The Minimum Wage: Putting Some Myths to Rest

[one...two...tree 2,762]

With seven strikes of fast food workers in eight weeks, demanding $15/hour and the right to a union, a discussion of raising the minimum wage has begun to stir up the predictable frenzy of pro-market mythology.

As in every previous discussion of raising the minimum wage, it has been asserted that such a move would increase unemployment, be harmful to the most underprivileged workers, bad for small businesses, and indeed, disastrous for the wider economy. In this same narrative, low-wage jobs are stepping stones, and hard work and higher education are reliable paths to middle class employment.

Is any of this true?

Who Are Low-Wage Workers?

Let's start with a useful benchmark of a low-wage job as one that keeps a full-time worker and their family of four at or below the federal poverty threshold - $23,005 per year, or $11.06/hour in 2011.

Contrary to the myths, the working poor are an ever-expanding contingent of America's labor force, while the middle class has been steadily shrinking. Over 25 percent of all workers qualify as low-wage workers.

Lest we think this is an issue only in Tennessee and Alabama, nearly 20 percent of Washington workers qualify as low-wage workers, with an additional 40 percent living within what is known as the supplemental poverty measure.

The road of higher education also increasingly leads nowhere. Low-wage workers are better educated than ever before, with over 26 percent having had some college education. Low-wage workers now carry sizable sums of student debt.

Conditions have deteriorated even more rapidly since the Great Recession began. Low-wage jobs comprised about 35 percent of jobs lost in 2008 and 2009, yet they accounted for 76 percent of net job growth in 2010.

Minimum Wage Already Too High in Washington?

It is true that Washington is currently the only state with a minimum wage above $9.00/hour.

What this demonstrates, however, is not a lavishness of wages here, but rather the abysmal standard of living faced by tens of millions of hardworking people nationwide. A full-time job at Washington’s minimum wage fetches about $18,000, clearly far less than necessary to meet basic expenses.

A more useful benchmark is a living wage. The Alliance for a Just Society defines living-wage jobs for Washington state, assuming full-time hours, as $16.13/hour or $33,544 annually for a single adult. Those figures would rise to $28.71/hour or $59,715 a year for a household of one adult and one child, and $29.42/hour or $61,188 a year for a family of four with one adult working. Keep in mind, many low-wage workers are unable to get full-time employment.

What Would the Fallout of $15/Hour Be?

Much is made of the impact a higher minimum wage would have on small businesses. But what about Starbucks, McDonald's, Subway, Pizza Hut and the vast array of huge corporations whose mega profits rest on the poverty wages of their workforce?

The CEO of YUM! Brands (KFC, Pizza Hut, Taco Bell) made $20.5 million last year. The average worker in one of the stores made $7.50/hour. Restaurant chains spent nearly a million dollars in 2006 to fight minimum-wage increases in six states.

The past several decades have seen worker productivity skyrocket, and wages for most stagnate. Where did the balance go? It went to the top one percent. If minimum wage had kept pace with productivity, it would be approximately $22/hour. If it had grown at the same pace as the income to the one percent, it would be around $33/hour.

Increasing the minimum wage to $15/hour is surely reasonable in the face of the massive siphoning of income to the very top. Should those who work hard every day have to struggle to pay for rent and groceries?

Research does show that a minimum wage increase can initially pose difficulty to some small businesses. However, this can be addressed by increasing taxes on big business (which are at historically low rates) and eliminating corporate welfare to subsidize small businesses, along with cutting B&O and property tax burden on small businesses.

But the main danger facing working people and small businesses is the continued proliferation of low wages. The economy is reeling with over 20 million people unemployed or underemployed, a low-wage workforce, a collapse of the housing bubble, and staggering consumer and student debt. Raising wages is a vital measure to break out of the depressionary spiral.

Statistical studies show a positive impact of wage increases on jobs. When working people have more income, their spending power goes up, which in turn boosts sales, which further increases jobs and overall spending power, and so on.

The idea that raising the wage would harm the most disadvantaged workers is a fig leaf to justify anti-worker policymaking. In fact, increasing the minimum wage raises the bargaining power of all workers, and has the effect of raising wages across the board.

The Great Recession has left in tatters the idea that capitalism works. It works well for the billionaires, but for the rest of us, it has meant fast eroding standards of living. The American middle class was created on the edifice of courage and sacrifice of a mobilized labor movement. Let us support the workers demanding $15/hour. They are a sign of the times.

Kshama Sawant, who has a Ph.D. in economics from NC State University, teaches at Seattle Central Community College

Edited June 7, 2013 by Lincolns mullet

[decocker 7,198]

i don't understand why people who work low paying jobs think they should be able to afford housing, utlities, food and transportation. duh, get a better job.

