Raising the minimum wage: The right thing to do, the smart thing to do

by Secretary Tom Perez on July 23, 2013 · 14 comments

To create opportunity for American workers, we must ensure that they can earn enough to support a family and afford life’s very basics. Tomorrow, it will be exactly four years since our low-wage workers last saw a raise. Now more than ever, we must renew the call to increase the minimum wage.

If you work full time in the wealthiest nation on earth, you shouldn’t live in poverty. You shouldn’t have to lay awake at night worried about how you’re going to pay the utility bill, or what you’ll do if the car breaks down, or whether you can put dinner on the table the next day.

Minimum wage infographic

Join the conversation on Twitter and Facebook using the hashtag #MWraise.

President Obama has proposed raising the federal minimum wage from $7.25 to $9 per hour. Since the last increase, its value has eroded 7.3 percent due to the rising cost of living, so the president also wants to index the minimum wage to inflation beginning in 2015. Why shouldn’t workers’ take-home pay keep up with the price of a gallon of milk or a pair of children’s shoes?

The president’s minimum wage increase is part of his vision of an economy where opportunity is available to everyone; where we all get a fair shake; where the middle class is within reach no matter who you are or where you come from.

There is a lot of sky-is-falling rhetoric suggesting that a higher minimum wage will be a catastrophic job-killer. But we’ve seen this movie before. This argument rears its ugly head every time an increase is on the table. The minimum wage has increased in 22 steps since the 1930s, thanks to strong bipartisan support. Not once did it send the nation into an economic death spiral.

Quite the contrary. A higher minimum wage boosts consumer demand, the engine that powers our economy during a recovery like this. Study after study from credible economists demonstrate that raising the minimum wage has no negative effect on employment and may be good for business as it leads to a more stable workforce with less turnover, lower training costs and higher productivity.

The minimum wage numbers tell a compelling story, as the above graphic illustrates:

  • 4 years exactly since the last minimum wage increase took effect
  • 6 years since Congress last acted on the issue
  • 15 million workers would benefit from the president’s proposal
  • 1968: the year of the minimum wage’s peak buying power before a 45-year decline
  • 67 percent of small businesses support a minimum wage increase

But behind the numbers are stories of real people, their struggle and sacrifice – a father working in the grueling heat as an airport baggage handler, a grandmother doing back-breaking work cleaning offices at night. They’re working hard and taking responsibility. They’re not looking for handouts or special favors. They just want a fair day’s pay for a fair day’s work.

It is time to increase the minimum wage. As a matter of social justice, it’s the right thing to do; as a matter of economic common sense, it’s the smart thing to do.

 

{ 14 comments… read them below or add one }

1 renee schultze July 24, 2013 at 1:58 pm

I think that the peoplein political office should take a pay cut rather than giving us a pay raise. Because where is this raise to minimum raise going to come from.

2 J Learmonth July 24, 2013 at 2:21 pm

I wholeheartedly disagree. When you increase the minimum wage you are also deminishing the value of my education because I will not be afforded the same increase. I have student loans and work extremely hard to make ends meet and yet in the past six years, as a state employee, I have not received any cost-of-living raises.
And, what about the individuals who have worked really hard and have ended up at $9/hr? They won’t receive any increase however someone off the street will automatically make what they are making-including high school students who have no economic reason to be considered.
As for the buying power of the minimum wage amount – ALL of our buying power has been reduced-from the highest to the lowest levels.
This is not social justice and it does not make economic sense-as an accountant I have seen employers reduce their staff size to compensate for the added wage burdens. Unemployement will rise again which will place a burden on our social programs and ultimately increasing the working-man’s tax burden.
My suggestion: Stop the emergency unemployment and get the individuals, who are comfortable on unemployement, back into the workforce. When they start working they will help stimulate the economy as well as pay into our tax system. Once the economy has rebounded then discuss the increase of minimum wage but it should be designed in a three-tiered program: individuals who are claimed on their parent’s tax returns would receive a reduced minimum rate, ‘working-class’ adults would receive a new minimum rate ($9), and any workers (making under 75,000/yr) who have remained employed by the same employer for two years or longer would received a minimum increase in their pay equalivent to $1.75/hr.

