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Jamie_B

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When the Minimum Wage Makes Economists Smile

 

 

Chairman of the President's Council of Economic Advisers is a grand title, and it's been held by some pretty impressive academic economists over the years (Arthur Okun, Marty Feldstein, Joe Stiglitz, Ben Bernanke, Cristina Romer — to name a not-entirely-randomly chosen few). But it's usually hard to detect the Chairman's fingerprints in administration economic policy. The big decisions are made in the West Wing of the White House, not over in the Executive Office Building where the Council is housed.

So when a chairman does have a clear impact, it gets noticed. Then-chairman Glenn Hubbard, for example, pushed for and got a reduction in taxes on dividends in 2003. And, in the State of the Union Address Tuesday night, current Chairman Alan Krueger got a kind of shout-out from the President, in the form of a proposal to raise the federal minimum wage all the way from $7.25 to $9 and index it to inflation after that.

In 1992, when New Jersey raised the state minimum wage from $4.25 to $5.05, Krueger and his then-Princeton colleague David Card surveyed 410 fast-food restaurants in New Jersey and eastern Pennsylvania before and after the wage hike. The idea was to compare changes in fast-food employment in New Jersey, where the minimum wage had risen, with those in Pennsylvania, where it stayed constant at $4.25. The surprising result: fast-food employment went up in New Jersey relative to Pennsylvania.

This was surprising because the basic supply-and-demand model of economics teaches that, when you raise the price of something (in this case, low-skilled labor) demand for it will go down. There had been a number of philosophical objections posed to this approach through the years — among them the argument that employers possess more power and information than individual workers in most labor markets, allowing them to push wages below the optimal level in the absence of collective bargaining or government intervention. But Card and Krueger now had empirical evidence that the "textbook model," as they put it, didn't work. The New Jersey fast food restaurants did pass their increased wage costs on to customers in the form of higher prices — but they weren't enough higher to hurt business.

This research was a sensation, as economic research goes. It got lots of media attention back in the early 1990s, and has continued to inspire economist after economist to attempt to refute or back up its conclusions (Google Scholar lists 8,780 citations, and Wikipedia summarizes some of the major work). It's probably accurate to say that most economists still don't believe that raising minimum wages is a reliable way to increase employment (one hopes that Brian Barry and Anil Kashyap of the University of Chicago will ask their Economic Experts Panel about this soon) — but I also get the sense that the percentage of economists who think it has a substantial negative effect on employment has declined since the initial Card-Krueger research was published. Economists in general have become a bit less trusting of "textbook models" than they were in the 1970s through 1990s. And while it's dangerous to equate changing fashions in the economics profession with truth, I'll go ahead say that the business groups making dire claims about the negative economic impact of a minimum wage increase are mostly blowing smoke.

productivitygap2-thumb-250x429-3275.jpegWhat ails the U.S. economy, and in particular its workers, though, goes well beyond the minimum wage. According to the Bureau of Labor Statistics, 3.8 million people, or about 3% of the country's wage and salary workers, made the minimum wage or less in 2011. Yet workers across the income spectrum, except for those at the very top, have been stuck in neutral for a while. Except for a brief uptick during the dot-com era, labor's share of income has been on a steady decline since the early 1970s. Through the years, this has been mostly attributed to globalization (capital can go anywhere on the globe in search of the highest return, while workers are generally stuck in the country they came from) and technological change (machines are replacing workers). Lately there's increasing sentiment, perhaps not so much among economists as among others who care about economic policy, that maybe political decisions and changing social mores have played big a role, too.

As Jonathan Schlefer wrote on hbr.org in November, early economists like Adam Smith and David Ricardo believed wages were set by "habits and customs of the people," to use Ricardo's words, as much as by economic forces. That's where something like the minimum wage — or collective bargaining by labor unions — comes in. If, in a free market, the wages and salaries paid closely approximate the actual value of the work done, then minimum-wage laws and unions can only get in the way. But if labor markets are naturally riddled with inefficiency and affected by custom and habit, then laws and unions can conceivably bring a healthier economy — and higher profits for business — by raising wages.

