billion over the phase-in period to directly and indirectly affected workers who would, in turn, spend those extra earnings. Indirectly affected workers – those earning close to, but still above, the proposed new minimum wage – would likely receive a boost in earnings due to the “spillover” effect, giving them more to spend on necessities.
Increasing the minimum wage to $10.10 would benefit millions of workers whose characteristics in terms of their gender, age, race, educational attainment, work hours, family income, and family composition contradict some prevailing beliefs about minimum-wage workers. Since 2009, 29 states, including all of our neighboring states, have raised the wage floor for their workers. It’s the right thing to do, and Pennsylvania needs to do it soon.
PS: Our legislators just got a 1.9% raise to $90,000.
Mark Berg is a community activist in Adams County and a proud Liberal. His email address is MABerg175@Comcast.net.