A labor advocate: raising the minimum wage isn’t ‘bad’

Written by Sallie Hofmeister Chris Del Bosco of the Food and Water Watch organization works to ensure water and food security for people around the world. He says raising the minimum wage can help…

A labor advocate: raising the minimum wage isn't 'bad'

Written by Sallie Hofmeister

Chris Del Bosco of the Food and Water Watch organization works to ensure water and food security for people around the world. He says raising the minimum wage can help communities. This post first appeared on Medium.

When people say minimum wage laws “are bad,” I ask them what they mean by “bad.” Any legitimate way to “protect” workers is based on a clear and favorable standard of living — not how little you want your neighbor to earn.

Here’s how I see minimum wage (and minimum benefits) policies.

First, if you’re paying a worker a wage they need to live by, they will be willing to work longer, to do more work, or for a lower wage to pay for basic needs and create wealth for everyone. A weak minimum wage will have the opposite effect: driving down that worker’s productivity, work intensity, and future growth prospects.

Second, when governments lower pay, many workers work less. This may actually help some, but it also undermines the prospects of future generations of workers.

Many economists say minimum wage levels are “impacted.” They just don’t give specific examples. For example, the National Research Council (NRC) said “economic theory suggests” that decreasing the minimum wage “is likely to reduce employment in the long run.”

So how do you decide what the minimum wage should be, when your number is changing? You can rely on political “wisdom,” which is sound judgment about what politicians of the day think is a good idea. Or you can base your decision on empirical evidence.

Congress can do that, too. But since a Democratic majority has returned to Washington, DC, and assumed control of the House of Representatives, I hope we can look beyond political gamesmanship and instead dedicate ourselves to bipartisan legislation.

Here are some ideas we could work on now:

Raise wage floor up to the consumer price index median, rather than a federal minimum wage; it would be easier to adjust the wage level in the future when the economy is different. Raise the minimum wage to keep up with the rising cost of living, then slowly raise it until it catches up. Replace minimum wage with a minimum federal earned income tax credit; it could grow with the cost of living — that way there would be no workers making less than poverty level wages.

Many economists argue that as wages go up, the prices for goods and services fall, thus making the increases in wages more effective at reducing poverty. Or — and I think this is where the argument “or else” comes from — raise the wages to increase purchases and sales, thus the prices would be much higher.

So we know that increases in the minimum wage have benefits. But what about negative effects? What if the workers are not the people you want to give raises to? It might be for good reason, such as inefficient use of labor, health risks, or discrimination. The person or children who get the raise may still be poor. My colleague at NRW, Bill Van Auken, worked in Berkeley on a study — part of the Berkeley Student Minimum Wage Project — that found the negative effects of minimum wage increases on young children and families in low-income communities.

To me, the question then becomes: what is the cost to society of paying people less? (Raising the minimum wage doesn’t just increase the income level of workers, it improves the educational opportunities for their children and the health of their children.)

Research shows that if we raise the minimum wage for every state, national and local worker, there would be great benefits for our economy. It would raise wages for about 20% of the workforce, raise state and local tax revenues, encourage people to invest more in their own communities, and reduce tax burdens. And we would have a greater diversity of employers paying higher wages.

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