[I AM NOT THAT GUY 5,715]

The SLOG?

http://slog.thestranger.com/slog/archives/2013/06/04/the-minimum-wage-putting-some-myths-to-rest

Kshama Sawant for Seattle City Council position 2?

http://www.votesawant.org/

[one...two...tree 2,762]

i don't understand why people who work low paying jobs think they should be able to afford housing, utlities, food and transportation. duh, get a better job.

What makes a low paying job? In the OP, the author states...

The past several decades have seen worker productivity skyrocket, and wages for most stagnate. Where did the balance go? It went to the top one percent. If minimum wage had kept pace with productivity, it would be approximately $22/hour. If it had grown at the same pace as the income to the one percent, it would be around $33/hour.

Retail and service industry jobs have the biggest job growth in the past few decades - that's where the jobs are for many, particularly those living in rural areas.

[decocker 7,198]

What makes a low paying job? In the OP, the author states...

The past several decades have seen worker productivity skyrocket, and wages for most stagnate. Where did the balance go? It went to the top one percent. If minimum wage had kept pace with productivity, it would be approximately $22/hour. If it had grown at the same pace as the income to the one percent, it would be around $33/hour.

Retail and service industry jobs have the biggest job growth in the past few decades - that's where the jobs are for many, particularly those living in rural areas.

if you qualify for assistance and work full time and still can't make ends meet - you've got yourself a low paying job.

[I AM NOT THAT GUY 5,715]

Labor costs are on of the primary factors that contribute to inflation. Believe it or not, the Fed's policies to clamp down on inflation are why wages have remained stagnant in this country, unless of course, you work for the government sector.

[I AM NOT THAT GUY 5,715]

if you qualify for assistance and work full time and still can't make ends meet - you've got yourself a low paying job.

Government has been lowering the threshold for many government freebies, in order to assist the working poor and allow them a transition period to finally get off of government assistance. Why are liberals so heartless?

[one...two...tree 2,762]

Labor costs are on of the primary factors that contribute to inflation. Believe it or not, the Fed's policies to clamp down on inflation are why wages have remained stagnant in this country, unless of course, you work for the government sector.

But they haven't remained stagnant across the board. Only lower income wages have lagged.

http://money.cnn.com/2013/02/13/news/economy/minimum-wage-countries/index.html

[decocker 7,198]

Government has been lowering the threshold for many government freebies, in order to assist the working poor and allow them a transition period to finally get off of government assistance. Why are liberals so heartless?

in my personal experience, i have not found this to be true.

[one...two...tree 2,762]

if you qualify for assistance and work full time and still can't make ends meet - you've got yourself a low paying job.

Labor organizations have been arguing that this is the wrong kind of business model. Walmart employees, for example, rely heavily on government assistance and subsidies in order to survive. So basically, Walmart's business is being subsidized because its labor force is not paid a high enough wage to live on. How is that sustainable over time?

[I AM NOT THAT GUY 5,715]

in my personal experience, i have not found this to be true.

People are smarter than the government. Folks at the bottom of the wage scale know exactly how much they can make and how long they can work, so as not to lose the assistance. The type of work they look for, is the kind of work that is temporary in nature, so that when they get laid off, they can go back to collecting unemployment.

Labor organizations have been arguing that this is the wrong kind of business model. Walmart employees, for example, rely heavily on government assistance and subsidies in order to survive. So basically, Walmart's business is being subsidized because its labor force is not paid a high enough wage to live on. How is that sustainable over time?

You are making a false dichotomy. The government created and sustains that system.

[decocker 7,198]

People are smarter than the government. Folks at the bottom of the wage scale know exactly how much they can make and how long they can work, so as not to lose the assistance. The type of work they look for, is the kind of work that is temporary in nature, so that when they get laid off, they can go back to collecting unemployment.

again, not in my experience.

[I AM NOT THAT GUY 5,715]

again, not in my experience.

Maybe you hang out with a better class of working poor.

[decocker 7,198]

Maybe you hang out with a better class of working poor.

i think i must..i don't know anyone who's been on unemployment. i'm speaking strictly foodstamps/medicaid..

[SMR 368]

i don't understand why people who work low paying jobs think they should be able to afford housing, utlities, food and transportation. duh, get a better job.

I take it you were being sarcastic, but you're right.

The basic assumption of the article is to define low wage jobs as those which don't allow a single wage earner to keep a family of 4 above the poverty line. Yet there is no data supplied which even indicates how many of these "low wage earners" are the single breadwinners in a family of 4. Some of them are certainly teenagers and college students. Others are single adults. Many are in families with multiple wage earners. It's like defining undersized wood as that which won't hold up a house and then lamenting the amount of undersized wood being used. Without data about how much of that undersized wood is holding up houses rather than being used in banisters, the whole premise is a veritable stretch.

For those that are actually trying to support a family of four by asking if you want fries with that, yes you're stupid. I'm not sure whether the primary evidence that you are stupid is that you can't get a better job or that you actually think that working at McDonald's is a viable job, but either of those should be sufficient evidence.