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 Many of those jobs have been replaced by jobs that pay what the government classifies as low wages - an average of $12 an hour or less - not living wages.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.