$15 An Hour Minimum Wage

What does it mean to be an American, and for that matter what is the American dream? It used to be that a person could easily find work, and afford to provide for two or three children, a spouse that stays at home, two cars, a nice home, and a vacation or two every year. Is that dream possible with today’s minimum wage? Many people today say it is harder than it once was financially. It would appear that finding a job is harder, and those that do have jobs put in more hours for less pay. In addition, things like washers, dryers, cars, and especially houses have seen their prices increase drastically. Is it true that the days of a single income family are gone? Will things just continue to become more difficult for the average worker? Seattle Washington is not taking these changes lying down. There is a large movement in city hall, and on the streets to do something about raising the minimum wage. It may sound crazy, but the city council and the mayor are currently proposing a mandatory 15 dollar an hour minimum wage. This paper seeks to explain why this is a great idea, and long overdue. An increase in the minimum wage will help increase the standard of living for millions of Americans, and reduce the reliance on social services such as WIC and Food Stamps for the working poor. Seattle should move quickly to adopt a 15 dollar an hour minimum wage, and have it take effect within a year.

The days of punching in and out at the factory are obsolete, replaced instead with a new industry: the service industry. According to the Office of the US Trade Representative (n.d.) the “service industries account for 68 percent of US GDP and four out of five US jobs”. Therefore the service industry is the bulk of the US economy. This means your typical blue collar factory worker job is gone. As a result fast food companies are not just full of teenagers working summer jobs; according to an article in The New York Times the average age of a fast food worker is now 29 years old (Feuer, 2013).

A 29 year old is not working part time to save up for their first car. A 29 year old is working hard to provide for themselves, and possibly their family. Employees rely on this income, and when this income falls short of paying the bills these workers rely on government assistance to make up the difference.

Federal minimum wage is currently $7.25 and has been for the last 5 years. Take a moment and look historically at what minimum wage once was, and see it has actually been declining. In 1968 minimum wage was $1.60 an hour, and if that amount were adjusted for inflation you would have a value of $9.68 today, (Cooper, 2013).When taking into account inflation, minimum wage is actually shrinking. Furthermore, according to a report by The Economic Policy Institute (EPI), wages in the US have been growing on average at a rate larger then inflation, if the minimum wage were to have grown along that rate it would be $10.65 today, (Cooper, 2013).

Ever hear someone say “we work harder today for less pay then people used to?”. According to the EPI’s report worker production has almost doubled. The EPI suggests that with this increase of worker production, adjusting for inflation since 1968, the minimum wage today should be $18.30 (Cooper, 2013).That is a far cry from the current $7.25 federal minimum wage, or even the current Washington state minimum of $9.32 an hour. See Apendix A for a graphical representation of this data set.

The New York Times states in regards to New York fast food workers, “three in five have received some form of government assistance in the last five years”. Government assistance is paid for by our tax dollars. Political satirist Bill Maher (2013) puts it another way, “…Do you want smaller government with less handouts, or do you want a low minimum wage? Because you cannot have both. If Colonel Sanders isn’t going to pay the lady behind the counter enough to live on, then Uncle Sam has to, and I for one am getting a little tired of helping highly profitable companies pay their workers”. That is the point, summed up completely. A joint study between the University of Illinois and the UC Berkley Labor Center on the effect of public assistance cost with working families, focused on 4 main programs: Medicaid, food stamps, the Earned Income Tax Credit, and Temporary Assistance for Needy Families to fast-food workers and their households. The study concluded “...the cost of these four programs for working families averaged $243 billion per year from 2007-2011.” (Allefretto et al. , 2013) Imagine if our government could free up $243 billion dollars a year. That’s a lot of new roads, and improvements for schools. We the people are having our taxes subsidize the very large company profits.

Some economists argue against any increase in the minimum wage, such as James Dorn, stating “ …when the price of anything, including labor, goes up, the quantity demanded goes down, other things constant” (2014).Other economists make the argument that increasing minimum wage will harm the lowest skilled workers by eliminating their jobs all together. Despite these claims, numerous reports show that there is no change, or in some cases an increase in jobs. In regards to a federal minimum wage increase the EPI report states “Across the phase-in period of the increase, GDP would grow by about $22 billion, resulting in the creation of roughly 85,000 net new jobs over that period” (Copper, 2013).Another report states “…that evidence points to little or no employment response to modest increase in the minimum wage.” (Schmitt, 2013, p.1)

The opinions for and against minimum wage increases may be loud and impassioned, but the numbers are facts, and the facts are in.The facts show a systematic destruction of the American middle class, and the time is right to do something about it, now. The United States is a huge country, and making change is slow and cumbersome, however change on the local level can be made.Groups in support of the increase such as 15 now, socialist alternative, and many others already exsist. These groups are organized, and ready to make change on the local level, that can hopefully translate to a nation wide movement to eliminate the working poor by bringing them up to the great American middle class.