3 Alicia Love July 24, 2013 at 2:46 pm

Great idea. It’s the right time to do the right thing for Americans!

4 darrel pantalone July 24, 2013 at 3:35 pm

Rasing min. wage good idea, except its a zero sum action as the increased cost for payroll is passed on to the consumer. No real gain in purchasing power. Nice idea however.

5 AnnMarie Pacheco July 24, 2013 at 4:32 pm

This is long over due for such a large number of our work force, struggling to make ends meet

6 Edgar Lindo July 24, 2013 at 8:47 pm

This is great..

But living standards keep also falling because of the money bleeding from trade deficit and outsourcing….. regardless of how well the American worker is treated, the living standards will only go down if there isn’t a high GDP with a balance trade..

Also, if a foreign worker comes to America increasing the workforce and willing to work for less, then this will also create inequality and lower wages within a community.

Much Regards..

7 Gloria Martinez July 25, 2013 at 1:30 pm

Help we are really struggling and need help with our hourly wage!!

8 Heather O July 26, 2013 at 4:19 pm

How about making sure that everyone is included in the minimum wage (whether the one we have or an increased one)? I was recently appalled by the revelation that people with disabilities can be paid only pennies an hour so that “nonprofits” can continue paying their top leaders millions each year. Please help us even out opportunity and fair wages for everyone.

9 Michael October 30, 2013 at 12:24 am

I agree with every one on site. Each one have great points. The state employee had a really nice point. Should be adjusted not flat rate reward people on job more money. Enstills work ethic and goal setting. Non profitt worker quit working for non profit most are con artist. JOIN LOCAL Chruch if not scamers more reward any way and going not be paid but reward equally greater. I my self no raise three years work for Medicare Csr CAUSE I work for fedreal contractor thats how get out of raise blame it on area wage cost living in rual Ky Dol supposeling and my company made 28 million first quater alone just Medicare contract only not to metion the other contracts the have. It will always be like that unless you in a Union a strong one like UMWA

10 Brian C November 14, 2013 at 8:11 pm

Raising the national minimum wage is an idea I can generally agree with, and I think that fixing the minimum wage to the rate of inflation is a reasonable proposal as well. However, this reform needs to be done intelligently. The answer is not to raise the wage by two dollars all at once. Doing so would place a sudden strain on employers and we would most likely immediately see most of the increase passed on to consumers. Rather, I think it would be wiser to raise the minimum wage incrementally over a period of time, factoring in a percentage of the current disparity with the rate of inflation with each increase. This would allow a gradual transition for employers and, if given the chance to modify their operations incrementally, would at least minimize the percentage of the increase that was passed on to consumer.

11 Tyrone December 28, 2013 at 10:20 am

Two words: Thomas Sowell. Look him up. He is a brilliant black economist who sees through this BS. I would like links to these studies that show that raising minimum wage has no ill effects. Where does the money come from to pay the workers more? Either employers raise prices or cut hours/lay off workers. It will not come from profits of corporations. Both are negative effects. The argument that raising the minimum wage has no ill effects is fundamentally flawed, if raising it only has positive effects why not raise it to $50/hr?As a black man I am disgusted by the liberal propaganda and the Obama administration. The liberals have done what slavery could not do: enslave the black man and destroy the black family. Providing incentives for black women to have multiple children outside of wedlock to reap maximum government benefits and raising the minimum wage to prevent blacks from getting jobs and learning basic job skills.

When minimum wage goes up people who have no job skills cannot find a job. Say a local business is willing to pay me $5 an hour to stock his shelves and clean up. I get the job, learn responsibility, working with others, how to show up on time, and start learning how to manage my money. I am willing to work for this as a young person entering the workforce, and that is what he is willing to pay me. Then the government steps in and says he has to pay at least $7.25 for that job. He doesn’t then hire me anyway and pay me $7.25, he hires someone else with more experience or a better candidate. Now as a young black teen I turn to crime instead of learning job skills. Had I gotten the job I could have worked my way up and in a couple years been the manager and made enough to start a family. How do so many people not understand this? Minimum wage workers are only 3% of the workforce. Raise it and we make it harder to get a job, lose jobs, and increase prices. Who pays? The 97% who are not getting a pay raise and the people who can’t get a job because nobody is willing to pay them $9 an hour. We need to get rid of minimum wage and let everyone start wherever they can get a job then work their way up. If minimum wage was $20 an hour unemployment would probably be 25% and those who got a minimum wage job would have no incentive to work hard of excel because their job pays enough to support a family.