Studies of retailers seem to indicate that this might the case. So does the current example of the Northern European countries, which combine strong unions and high wages with higher competitiveness rankings than the U.S.

Of course, it's really hard to imagine at this point that unions will ever regain much of a foothold in the U.S. private sector. The minimum wage is irrelevant to most of the workforce, too. And it may still be that most reliable way to increase the wages of American workers is simply to upgrade their skills. But I get the sense that the conversation about pay in the United States is just getting started — and that it's not going to be dominated by the models out of economics textbooks.

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http://www.huffingtonpost.com/2013/02/13/minimum-wage-productivity_n_2680639.html?ncid=edlinkusaolp00000009

 

Minimum Wage Would Be $21.72 If It Kept Pace With Increases In Productivity: Study

President Obama's call to increase the federal minimum wage to $9 an hour was one of the more significant proposals he laid out in his State of the Union address Tuesday night. But $9 an hour is still a far cry from what workers really deserve, a 2012 study finds.


 

The minimum wage should have reached $21.72 an hour in 2012 if it kept up with increases in worker productivity, according to a March study by the Center for Economic and Policy Research. While advancements in technology have increased the amount of goods and services that can be produced in a set amount of time, wages have remained relatively flat, the study points out.


 

Even if the minimum wage kept up with inflation since it peaked in real value in the late 1960s, low-wage workers should be earning a minimum of $10.52 an hour, according to the study.


 

Between the end of World War II and the late 1960s, productivity and wages grew steadily. Since the minimum wage peaked in 1968, increases in productivity have outpaced the minimum wage growth.


 

The current minimum wage stands at $7.25 an hour. In 2011, more than 66 percent of Americans surveyed by the Public Religion Research Institute supported raising this figure to $10.


 

The last time the federal minimum wage increased was in 2009. Currently observed in 31 states, the federal minimum wage translates to an annual income of about $15,000 a year for someone working 40 hours per week.

 

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http://www.huffingtonpost.com/2013/02/13/minimum-wage-productivity_n_2680639.html?ncid=edlinkusaolp00000009


 

The minimum wage should have reached $21.72 an hour in 2012 if it kept up with increases in worker productivity, according to a March study by the Center for Economic and Policy Research. While advancements in technology have increased the amount of goods and services that can be produced in a set amount of time, wages have remained relatively flat, the study points out.

 

I guess I don't really get this part. If productivity wen't up due to technology, why should the worker get paid more?

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minimum wages isnt too far off, $8 is probably fine. most minimum wages jobs are for under 18 yr olds working between age 14-18(baggers, cart getters, etc) and arent living off that wage.. furthermore there are lots of GED level jobs that pay $32-$50k, most are in sales jobs, but not exactly hard sales jobs..

 

this is just another 99% vs 1% argument.  99% of the country is making more than minimum wage, 

 

the % of people making minimum wage who are real 40/hr/week employees has to be bordering on zero..  Mcdonalds here pays $10/hr.

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Because the worker can get more done, that's what productivity is.

 

but it's not due to any extra work or skill from the worker. If anything, it likely made the job easier for the worker. The worker shouldn't get paid more just because the company invested in technology to increase productivity.

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but it's not due to any extra work or skill from the worker. If anything, it likely made the job easier for the worker. The worker shouldn't get paid more just because the company invested in technology to increase productivity.

 

 

If the worker is able to do more work because of that why shouldnt they get paid more? They are producing more for the company at less cost.

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When minimum wage increases doesn't that inherently affect the cost of goods?  As in, companies know joe public has additional funds to spend hence prices tick up... all I see that the minimum wage does is hurt the middle class.  The folks that are going to see a pay adjustment for minimum wage are going to be where they are now, the top wage earners don't care what goods cost - they've got plenty of money anyway... but middle class incomes aren't going to increase because of minimum wage, yet the price of goods will increase.

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If the worker is able to do more work because of that why shouldnt they get paid more? They are producing more for the company at less cost.

 

If my company purchases new software that makes my job easier and allows me to get more done, I wouldn't expect a raise.

 

If I increase my productivity due to my own effort, I would expect to get paid more.

