GRASSROOTS/Hank Kalet

Minimum Wage Should Be a Living Wage

The nation’s lowest-income workers deserve a raise. As the national Raise the Minimum Wage campaign points out, a full-time worker earning the federal minimum wage for a full year earns just $15,080 a year – which is not enough to afford a two-bedroom apartment anywhere in the country.

And at $7.25 an hour, it is worth about $3 less, when adjusted for inflation, than the wage was worth 45 years ago.

For these workers, good news may be on the horizon. A half-dozen states are considering increasing their wage, including New Jersey, which has a dollar wage hike on the ballot in November, an the president is proposing a phased-in increase that would take full effect in 2015. Many of these increases, including the proposed federal increase to $9 an hour, include an escalator clause that would bump the minimum up annually based on Consumer Price Index.

Yet the proposed wage hikes seem a bit paltry when you look at the numbers. Had the 1966 minimum wage kept pace with inflation it would clock in at about $10.50 an hour, which translates to annual earnings of $21,800 for a year. If the wage earner is a single mother with three children, she would fall below the federal poverty line of $22,050 per year (2011 figure).

To meet the self-sufficiency standard – what the Center for Women’s Welfare in Seattle describes as the income needed to meet basic needs without public subsidies or other assistance – that same family of four in New Jersey would needs to earn between $50,000 and $90,000 a year – depending on specific family characteristics and location.

In Nebraska, the figure is between about $32,000 and $55,000 and it varies from state to state. What is clear, however, and what does not vary from state to state is that the wage floor we’ve set is inadequate. If our goal is to make work pay enough to keep people off public assistance, to make them self-sufficient, we need a more robust wage than we have been prepared to pay.

The business community and their conservative supporters, like the Chamber of Commerce and the Employment Policy Institute, are not going to like it. But they’ve never liked minimum wages – or any regulatory imposition on what they view as their prerogative to earn as much as they can without sharing – and their arguments just do not stand up to scrutiny.

Wage hikes, they say, will kill jobs. The evidence, however, just doesn’t support this. At best, for them, it’s inconclusive; at worst, for the anti-wagers, there are indications that a higher minimum wage will generate new economic activity and could create jobs and create a more stable work environment.

Consider a forthcoming report from the Center for Economic Policy Research. The report, due in March, “finds that modest increases in the minimum wage … have little impact on employment, due to adjustments by employers and workers,” according to a press release.

“This is one of the most studied topics in economics, and the evidence is clear: modest minimum wage increases don’t have much impact on employment,” said the report’s author John Schmitt. “An increase to $9 per hour would be hugely important for the workers getting it, but the idea that this would lead to less employment is just not supported by the evidence.”

Dean Baker and Will Kimball, in a blog post for the CEPR web site, point out that Obama’s $9 proposal would barely recapture the lost purchasing power of the wage – but only if it were enacted in its entirety today and not phased in over three years. Doing so certainly would be positive for low-wage workers – any raise would be good – but it just is not enough.

“(I)t is worth asking a slightly different question,” they say. “Suppose the minimum wage had kept in step with productivity growth over the last 44 years. In other words, rather than just keeping purchasing power constant at the 1969 level, suppose that our lowest paid workers shared evenly in the economic growth over the intervening years.”

That would put the wage at $16.54 in 2012 dollars – still well below the sustainability level, but enough to make low-wage workers less dependent on government and private assistance.

The question of whether to raise the wage is about more than economics. It is about morality. Can we as a society continue to pretend that we can pay men and women poverty wages for doing work that we believe necessary to the functioning of our economy? I think you can tell what my answer is.

Hank Kalet is a poet and journalist in central New Jersey. He covers economics for NJ Spotlight and teaches news writing at Rutgers University and writing at Middlesex County College. Email grassroots@comcast.net.

From The Progressive Populist, March 15, 2013