Traverse City Record-Eagle


March 2, 2013

Another View: Raise minimum wage

Little evidence exists to suggest that modest increases in the minimum wage lead to job losses, so the battle ahead in Congress is really one between free market orthodoxy and basic human decency. We would invest our money in decency.

In his State of the Union address ... President Obama called upon Congress to boost the federal minimum wage to $9 an hour by 2015, up from the current $7.25. The wage would rise in steps and after hitting the maximum in two years would thereafter be indexed to inflation ....

“When you raise the price of employment, guess what happens? You get less of it,” House Speaker John Boehner said ...

The speaker is wrong, but let’s put this into perspective.

Adjusted for inflation, the minimum wage in the late 1960s was about $10 per hour, and it was even higher in the 1980s. President Obama’s call to raise it to $9 is far from excessive. (Michigan is at $7.40)

The proposed new rate translates to a little less than $19,000 a year before taxes, still below federal poverty thresholds. Even with the Earned Income Tax Credit and SNAP benefits, it’s nowhere near a comfortable living.

And then there’s the issue of fairness. We all took a bath in the Great Recession. Average income from 2007 to 2009 fell 17.4 percent, the largest two-year drop since the Great Depression. ... (T)he top 1 percent in income lost more than a third of their incomes.

But things have changed. From 2009 to 2011, average real income per family grew by 1.7 percent, but most of ... that was concentrated in the top 1 percent. The rest of the country, on average, lost income....

(G)rowing income inequality isn’t just unfair, it’s detrimental to the U.S. economy. While the wealthy generally save a lot of their income, the people who make the least consume most of their income. When those folks are hurting, like they are now, their inability to spend money slows the economic recovery.

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