 

I think whoever causes the increase in productivity should see the benefit. Companies wouldn't invest in this increased productivity if increased wages offset any cost savings.

 

People should be paid based on the value they bring to the company. A machine being more efficient doesn't make that individual worker more valuable.

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When minimum wage increases doesn't that inherently affect the cost of goods?  As in, companies know joe public has additional funds to spend hence prices tick up... all I see that the minimum wage does is hurt the middle class.  The folks that are going to see a pay adjustment for minimum wage are going to be where they are now, the top wage earners don't care what goods cost - they've got plenty of money anyway... but middle class incomes aren't going to increase because of minimum wage, yet the price of goods will increase.

 

 

Tie it to inflation as has been suggested, then what becomes the point of raising prices when wages would be raised as well?

 

Further that's actually not true, you can find studies that show when the MW is rasied it raises wages for everyone, not just those at the bottom.

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If my company purchases new software that makes my job easier and allows me to get more done, I wouldn't expect a raise.

 

If I increase my productivity due to my own effort, I would expect to get paid more.

 

I think whoever causes the increase in productivity should see the benefit. Companies wouldn't invest in this increased productivity if increased wages offset any cost savings.

 

People should be paid based on the value they bring to the company. A machine being more efficient doesn't make that individual worker more valuable.

 

 

If you are able to output more for the company regardless of the reasoning you become more valuable to the company, why would that not mean you should get more in pay?

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http://opinion.latimes.com/opinionla/2011/12/san-francisco-minimum-wage-increase-good-idea.html

 

The San Francisco solution: To improve the economy, pay
workers more

 

Did you catch the latest bit of insanity out of San Francisco? Effective Jan.
1, Baghdad by the Bay's minimum wage will climb to $10.24 an hour.


So long, San Francisco. That little earthquake in 1906 was nothing compared
with what this will do to your city. Might as well shut down those cute cable
cars. Maybe you can find someone to buy that nice bridge. Too bad, too: Just
when the 49ers are starting to win again, and the Giants are better than the
Dodgers.


What's that you say? It's not the end? From The Times' story Tuesday:


San Francisco's minimum wage has climbed steadily since voters in 2003
approved a local initiative mandating an annual increase in the minimum wage
using a formula tied to inflation. In recent years, the city has also required
many employers to provide their workers with health benefits and all employers
to offer paid sick time.


Critics have derided the mandates as anti-business job killers. But San
Francisco's economy has proved resilient. The city's unemployment rate was 7.8%
in November, well below the 11.3% statewide rate. Over the last year, the San
Francisco metropolitan area, which includes parts of neighboring San Mateo and
Marin counties, created 3,900 new jobs, mostly in bars and restaurants within
the city of San Francisco, according to the California Employment Development
Department.


We've been told lately that the only way to get the economy back on track is
to cut, cut, cut -- workers and their pay and their benefits. Oh, and cut, cut,
cut -- taxes for the wealthy, the so-called job creators.


But maybe there's something in the water in San Francisco: Better wages,
better benefits -- and new jobs?


Of course, not everyone is happy:


"It makes these jobs so high-paying that they disappear," said Daniel
Scherotter, executive chef and owner of Palio D'Asti, an Italian restaurant in
the downtown financial district. "It's hurting the people it's trying to
help."


As a result, Scherotter said he cut his kitchen staff by eight people in the
last five years and shifted pastry production outside the city
limits.


I understand what Scherotter is saying. He's got a business to run.


But he's wrong, and here's why. 


Call it America's dilemma: Consumers complain that everything costs too much,
and they've seen their wages stagnate or their jobs disappear. With unemployment
high and consumers not spending as much, businesses look to reduce costs --
usually labor costs.


But that formula just doesn't cut it.


For this country to work, people have to work. And that work has to pay
enough for people to live on. Even at $10.24 an hour, that's $21,299.20 a year
annually for a full-time worker. (Provided they don't take any time off, of
course.)


If, as Scherotter says, the economics of running a restaurant require that
workers be paid less than $10.24 an hour, then perhaps it's the business model
that's broken.


Well-paid workers become free-spending consumers. Free-spending consumers
fuel the economy. A better economy breeds more jobs.


