Monday, July 01, 2013

The Least Of These

(Editorial cartoon by Joel Pett / Lexington Herald-Leader (June 3, 2013) and featured at McClatchy DC.)

I missed an important anniversary last week.  Fortunately, Michael Hiltzig didn't:

Let us now praise one of the many legacies that prove that, in addressing its citizens' economic dignity, the America of the Thirties was smarter and more humane than the America of today.

The example at hand is the minimum wage law.

The federal minimum wage celebrated its 75th birthday last week. The wage was enacted as part of the federal Fair Labor Standards Act, which arrived in 1938 just as the New Deal was running out of steam. The landmark measure banned child labor, set the maximum workweek at 44 hours, and imposed a minimum wage of 25 cents an hour. ...

Does $9 or $10 sound high? Consider that if the minimum wage had merely kept pace with worker productivity gains since 1968, it would be more than $16.50 today. One way or the other, the minimum wage isn't what it used to be. In inflation-adjusted buying power, it peaked in 1968, when the nominal rate was $1.60. That's the equivalent of $10.70 in today's dollars. Since then, it's been on an erratic path downward. The federal rate hasn't been increased since 2009. ...

Who's leading the charge against a minimum wage increase today? The restaurant industry, which includes such fast-food mega-companies as McDonald's and Yum Brands (owner of KFC, Taco Bell and Pizza Hut), both of which are earning higher profits now than before the recession.

The most common objection to a higher minimum wage always has been that it leads to lower employment. This is one of those "everybody knows" talking points, and it does have a strong intuitive appeal. Stands to reason, doesn't it? Require business owners to spend more on each employee, and of course they're going to spread it among fewer people.

As it happens, the employment effect of the minimum wage is "one of the most studied topics in all of economics," observes economist John Schmitt. So it's curious that, despite decades of searching, economists have failed to document consistently any such phenomenon. ...

What's undeniable is that the minimum wage improves the lives of those who earn it, reducing poverty and narrowing pay inequality. That doesn't seem to be reason enough for conservatives to get behind it. To hear them talk, giving workers a $1.25 hourly raise would break the nation, although we've managed to muddle through a three-decade period in which average CEO compensation rose 725%. Perhaps it's limiting the increase in the average wage-earner pay to only 5.7% in that time that kept America from sinking beneath the waves.   [Emphasis added]

As Hiltzig points out in the rest of his column, raising the minimum wage would put more money in consumers' pockets, which means they would put more money into the economy and into the tax coffers, things our owners and the 1% have assiduously avoided, which is why our economy is still struggling.

I noted that I had missed this anniversary.  Apparently so did our president and our congress critters.  Maybe we should point this out and urge a bill get passed and signed into law to raise the minimum wage by at least $1.25.

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