In conclusion companies will not provide a living wage for their workers if they are not forced to. The past several years have shown companies’ profits continue to rise, and CEO compensation increase drastically, while these same companies lobby congress to not increase the minimum wage. According to the fact checking website OpenSecrets, trade groups and lobbyists have spent over $91 million in 2013 alone (Feinberg, R. 2014). The bottom line is that if the employer does not pay the worker a living wage, then tax payers all step in and pay hundreds of billions in taxes. Morally and politically an increase to $15 an hour is the right move for Seattle, and as of June 2nd 2014 the Seattle City Council unanimously approved the bill (Sawant, K. 2014). Though the bill does not immediately increase the minimum wage up to $15 an hour but instead phases increases to reach $15 minimum wage by 2017 for businesses with over 500 employees, and $15 by 2019 for businesses with under 500 employees (Keenan, N.V. 12 May 2014). See Appendix B for a graphical representation of this data set. Not as fast an increase as was argued for, but for a democracy to work effectively, compromises must be made by everyone.

Apendix A:

Real value of the federal minimum wage, 1968-2013 and 2013-2016 under proposed increase to $10.10 by 2016.Compared with its value had it grown at the rate of productivity or average worker wages (2013 dollars).(Cooper, D. Dec 2013 Figure C)

Appedenix B:

(Keenan, N.V. May 2014 Table 2)

References:

Allefretto, S., Doussard, M., Graham-Squire, D., Jacobs, K., Thompson, D., & Thompson, J. (15 Oct, 2013) Fast food, poverty wage: The public cost of low-wage jobs in the fast-food industry. UC Berkeley Center for Labor Research and Education. Retrieved from http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CB0QFjAA&url=http%3A%2F%2Flaborcenter.berkeley.edu%2Fpubliccosts%2Ffast_food_poverty_wages.pdf&ei=RkyeU6SMFoyhogSgl4DQAg&usg=AFQjCNEp3XNWqyFK_eJxsjkE4oj7mEjBiA&sig2=78DmZ8Je_hioV-1ap_1jFw

Cooper, D. (19 Dec 2013). Wages Incomes and Wealth. Economic Policy Institue. Retrieved from http://www.epi.org/publication/raising-federal-minimum-wage-to-1010/

Dorn, J. (22 Jan 2014). Mr. President, Increasing the Minimum Wage Is Wrong Medicine for Ailing Economy. Cato Institute. Retrieved from http://www.cato.org/blog/mr-president-increasing-minimum-wage-wrong-medicine-ailing-economy

Feuer, A. (28 Nov. 2013). Life on $7.25 an hour. Older workers are increasingly entering the fast-food industry. The New York Times, pp. MB1. Retrieved online from http://www.nytimes.com/2013/12/01/nyregion/older-workers-are-increasingly-entering-fast-food-industry.html?_r=0

Feinberg, R. (4 Apr 2014). The money against the minimum wage. Open secrets. Retrieved online from https://www.opensecrets.org/news/2014/04/the-political-money-against-the-min/

Keenan, N. V. (12 May 2014). Table 2. Phase-in tiers for proposed minimum wage. Sound Progress. Retrieved online from http://soundprogress.wordpress.com/2014/05/12/implications-of-mayors-proposal/

Sawant, K. (5 May 2014). Kshamas blog. Seattle.gov [Web log comment]. Retrieved online from http://sawant.seattle.gov/transcript-of-my-speech-on-the-15hour-victory/

Maher, Bill (Oct 25, 2013). New Rules. Real time with Bill Maher. Retrieved online from http://www.youtube.com/watch?v=Bf013ID8lCE WARNING: This video is offensive

Office of the US Trade Representative (n.d.). Services. Retrieved from http://www.ustr.gov/trade-topics/services-investment/services

Schmitt, J. (Feb. 2013). Why Does the Minimum Wage Have No Discernible Effect on Employment? Economic Policy Institute. Retrieved from http://www.cepr.net/documents/publications/min-wage-2013-02.pdf