Who knows, maybe San Francisco is on to something. And it might just work
better than cutting the taxes of all those job creators.

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If they could get gas back under $2 a gallon I'd be happy. 

 

Gas/oil cost isn't the problem.  It's the very weak US dollar.  Add in Quantitative Easing and it's going to be further de-valued.   That means gas will probably go up and we'll curse the Arab nations while our leaders laugh at us. 

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Gas/oil cost isn't the problem.  It's the very weak US dollar.  Add in Quantitative Easing and it's going to be further de-valued.   That means gas will probably go up and we'll curse the Arab nations while our leaders laugh at us. 

 

 

The Dollar is stronger than most other nation currencies. Gas prices have to do with speculation, and the stupid ethonol rules.

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Gas/oil cost isn't the problem.  It's the very weak US dollar.  Add in Quantitative Easing and it's going to be further de-valued.   That means gas will probably go up and we'll curse the Arab nations while our leaders laugh at us. 

 

 

I am not so ignorant and racist to think anything about Arab nations when it comes to gas prices. 

We hardly get any oil from them.

 

We are producing more oil than we did when gas was under $2 a gallon. We are driving more efficient cars. 

Gas demand is supposed to be down. But so is supply? lol It makes no sense. 

 

 

Hell, another thing that makes no sense is a gas station had gas delivered, pays a certain price for it.

And justifies raising the prices daily on it. 

 

Seriously though. Fuck gas prices. Can't someone build a car that runs on water? Or farts even? 

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I'd argue that the Earned Income Tac Credit is more helpful to the working poor than any bump in the minimum wage. Like Go pointed out and was pretty much ignored, the number of people actually living off the minimum wage is very small.

 

 

I'm not opposed to that either, but again raising the minium wage raises wages for everyone.

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http://truth-out.org/news/item/14672-raising-the-minimum-wage-is-good-for-business-but-the-corporate-lobby-doesnt-think-so   Raising the Minimum Wage Is Good for Business (But the Corporate Lobby Doesn't Think So)
         
   

Contrary to naysayers in the business lobby, numerous studies
suggest increasing the minimum wage to $9 an hour and tying it to the
cost of living will lift millions of Americans out of poverty and
stimulate the economy.

As soon as Barack Obama called on Congress to raise the minimum wage
to $9 an hour in his State of the Union address Tuesday night, you could
see Speaker John Boehner, seated behind the president, uttering his
religious mantra: "Job killer." And even if you couldn't read his lips,
you could read his mind: "Campaign contributions." He and his Republican
colleagues could expect huge donations from business lobby groups -
especially those that depend on low-wage workers, like the hotel
industry, restaurants and fast-food chains, nursing homes and hospitals
and big-box retailers - to keep Congress from embracing Obama's modest
proposal.


Boehner's "job killer" grumble should come as no surprise. Business
groups and their political allies have been "crying wolf" about the
minimum wage ever since President Franklin D. Roosevelt proposed it
during the Depression to help stimulate the economy. The critics warned
that enacting a minimum wage would destroy employees' drive to work hard
and would force many firms out of business. The minimum wage law,
warned the National Association of Manufacturers (NAM) in 1937,
"constitutes a step in the direction of communism, bolshevism, fascism,
and Nazism." Congressman Edward Cox, a Georgia Democrat, said that the
law "will destroy small industry." These ideas, Cox claimed, "are the
product of those whose thinking is rooted in an alien philosophy and who
are bent upon the destruction of our whole constitutional system and
the setting up of a Red Labor communistic despotism upon the ruins of
our Christian civilization." Roosevelt and most members of Congress
ignored these warnings and adopted the Fair Labor Standards Act in 1938,
establishing the federal minimum wage of 25 cents an hour.


Since then, each time Congress has considered raising the minimum
wage, business groups and conservatives have repackaged the same
arguments. In 1945, NAM claimed that, "The proposed jump from an hourly
minimum of 40 to 65 cents at once, and 70 and 75 cents in the following
years, is a reckless jolt to the economic system. Living standards,
instead of being improved, would fall - probably to record lows."
Instead, the next three decades saw the biggest increased in living
standards in the nation's history.


