GIVE WORKERS A RAISE
Opponents keep singing old tunes. Here are 5 reasons why they’re wrong:
The long-standing effort to raise the federal minimum wage is approaching showdown time. Opinion polls show consistent support for a raise across the political spectrum. Cities from Washington to San Jose have passed significant local increases, and more are on the way. Last week, President Obama upped the ante with a push for higher overtime pay.
Like the National Association of Manufacturers in 1937, which declared that the minimum wage would be “a step in the direction of communism, bolshevism, fascism and Nazism,” today’s corporate establishment has resorted to spewing out every broken-record argument in the book. Though the minimum wage has been increased 22 times without calamity, the broken record continues to spin. This tune is getting tedious. 1. Raising the minimum wage is one of the most mainstream ideas in politics today. Spin masters argue that the minimum wage is radical and destructive. If this is so, why do 80% of Americans, 62% of Republicans and a growing consensus of economists support raising the minimum wage? This broad coalition sees a minimum wage increase for what it really is: a recognition of work’s value; a restoration of the minimum wage to its mid-century inflation-adjusted level; and, as conservative Ron Unz asserts, a savings for taxpayers when fewer workers turn to public assistance.
2. A modest increase in the minimum wage doesn’t cut
jobs. Spin masters argue that when you raise the price of employment, as House Speaker John Boehner put it, “you get less of it.” The weight of evidence from the economics literature has found that this crude model does not play out in reality. Increases in overall business costs resulting from moderate wage increases can be easily absorbed by slight price increases, lower employee turnover costs and more equal distribution of companies’ revenues. In fact, a meta study by Paul Wolfson and Dale Belman in 2013 concluded that modest minimum wage increases have little to no negative impact on employment.
3. Raising the minimum wage will not cause a big jump
in prices. Spin masters argue that a minimum wage increase will raise prices in a way that will hurt poor people. That’s not true. A University of California-Berkeley study shows that if Walmart, for example, increased its mini-
mum wage to $12 an hour and passed all the costs onto customers (as opposed to, say, cutting into their massive executive compensation or rolling back their recent $51 billion in stock buybacks), it would cost customers only 46 cents more per trip.
4. Raising the minimum
wage decreases poverty. When not arguing that the minimum wage hurts poor Americans, broken record spinners argue that the minimum wage has no effect on poverty. Such a pronouncement would be news to both workers struggling to pay their fuel bills and economist Arindrajit Dube, who predicts that a 10% minimum wage increase reduces poverty by about 2%. A raise in the earned-income tax credit — as some propose as an alternative — would also decrease poverty, but it would effectively use taxpayers’ money to pay low-income workers’ wages that their employers should be paying.
5. Raising the minimum wage is the right thing to do. The worst spin of all is the idea that only “experts” can understand what makes our economy work. The American people and a growing group of patriotic businesses have turned their intuitions about economic fairness into action. Craig Jelinek, CEO of Costco Wholesale Corp., told me that he starts his workers at $11.50 an hour plus benefits because it results in “less turnover, more productive workers and it’s the right thing to do.” After two years of internal deliberation, Doug Mcmillon, Walmart’s new CEO, is also nearing a decision to do the right thing and abolish Walmart’s poverty wage regime.
But much of the corporate establishment is sticking to its longdiscredited story, still hoping that “if you repeat a falsehood often enough, people will believe it.” But Americans understand the reality of low wages. It is time for Congress to marshal the economic and moral case against these plutocratic spin masters and give 30 million Americans a longoverdue raise.