Also, I live in a very poor black neighborhood and I have noticed my neighbors all have money for malt liquor and tobacco products. Most of them are just on government assistance and some have minimum wage jobs. Why don’t we give them pay a raise so I can pay more for everything and they can continue drinking colt 45 and smoking black and milds while I work 60 hours a week as a construction supervisor to save up so my three beautiful young girls can have more opportunities than I had growing up.

12 anonymous January 3, 2014 at 1:19 am

Tyrone, my friend We seek to elavate others so they may take care of themselves alliviateing our governtment and its people from the burdens caused by corporate greed and government over reach. If the common man can take care of himself by the labor of his hand he is free to seek his minds potential, and inovate. I will post a very long reason on why everything you said here is a position of fear . here is a segment from http://www.epi.org/publication/ib341-raising-federal-minimum-wage/

Raising the minimum wage as a tool for economic growth
“The immediate benefits of a minimum-wage increase are in the boosted earnings of the lowest-paid workers, but its positive effects would far exceed this extra income. Recent research reveals that, despite skeptics’ claims, raising the minimum wage does not cause job loss.4 In fact, throughout the nation, minimum-wage increases would create jobs. Like unemployment insurance benefits or tax breaks for low- and middle-income workers, raising the minimum wage puts more money in the pockets of working families when they need it most, thereby augmenting their spending power. Economists generally recognize that low-wage workers are more likely than any other income group to spend any extra earnings immediately on previously unaffordable basic needs or services.

Increasing the federal minimum wage to $9.80 by July 1, 2014, would give an additional $39.7 billion over the phase-in period to directly and indirectly affected workers,5 who would, in turn, spend those extra earnings. Indirectly affected workers—those earning close to, but still above, the proposed new minimum wage—would likely receive a boost in earnings due to the “spillover” effect (Shierholz 2009), giving them more to spend on necessities.

This projected rise in consumer spending is critical to any recovery, especially when weak consumer demand is one of the most significant factors holding back new hiring (Izzo 2011).6 Though the stimulus from a minimum-wage increase is smaller than the boost created by, for example, unemployment insurance benefits, it is still substantial—and has the crucial advantage of not imposing significant costs on government.”

13 Derek January 12, 2014 at 6:20 am

The thought process of the Secretary is completely wrong. Read the example from this article and maybe it will help clarify how raising the cost of labor for businesses is killing jobs. http://www.forbes.com/sites/williamdunkelberg/2012/12/31/why-raising-the-minimum-wage-kills-jobs/

14 joy April 25, 2014 at 11:20 am

Yes more money in america’s pockets would be beneficial, but where does this money come from? Higher taxing, higher pricing on goods and services, more layoffs, and most likely a larger workload because of the layoffs. If minimum wage is raised and prices go up the economy will suffer for it, americans won’t want to spend as much if the pricing of goods is higher, which will cause a domino effect that will get back to the companies that raised their minimum wage, and even those who didn’t. They won’t be making as much profit, so they’ll slow down production, which means even more jobs cut. Also, most people earning minimum wage are part time workers, like those in school or those who have a primary beneficiary in their household already. Those going to school are becoming more educated so they can climb the corporate ladder out of minimum wage, it’s not meant for people to live of off on its own. Minimum wage is a baby step to give people initiative to improve themselves so we can have a more productive and educated working force. If we raise it, we’ll be biting off more than we can chew.
I’m not saying this as someone on the high end of society, I’m in school now and can really only earn minimum wage so i’m not biased in the defence to keep it where it is, I just see that me and many others benefiting from it now, will ultimately not be worth the hardship it will bring on.

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