In 1975, economist Milton Friedman, a conservative guru, said: "The
consequences of minimum wage laws have been almost wholly bad, to
increase unemployment and to increase poverty. In my opinion there is
absolutely no positive objective achieved by minimum wages." While
campaigning for president, for example, Ronald Reagan said, "The minimum
wage has caused more misery and unemployment than anything since the
Great Depression." In 2004, David Brandon, the CEO of Domino's Pizza,
declared: "From our perspective, raising the minimum wage is a job
killer." Last week, Jason Riley, a Wall Street Journal editorial writer,
called the minimum wage a "proven job killer" on the newspaper's cable
talk show.


Following Obama's State of the Union address, business
representatives and conservative media pundits echoed the same talking
points. Analyzing Obama's speech for Fox News, Nina Easton, an editor
for Fortune magazine, repeated the claim that increasing the minimum
wage is a "job killer." Michael Saltsman, research director at the
business-backed Employment Policies Institute, told Fox Business News
that "minimum wage hikes lead to job losses." Bill Herrle, executive
director of the National Federation of Independent Business' Florida
affiliate, told Sunshine State News that Obama's plan was a "job
killer."


But such dire predictions have never materialized. That's because they're bogus. In fact, raising the minimum wage is good
for business and the overall economy. Why? Because when poor workers
have more money to spend, they spend it, almost entirely in the local
community on basic necessities like housing, food, clothing and
transportation. When consumer demand grows, businesses thrive, earn more
profits, and create more jobs. Economists call this the "multiplier
effect." According to Doug Hall of the Economic Policy Institute, a
minimum wage hike to $9 would pump $21 billion into the economy.
Moreover, since most minimum wage jobs are in "sticky" (immobile)
industries - such as restaurants, hotels, hospitals and nursing homes
and retail stores - that can't flee overseas, raising the level doesn't
lead to job flight. Not surprisingly, the National Restaurant
Association is, along with the US Chamber of Commerce, one of the
fiercest opponents of a minimum wage hike.


In recent years, the nation's job growth has been concentrated in
low-wage sectors, led by Walmart, the nation's largest private employer,
whose pay levels are so low that many employees are eligible for food
stamps. So if raising the minimum wage is good for the economy, why are
most business lobby groups working so hard to kill the idea? Consider
Walmart. The country's biggest private employer, which pays
poverty-level wages, doesn't want to raise pay for its own workers, so
that the Walton family and other big stockholders can earn huge profits.
But Walmart would like all other employers to boost wages, so
they'll spend it at Walmart stores, which would significantly increase
the chain's sales and profits, more than offsetting any wage increase
for its own employees. But most businesses tend to be narrow and
short-sighted, and object when government requires them to act more
responsibly, so they and their lobby groups consistently oppose any
increase in local, state and federal minimum wages.


Indeed, the "Walmartization" of our economy has been devastating. In
recent years, the nation's job growth has been concentrated in low-wage
sectors. More than one-quarter of all jobs pay poverty-level wages.
According to a National Employment Law Project
study, the majority of new jobs created since 2010 pay just $13.83 an
hour or less. This has contributed to the nation's widening economic
inequality. Nobel laureate economist Joseph Stiglitz recently said,
"Increasing inequality means a weaker economy" for all of us.


Meanwhile, of course, the incomes of the wealthiest Americans -
including the corporate CEOs who lobby against raising the minimum wage -
have skyrocketed. Since 1993, the incomes of the richest 1 percent of
Americans increased by 57.5 percent, while the incomes of the bottom 99
percent increased by only 5.8 percent, according to studies
by economist Emmanuel Saez at the University of California at Berkeley.
Since 2009, as the country was emerging from the recession, the
wealthiest one percent saw their incomes grow by 11.2 percent while the
rest of Americans watched their incomes shrink by 0.4 percent. In other
words, the richest 1 percent - those with incomes over $600,000 -
captured almost all of the income gains in the first two years of the
recovery.


