Why the Minimum Wage Should
be Increased to $15.00/hour
By Dan Riker
We have an
economic crisis in the United States today. We need a major increase in the
incomes of most Americans. And there is one simple way that can be done - make
the minimum wage a living wage. Raise it to $15.00 an hour.
We have the
worst economic situation in the U.S. since the Great Depression. We have
enormous economic inequality, a lack of upward mobility, and declining economic
opportunity. Our economy is growing but nearly all of the growth is going to
the top 10% and much of that to the top 1%.
Despite the fact
that the GDP has tripled since Ronald Reagan was President in the 1980s,
average wages have not increased at all. A Portland State University study just
released this past week reported that the average income in Portland actually
has declined. Reagan's economic
policies, which generally have been followed by every President since, caused
millions of good-paying jobs to be shipped overseas, millions more to be
eliminated by corporate mergers and millions more replaced by automation. Many
of those jobs have been replaced by jobs that pay what the government
classifies as low wages - an average of $12 an hour or less - not living wages.
Add to this the
loss of most of the home equity American homeowners had because of the
sub-prime mortgage crisis and while the banks were bailed out, homeowners
were not and many lost their homes or still are stuck with mortgages greater
than the value of their houses.
Recent studies
reported that only 29% of Americans have more than $1,000 in savings and nearly
half have none at all. Most Americans today have no money to spend on anything
but necessities and are one job loss or serious illness or accident away from
destitution - and they know it and they hate it.
This economic
crisis has contributed greatly to our present political crisis. Across the country right-wing politicians
are being empowered by the hatred, fear and resentment of millions who are
struggling to stay out of poverty and who get little government assistance
themselves.
Many lower
middle class whites, particularly in the South and in Rust Belt areas, already
held racist views and had begun to vote Republican after the Civil Rights laws
were passed in the 1960s, but the Republican Party today is vastly different
from the one they joined a couple of generations ago. Voting Republican today
is irrational and self-destructive. Right-wing Republicans not only don't want
to do anything to improve the economic circumstances of the lower and
middle-middle class - they actually want to take away or at least reduce what
few benefits they may receive - such as Social Security, unemployment
insurance, Medicaid and Medicare.
This
self-destructive behavior was just seen in Kentucky. This state, that had one
of the most successful roll-outs of Obamacare that provided medical insurance
to hundreds of thousands of its residents for the first time, just elected -
with extremely low voter turnout - about 30% -
a right-wing Republican governor who promised during the campaign to
abolish the program.
And if there
wasn't already enough evidence that millions of people are losing their minds -
now we have the fascist, racist and bully, Donald Trump, as the leading
contender for the Republican Presidential nomination.
Government at
all levels is losing support. Fewer and fewer people are voting and increasing
numbers of those who do - no longer believe in the social contract - the duties
that we have to each other to preserve freedom, democracy and equality of
opportunity.
What can we do
about this? One simple thing will make a huge difference.
Raise the
minimum wage to at least $15.00 an hour over a three-year period and index it
to inflation.
We must look
past the fact that less than 4 million people are working at or below the
minimum wage, to the fact that more than 50 million are working for low wages -
for less than $12.00 an hour on average - including 25% of the workers in
Portland. And it is projected that 45% of new jobs in Oregon in the coming
years will be low-wage jobs.
Think about it.
Nearly one-third of all full-time workers in the United States currently are
working for less than what they need to live and that number is likely to grow.
What is this if not a form of slavery?
In order to
survive, in order to support a family, millions work more than one job. Many
also have to utilize the Earned Income Tax Credit, Food Stamps and other
programs in order to feed their families and provide a place to live. There is
no way these people can go to night school to improve their skills and get
better work. There is no bootstrapping one's way out of this slavery.
Walmart and
other corporations are employing the modern version of slavery to earn billions
of dollars in profits and make their owners among the riches people in the
history of the world. Walmart employees receive more than $6 billion in
government benefits to make up for their low wages. Walmart also is the major
beneficiary of Food Stamps because so many are cashed at their stores,
especially by their own employees. If Walmart increased its minimum wage to
$15.00 over a three-year period it could cover the cost with about a 5%
increase in prices and maybe not that much.
We spend $133
billion on the Earned Income Tax Credit and Food Stamps. What if a substantial
portion of that money could be used to repair our highways and bridges, reduce
the cost of education, provide more aid to small businesses and fund increased
scientific and medical research? Tens of thousands of good paying jobs would be
created.
Raising the
minimum wage to $15.00 will cause a major expansion in the nation's economy,
improve economic and educational opportunity and dramatically reduce poverty.
And that will
happen because of simple economics.
Increasing the minimum
wage to $15 helps far more people than the four million who work for it
now. Increasing the minimum wage to
that level will drive up the wages of tens of millions of workers - the 50
million who now are low wage and others up the line as their incomes are
adjusted.
The people will
spend this new income on consumer goods and that will propel the economy to
grow faster than it has in many years. Consumer spending represents 71% of our
economy - our Gross Domestic Product - of $18 trillion annually. I have
computed that this will increase the GDP possibly by as much as 5% - twice the
current growth rate - effectively tripling the growth rate. And a multiplier
effect would set in, driving the GDP even more.
People would buy
more houses, cars and consumer products of all kinds. Millions of people would
be able to seek technical and collegiate education. Health would improve.
People would be happier and the nation would prosper as companies expanded to
meet the increased demand, creating even more and better jobs.
Some argue that
such an increase would cost jobs. There is no significant historical evidence
that increases in the minimum wage have had negative effects on employment. In
fact, right now there is plenty of evidence that the much higher minimum wages
in effect in Seattle and elsewhere are stimulating their economies and creating
more jobs - not fewer. However, as a society we must take the position that if
a business can only survive by turning its workers into virtual slaves that
business does not deserve to exist.
We can and must
end this modern slavery. We can change America dramatically for the better - we
can reduce the bitterness and resentment of tens of millions of people near the
poverty line - by deciding that
no full-time job can pay less than a living wage.
And a living wage today is a
minimum of $15 an hour.
