Will Congress raise the federal minimum wage?
Magic 8 Ball says: Outlook is Good
One of the new Democratic majority's First 100 Hours agenda items is to increase the federal minimum wage, which has been stalled at $5.15 per hour for ten years. They don't say exactly what the proposed increase would be, but Sen. Ted Kennedy proposes a phased increase to $7.25 over a two year period. The Republican controlled Senate last year defeated a similar compromise proposal by Sen. Kennedy that would have increased the minimum wage to $6.25 per hour.
President Bush signaled that he might be able to find "common ground" with Democrats in Congress on increasing the minimum wage. But he and other Republican leaders have also said that an increase should be accompanied by some form of incentives for business to help offset the increased costs. They haven't offered specifics, but have mentioned tax relief for businesses most affected. Democrats have suggested employer tax credits to help pay for increasing health insurance premiums, so perhaps this is something they can use as a bargaining chip.
Big business and conservative economists are naturally opposed to a minimum wage increase, saying it will increase unemployment and create inflationary pressures. But increasing the minimum wage has found some unlikely allies, including Wal-Mart:
Some argue that an increased minimum wage is a state and local issue, and they make a good point:
In Alabama, a survey of economists at state universities showed that more than 60% opposed raising Alabama's minimum wage, citing concerns about increasing unemployment. But at least one economist took a more progressive approach in voicing his opposition:
Overall, it appears that raising the federal minimum wage will have somewhat less-than-enthusiastic bi-partisan support but support nonetheless in the Democrat controlled Congress. It also does not appear that business is prepared to put up much of a fight. This could spell good news for millions of American workers. It won't solve the problem of poverty in America, but it's a step in the right direction. And I approve this message.
One of the new Democratic majority's First 100 Hours agenda items is to increase the federal minimum wage, which has been stalled at $5.15 per hour for ten years. They don't say exactly what the proposed increase would be, but Sen. Ted Kennedy proposes a phased increase to $7.25 over a two year period. The Republican controlled Senate last year defeated a similar compromise proposal by Sen. Kennedy that would have increased the minimum wage to $6.25 per hour.
President Bush signaled that he might be able to find "common ground" with Democrats in Congress on increasing the minimum wage. But he and other Republican leaders have also said that an increase should be accompanied by some form of incentives for business to help offset the increased costs. They haven't offered specifics, but have mentioned tax relief for businesses most affected. Democrats have suggested employer tax credits to help pay for increasing health insurance premiums, so perhaps this is something they can use as a bargaining chip.
Big business and conservative economists are naturally opposed to a minimum wage increase, saying it will increase unemployment and create inflationary pressures. But increasing the minimum wage has found some unlikely allies, including Wal-Mart:
Wal-Mart's core lower-income shoppers could get more disposable income if Democrats push through a raise in the federal minimum wage of five-dollars-and-15 cents an hour.Even the National Federation of Independent Business, an advocacy/lobbying group for small businesses, says:
Seattle-based fund manager Patricia Edwards says even a small increase would mean more cash for lower-income households that could be spent at Wal-Mart.
While businesses tend to oppose an increase in the minimum wage, Darien and McCracken noted that their groups' members tend to pay their employees above the minimum, making that less of an issue for them.In addition to increased buying power among the working poor, another aspect that I have not seen discussed is the increased Social Security and Medicare funding that would result from raising the minimum wage. According to my guesstimates, increasing the minimum wage to $7.15 per hour would inject nearly $3 billion of new annual funding into Social Security and nearly $700 million into Medicare. That's not much given the massive size of these programs, but as they say, a billion here, a billion there, and pretty soon you're talking real money. And it gives low-wage workers a bigger stake and a better head start in preparing for their senior years.
The NFIB opposes an increase in the minimum wage, but Danner noted, "in the past, they've tried to provide some kind of tax help for the small businesses most impacted by an increase. We'll be anxious to work with them on the minimum wage."
Some argue that an increased minimum wage is a state and local issue, and they make a good point:
[B]etter $9.14 an hour in high-income, high-cost San Francisco than in Biloxi. "If Mississippi had the same minimum wage as San Francisco, it probably would cause a lot of unemployment," speculates Eric French, a senior economist specializing in labor and health issues at the Federal Reserve Bank of Chicago.And indeed, many states have taken their own steps, including voters in six states who voted to increase the state minimum wage in last week's elections:
The measures won with support ranging from 76 percent in Missouri to 53 percent in Colorado, where business groups mounted an aggressive opposition campaign. Arizona, Montana, Nevada and Ohio also approved increases, joining 23 other states that already have set their minimum wages above the federal level.There have been recent minimum wage victories in Southern states (Arkansas and North Carolina), but also defeats (Tennessee and Virginia). Alabama, South Carolina, Mississippi, and Louisiana also do not have higher state minimum wages.
The measures were placed on this year's ballots through citizen petition drives led by the AFL-CIO, the anti-poverty coalition ACORN and other liberal groups which faulted the Republican-led Congress for failing to raise the federal minimum wage since 1997.
"We did the job Congress refused to do," said ACORN's president, Maude Hurd. "Millions of families across the country will benefit."
In Alabama, a survey of economists at state universities showed that more than 60% opposed raising Alabama's minimum wage, citing concerns about increasing unemployment. But at least one economist took a more progressive approach in voicing his opposition:
Carl Ferguson, an associate dean for research and technology and a professor of marketing at the University of Alabama Center for Business and Economic Research, said tackling the minimum wage issue, as an economist, is complex.So while the argument that it's a state/local issue is interesting, as we've seen in the past with segregation, environmental regulation, and workplace safety (and those on the right could even argue NCLB), federal action is sometimes needed to encourage states to do the right thing. And states are still free to set a higher minimum wage.