The last time Congress raised the federal minimum wage was in 2007,
when President George W. Bush reluctantly signed the bill passed by the
Democratic Congress to raise the federal minimum wage from $5.15 an hour
(where it had stood for ten years) to $7.25 an hour (phased in over
several years). It has remained at $7.25 since 2009. A full-time worker
who earns the current minimum wage makes only $15,080 a year. According
to "Out of Reach," a
report sponsored by the National Low-Income Housing Coalition, in no
state can an individual working full time at the minimum wage afford an
apartment for his or her family.


In fact, the minimum wage has fallen in value because Congress hasn't
raised it to keep up with inflation. At its peak in 1968, the minimum
wage was equal to about $10.50 an hour in today's dollars. That's a 25
percent decline in buying power.


Frustrated by Congress' intransigence, a growing number of states
have made an end run around Washington. Nineteen states now have minimum
wages over $7.25 an hour. The highest is in Washington State, where the
minimum wage is $9.19 an hour.


Cities, too, have enacted laws raising pay for low-wage workers. In
2003, Santa Fe, New Mexico adopted a citywide $8.50 an hour living-wage
law with regular cost-of-living increases. The rate now is $10.29 an
hour. At the time, Sam Goldenberg, a business leader, predicted that the
law "would be a disaster for the businesses in Santa Fe." And
restaurateur Al Lucero called the plan economically irresponsible and
argued that "people will be so content with $8.50 or $10.50 an hour that
they'll have no desire to improve themselves."


Nearly 10 years later, Santa Fe has one of the lowest unemployment
rates in the state at 5.1 percent. Jeff Mitchell, a senior research
scientist at the University of New Mexico's Bureau of Business and
Economic Research, found "no evidence of adverse effects" from the wage
hike. Santa Fe's tourism industry is doing fine. Travel + Leisure
magazine last year listed Santa Fe in its top 10 US and Canadian travel
destinations for the 11th consecutive year.


In 2003, San Francisco voters also adopted a citywide minimum-wage
law. The Golden Gate Restaurant Association called it a job killer that
would "bankrupt many restaurants." The Association of Realtors said that
many hospitality industry workers were "likely to receive pink slips
and join the ranks of the unemployed."


Wrong again. A 2007 study by University of California economists
found that after San Francisco's minimum wage went up, restaurant growth
was higher in the city than in neighboring East Bay cities. In December
2012, the city's unemployment rate was 6.5 percent, well below the
statewide average, and job growth in bars and restaurants has led the
region's post-recession recovery.


In November, voters in Albuquerque and San Jose passed ballot
measures that will raise the minimum wage for workers in those cities.
Albuquerque's citywide minimum wage rose from $7.50 to $8.50 per hour
last month and will automatically adjust in future years with inflation.
In San Jose, the minimum wage will increase from $8 per hour - the
current minimum wage in California - to $10 per hour starting next month
and will adjust automatically in future years to keep pace with the
rising cost of living.


Since 1994, about 200 cities have passed "living wage laws" that set
minimums for workers for private companies that have municipal
contracts, get local tax breaks or rely on city facilities. In November,
for example, voters in Long Beach, California passed a ballot measure
that raises the minimum wage for hotel workers in that tourist city to
$13 per hour and guarantees hotel workers five paid sick days per year. A
recent study by William Lester of the University of North Carolina and
Ken Jacobs of the University of California-Berkeley found no difference
in employment levels between comparable cities with and without living
wage laws. They disproved the claim by that these laws drive away
business or lead to reduced employment.


Most Americans agree that workers who toil full time shouldn't be
stuck in poverty. According to a national poll conducted last year,
almost three-quarters (73 percent) of Americans support increasing the
minimum wage to $10 per hour and indexing it to inflation. The same poll
showed 50 percent of Republicans and 74 percent of Independents
favoring an increase in the minimum wage. Majorities of every major
religious group support raising the minimum wage to $10. Sen. Tom Harkin
(D-Iowa) and Rep. George Miller (D-California) have been working on a
proposal to raise the minimum wage to $10.10 indexed to inflation.


.


