Minimum WageTo Market Fundamentalists, Market Triumphalists, Republicans and Libertarians of all stripes the minimum wage is near the top of their list of enemies. Higher prices, higher unemployment, and armies of young workers (only young workers earn Min Wage, so they would tell you) will wonder the streets aimlessly, broken and bored as employment tanks and businesses shutter by the dozens. The flapping shutters of a row of dozens of closes businesses will greet us as we walk down the now destitute and broken down streets ruined by “big” government. Is this story true? Absolutely not. All emerging data points to just the opposite. Lower turnover, increased demand, and high productivity result in higher employment and better service. Raising the Minimum Wage is the right thing to do.
Had the minimum wage retained the value it had in 1968, it would be $10.86 an hour. And, of course, by 2014 the nation’s economy was far larger than it was then, and far more productive.
We had high min wage and no problem paying it before. Republicans are just pissed. Change is scary. But now of this is unprecedented. We have simply never seen the job growth associated with these lower min wages. Just more money, and spending, by the rich.
The mythology that a minimum-wage increase (or, in real terms, restoring it to its 1968 level) would cause employers to reduce employment is a common trope. A corollary is that getting rid of the minimum wage altogether and allowing employers to pay what employees are “worth” will reduce or even eliminate unemployment. As former congresswoman Michele Bachmann once put it, if the minimum wage were repealed “we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level.” Theoretically, Bachmann is correct. But her point is irrelevant. It is no great feat for an economy to create a large number of very-low-wage jobs. Slavery, after all, was a full-employment system.
Yes, you can employ everyone. You can hire 200 people at a penny a day to clean and landscape your home. But anyone too stupid to see this misses the point is too stupid to understand anyway.
In addition, and significantly, the gains from a higher minimum wage extend well beyond those who receive it directly. More money in the pockets of low-wage workers means more sales in the places where they live, which in turn creates faster growth and more jobs. Research by Arindrajit Dube, T. William Lester, and Michael Reich confirms this. They examined employment in several hundred pairs of adjacent counties lying on opposite sides of state borders, each with different minimum wages (one at the federal minimum, the other at a higher minimum enacted by a state) and found no statistically significant increase in unemployment in the higher-minimum-wage counties, even after four years. (Other researchers who found contrary results failed to control for counties where unemployment was already growing before the minimum wage had been increased.) Dube, Lester, and Reich also found that employee turnover was lower where the minimum wage was higher, presumably saving employers money on recruiting and training new workers.
Fundamental min wage argument. Memorize it. He even has the potential rebuttal to the argument and research covered.
Most workers earning the minimum wage are no longer teenagers seeking additional spending money. According to the Bureau of Labor Statistics, the median age of fast-food workers in 2014 was twenty-eight, and the median age of women in those jobs, who constituted two-thirds of such workers, was thirty-two. The median age of workers in big-box retail establishments was over thirty. More than a quarter of them have children. These workers are typically major breadwinners for their families, accounting for at least half their family’s earnings.
Whatever wage gains these workers receive are rarely passed on to consumers in the form of higher prices. That is because big-box retailers and fast-food chains compete intensely for customers and have no choice but to keep their prices low. It is notable, for example, that in Denmark, where McDonald’s workers over the age of eighteen earn the equivalent of twenty dollars an hour, Big Macs cost only thirty-five cents more than they do in the United States. Any wage gains low-paid workers receive will more than likely come out of profits—which, in turn, will slightly reduce returns to shareholders and the compensation packages of top executives. I do not find this especially troubling. According to the National Employment Law Project, most low-wage workers are employed by large corporations that, by 2013, were enjoying healthy profits. Three-quarters of these employers (the fifty biggest employers of low-wage workers) were generating higher profits than they did before the recession. Between 2000 and 2013, the compensation of the CEOs of fast-food companies quadrupled, in constant dollars, to an average of $24 million a year. Walmart, too, pays its executives handsomely. In 2012, Walmart’s CEO received $20.7 million. Not incidentally, the wealth of the Walton family—which still owns the lion’s share of Walmart stock—by then exceeded the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.
Contrary to claims that such a boost might have a negative impact on overall employment—principally by raising labor costs for employers—evidence from sixty-four separate studies suggests the impact of minimum wage hikes on employment and unemployment levels is negligible at best, and certainly offset by the boost in income to those who are dependent on such wages for survival.137 In fact, the most recent evidence clearly debunks the notion that higher minimum wages destroy jobs. At the beginning of 2014, thirteen states increased their minimum wages, four because of new legislation and nine others because their minimums are pegged to the inflation rate automatically. After evaluating the impact of minimum wage increases in these states, economists found that states where the minimum wage went up actually had faster employment growth than states where it did not.
Perhaps the strongest rebuttal to the claim that a hike in minimum wage will harm the economy comes from Seattle. The city, which will be phasing in a $15-per-hour minimum wage over the next several years—and has been pilloried in the business press as signing its economic death warrant for doing so—already had a much higher minimum wage than the national average, even before the recent hike. But had that fact harmed the city? Hardly. As billionaire investor Nick Hanauer—an admitted and proud member of the nation’s one percent—explained it to his fellow plutocrats recently: Most of you probably think that the $15 minimum wage in Seattle is an insane departure from rational policy that puts our economy at great risk. But in Seattle, our current minimum wage of $9.32 is already nearly 30 percent higher than the federal minimum wage. And has it ruined our economy yet? Well, trickle-downers, look at the data here: The two cities in the nation with the highest rate of job growth by small businesses are San Francisco and Seattle. Guess which cities have the highest minimum wage? San Francisco and Seattle. The fastest-growing big city in America? Seattle. Fifteen dollars isn’t a risky untried policy for us. It’s doubling down on the strategy that’s already allowing our city to kick your city’s ass.
Hanauer then went on to explain the economic logic behind a higher, rather than lower and stagnant minimum wage. Putting it in terms that even the most jaded of corporate executives should be able to comprehend, he notes: If a worker earns $7.25 an hour, which is now the national minimum wage, what proportion of that person’s income do you think ends up in the cash registers of local small businesses? Hardly any. That person is paying rent, ideally going out to get subsistence groceries at Safeway, and, if really lucky, has a bus pass. But she’s not going out to eat at restaurants. Not browsing for new clothes. . . . Please stop insisting that if we pay low-wage workers more, unemployment will skyrocket and it will destroy the economy. It’s utter nonsense. The most insidious thing about trickle-down economics isn’t believing that if the rich get richer, it’s good for the economy. It’s believing that if the poor get richer, it’s bad for the economy.
Although conservatives recently latched on to an article in Seattle Magazine, which suggested restaurants were closing their doors because of the wage hike there (and that restaurant owners were “panicked” at the new policy), an investigation by the Seattle Times debunked the claim. Indeed, the very restaurant owners whose decision to close certain Location s had been chalked up by conservatives to the increase in the minimum wage, told the Times exactly the opposite. They support the wage increase and were in the process of opening entirely new Location s or restaurants elsewhere in the city.139 If anything, both logic and experience tell us that policies to reduce inequality by boosting wages at the bottom can be expected to spur job creation and economic growth rather than suppress it.When workers have more they spend more, which in turn allows companies to produce more or provide more services to more people.
Great Link with all major right win lies about the minimum wage debunked in easy to use, dinner party or facebook debate format.
Links of real world examples of right wing lies concerning the minimum wage being debunked.
Purdue University Study demonstrating min wage increase would call for negligible price increases, and also examines Busta’s argument about lower turnover and money saved from training. A claim made before, but unsupported until now.