He said for an increase of minimum wage to work, he proposes a ripple-effect system that is composed of investing in the U.S. work force, providing workers with education and giving them job opportunities to succeed in life.
"We have to recognize that, No. 1, there are going to be people who are working in the lowest-level jobs and we have a responsibility to give them gainful employment," Ferguson said. "We have a responsibility to make sure all of our citizens are educated in a way that everyone truly has a chance to achieve their best.
[..]The survey's findings note that 71.4 percent of Alabama economists strongly agreed that raising the minimum wage will result in a decrease in entry-level jobs in Alabama.
Ferguson said if companies are forced to pay workers more money but only have a certain amount of money available for salaries, they would hire fewer people and decrease those entry-level jobs to make up for losses.
[..]"If a reasonable plan is put together it needs to be a comprehensive package to do more to make the worker better qualified and justified to earn a decent wage," Ferguson said.
Overall, it appears that raising the federal minimum wage will have somewhat less-than-enthusiastic bi-partisan support but support nonetheless in the Democrat controlled Congress. It also does not appear that business is prepared to put up much of a fight. This could spell good news for millions of American workers. It won't solve the problem of poverty in America, but it's a step in the right direction. And I approve this message.
8 Comments:
Raising the minimum wage is just a blindside way of keeping the poor man poor. Raising minimum wages raises prices, and usually to the point where those people just above the poverty line are suddenly plunged below it. Only the naive or the wealthy think this type of increase will help the poor. The minimum wage earner will be grateful for this wonderful large paycheck, until he goes to the grocery store and finds the price of bread has come up to match it.
I disagree with you aj staubin. How can raising minimum wage be a blindside way of keeping the poor man poor? People making $5.15 are undoubtly struggling terribly. They can't buy the basic neccesities needed for themselves and thier families. That makes them have to work two and/or three jobs, and still there's not enough money coming in to help suport thier families. Raising minimum wage will undoubtly help people more. And if bread, toilet tissue, etc. goes up, then at least these people will be able to afford it!
If the prices go up, they will be right back where they were. and the people who were just above the poverty line will be dropped bellow it.
Alabama has the lowest property tax of all US states! Minimum wage workers do not own property; therefore they do not pay property tax. Put the puzzle pieces (as slow as it is) together and raising minimum wage will in premise benefit the "poor."
What are the disadvantages to raise minimum wage?
What are the cons?
Increasing minimum wage will in theory create higher work ethics, decrease unemployment rates and instill assurance to future generations our country does care about the ‘everyday worker.’
On another note: Unfortunate occurrences happen; Doctors, lawyers, professionals of all kinds, etc. endure accidents and injuries daily! In the best case scenario, issues above are taken care of well in advance, but it is not always the case.
Well educated people now have to resort to accepting jobs where minimum wage is their only resort.
Shame on you if believing minimum wage should not be increased!
As you were…
Only the naive would think that groceries wouldn't go up. Prices go up on everything for one and not including the price of gas. In South Carolina you have to have a car there aren't buses or cabs to take you. The poor should be able to afford some type of home and live comfortable and raising minimum wage is the best start. Cost of living increases every year why can't there be a raise once in ten years for minimum wage.
Lets take me for example. I work for a very large company for which I have been working for 3 years. I have made my way up to making $10.30 an hr. Which is currently double our minimum wage in the state of Alabama. Lets just say they raise the minimum wage to $9.15. I know I will not then get a raise to $18.30 just because of my hard work and loyalty. I then would be able to quit my job here much easier because I can go somewhere else, maybe closer to home, and only lose $1.00 an hr. I would save that in gas. Does not say much for the hard working who have busted their chops to get where they are today (like me).
Also, if the minimum wage increases, the next thing to increase will be the actual cost of living. Ex: loaf of bread today: $1.20, tomorrow $3.20. This would put people still making minimum wage back in the same position they are in today which they are use to, however I would go broke! Tell me how that is fair or makes any sence???
Prices going up? That doesn't make sense. The only time that prices go up is during inflation. If the government can restrict themselves from printing more money, and just put more of a percentage of the current money into minimum wage, then prices would stay the same.
Someone said earlier that if they are making a certain amount of money after working hard to get to that wage, and then the minimum wage is raised close to what he is making, sure, your pay not go up in the same increment. But the person under you on the totem pole is working just as hard to try to survive, and put food on the table. How status-concerned is America getting that we look at other people and say that they don't deserve to make good money, just because they haven't worked at a place as long? As long as you can afford fuel, food, and you can pay the bills, let the little man make his money, also. He's busting his chops just as hard as you to be able to afford the little things.
If anyone has ever put down sod, dug ditches, or mixed mortar for a brick mason, and earned next to nothing, you know EXACTLY what I'm talking about. That's alot of hard work for 5.15 an hour, isn't it?
I happen to agree, I got my job the same as anyone else, have put in my time and worked my butt off to make above min wage. Now I am going to get told I once again am making no better than the person that is just starting because they raise the minimum wage and aren't going to compensate the rest of us in poor mans land, and in case you haven't ntoice, poverty level in most states covers folks that do make more than 5.15 an hour. I was making about 6 when I started my job and I was still in the bottom of the barrel and even now making more I still can't afford simple things like medical coverage for my family. Cola's should be required in all states and if your going to raise wages for one group you should do it across the board for all.
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