In his State of the Union address, Obama proposed to gradually raise
the minimum wage so that it hits $9 an hour in 2015. "Let's declare that
in the wealthiest nation on earth, no one who works full time should
have to live in poverty," he said. In fact, a full-time employee earning
$9 an hour would make about $18,720 a year, slightly below the official
poverty level of $19,530 for a family of three. Under Obama's plan, at
least 15 million workers would directly benefit from a higher minimum
wage. Millions more would get pay raises as the entire wage scale moves
up.


Corporate America and Congressional Republicans are particularly
upset that Obama's plan includes a cost-of-living adjustment, which
would automatically increase the minimum wage each year to adjust for
inflation. Most businesses don't like the idea of having to give
employees regular pay hikes. And the Republicans hate the idea because
it would eliminate their ability to keep the wage flat by refusing to
raise it legislatively. Ten states - Arizona, Colorado, Florida,
Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Wisconsin - include
a cost-of-living adjustment in their minimum wage laws. Since 1975,
Social Security has had an automatic cost of living adjustment for
benefit levels.


Although the evidence supports the advocates of a higher minimum
wage, the battle to raise the federal minimum wage won't be easy,
because business lobby groups have put enormous pressure on members of
Congress to resist this common sense policy. In addition to pouring big
bucks into campaign contributions and lobbying, they've also paid huge
sums to conservative economists and business-sponsored think tanks like
the American Enterprise Institute to come up with misleading arguments
about why giving Americans a raise is a bad idea. They generally argue
that a minimum wage increase will particularly hurt small businesses - a
view that the media often repeat with misleading anecdotes.


For example, the day after Obama's State of the Union speech, NPR
interview a California restaurant owner (who now pays workers the
state's $8 per hour minimum) who claimed that he'd have to lay off
employees or cut back their hours if Congress raised the federal minimum
wage to $9. But while this may be true of a handful of small
businesses, the overall impact of lifting the minimum wage is good for
business. Restaurants may have to slightly increase their payroll
expenses, but they'll benefit when customers have more money to spend,
thanks to a minimum wage increase.


Indeed, contrary to business rhetoric, studies reveal that that
higher minimum wage levels do not force employers to lay off workers. In
a study published in the Review of Economics and Statistics, economists
Arin Dube, William Lester and Michael Reich compared counties adjacent
to state borders, where one state raised the minimum wage and another
did not, between 1990 and 2006. They found conclusively that raising the
minimum wage had no impact on employment. A similar study by Alan
Krueger - now the head of the Council of Economic Advisers - came to the
same conclusion. The Obama White House also noted that Costco, the
retail discount chain, Stride Rite, a children's shoe chain, and other
firms have supported increasing the minimum wage, saying it reduces
employee turnover and improves workers' productivity.


These positive arguments won't stop business lobby groups and
Republican leaders from trying to block President Obama's modest
proposal. Speaker Boehner, who opposed the last minimum wage boost in
2006 when the Democrats controlled the House, said this week, "When you
raise the price of employment, guess what? You get less of it.... Why
would we want to make it harder to small employers to hire people?" Sen.
Marco Rubio of Florida, who delivered the Republicans' response to
Obama's State of the Union address, said "I don't think a minimum-wage
law works," on "CBS This Morning."


But if democracy is about translating public opinion into public
policy, Americans are overdue for a raise. Increasing the minimum wage
to $9 an hour and tying it to the cost of living will not, on its own,
lift the country out of its economic doldrums. But it will definitely
lift millions of Americans out of poverty, stimulate the economy, and
create new jobs. It is the right thing to do both morally and
economically.

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Anyone that owns his own business can come talk to me. This shit will close a lot of businesses down. Who the fuck is Obama to tell me to pay someone more? These guys live off of tips. Now on top of that I gotta

pay them $9.38 an hour here in MN. That is fucking insane. Why go to college anymore? You can drop out of high school and make fucking $25 bucks an hour.

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Anyone that owns his own business can come talk to me. This shit will close a lot of businesses down. Who the fuck is Obama to tell me to pay someone more? These guys live off of tips. Now on top of that I gotta

pay them $9.38 an hour here in MN. That is fucking insane. Why go to college anymore? You can drop out of high school and make fucking $25 bucks an hour.

 

You should tell us how this really makes you feel

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