we are worth more

While the Republicans in Congress do their best to do their worst to the American people, the core problems hurting most of the American people burrow deeper. There are short term and long term troubles and getting a vote to address even one of these issues in Congress seems hard enough to accomplish with Republican obstructionism continuing.

But what if there was one vote that could be held, one campaign that could be focused on to pass one law that if passed, could help with many of our most serious problems?

And what if that one law was already very popular with the public and even had some Republican support?

There are an array of financially-based problems that plague our nation. Unemployment, stagnant wages, poverty, jobs that don’t pay a living wage, growing inequity between workers and their bosses, cuts to SNAP (food stamps) and other poverty programs, the deficit, Medicare and Social Security gradually approaching inadequate financing and a sluggish economy to name many critical areas.

What can be accomplished isn’t extreme or far-fetched, it wouldn’t be an instant cure for all the economic ills mentioned above that afflict us…but it could help substantially in all of those areas.

And it’s as simple as Congress voting to increase the national minimum wage to $15 an hour.

We’ve heard the same dishonest wailing from the pro-business Republicans, “It will kill jobs!” “The price of a burger could go up 10%!” “Keep government out and let the free market decide!”

However, history has only proven that raising wages increases jobs because it puts more money in the hands of people who spend that money, buying more goods and services which requires businesses to hire more people to manufacture more goods and provide services. This is another issue where there is no justifiable equivalency for those opposed to it (despite the media’s need for there to always be two sides to an argument, sometimes there isn’t a strong enough “pro-AIDS” or “anti-fire-prevention” point of view to be placed side-by-side with the only factually backed opinion).

As we consider the impact of raising the minimum wage, we can consider just how far reaching that would be with regards to a whole host of economic issues facing the nation.

Let’s begin with some math. Now, I am not an economist but that’s not a requirement for being able to add and multiply numbers, the only requirement is an elementary school education (too bad that’s not a requirement for Republicans to be elected to Congress).

According to the U.S. Department of Labor’s Bureau of Labor Statistics, as of 2012, “…1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 2.0 million had wages below the federal minimum.”

That’s 3.6 million Americans earning minimum wage and lower.  Though there are many more Americans earning less than the minimum, let’s help out the adversaries of this proposition and only assume the average hourly wage for this entire segment of the workforce is around $7.00/hour.

Also according to the BLS, the average American between the ages of 25 and 54 works and has related work activities for about  8.8 hours a day (part timers and over-timers apparently balance each other out). Here too, let’s try to underestimate the amount of hours worked each day by minimum wage earners and use an average of 6 hours per day work day which would be 30 hours per work week (some employees work 20 hours per week because their employers are trying to skirt the Affordable Care Act provisions mandating health insurance for those working more than 20 hours a week but studies show this is not pervasive).

Now let’s start mathercizing. If a minimum wage increase added an average of $8/hour for 3.6 million Americans who worked an average of 30 hours/week, that means that each week there would be $864 million more being paid each week to that working poor segment of the U.S. workforce, around $3.75 billion per month and around $45 billion per year…flowing to those most in need who would be spending most of that back into the economy.

What would be the domino effect from that?

With a 12.5% tax on wages, the Social Security trust fund would receive an additional $5.6 billion per year. Not enough to wipe out its annual deficit but enough to cut it by up to 10% per year and extend the programs life much farther into the future (I wouldn’t want to give Republicans a big reason to vote against a minimum wage increase but if we had a Democratic Congress, I would also like to see a repeal of the Social Security Tax cutoff added to the bill and then in combination, we probably would eliminate that deficit).

Medicare collects a 2.9% tax so that means an additional $1.3 billion into their coffers annually.

The U.S is projected to spend $76 billion on SNAP (food stamps) spending in 2013. A big chunk of that spending would be eliminated as workers could afford to buy enough food for their families. And instead of our tax money going to subsidize Walmart, McDonalds and the rest of the corporate employers who pay so poorly that workers can’t afford their expenses, these corporations would be paying sufficient wages and freeing American taxpayers from that burden.

Consider all of the government programs related to helping those in poverty that would have less demand and require less spending of tax dollars when the working poor are no longer earning at poverty levels. The Republicans claim that the most important thing is the deficit, imagine how quickly it would fall with this kind of spending slashed and tax revenue increased by the jump in income.

And with $45 billion back in the consumer economy annually (instead of in corporate profits that are simply invested in markets and funds internationally), the demand for goods and services would increase so jobs to provide those would increase…and at the $15/hour minimum wage, new jobs would generate even greater income, spending and job growth.

So in this one vote which is already a winner with most Americans, raising the minimum wage to $15/hour would cut the Social Security and Medicare annual deficits, cut the federal deficit, reduce unemployment and unemployment insurance benefit payments, bring millions up out of poverty, reduce spending on welfare and poverty programs, fight economic inequality, protect American taxpayers from subsidizing major corporations who underpay their employees and greatly stimulate our national economy. Also consider what all that new income would mean to cities and states, greater spending on education, police and fire, infrastructure repair, etc.

Corporations like McDonalds moan about how the price of a Big Mac could go up .50 cents if the minimum wage was increased. Or jobs would be lost (again, studies show this is just plain false). Even though these arguments are wholly dishonest because the expense for hourly employee payroll for major corporations is a nominal percentage compared to all their other expenses (and therefore the percentage of added expense an increased minimum wage would be to these mega-corps is nowhere near the massive percentage increases they claim they would need to apply to their products or services).

In fact, there would be an economic boom especially in the businesses like McDonalds and Walmart that have a big customer base in the very demographic that would have a lot more money to spend.

And even if we bought into the lies about how prices would go up on big corporations’ products…what American would refuse to pay an extra few cents for a burger at McDonalds or a pair of sneakers at Walmart if it led to a better economic times that benefited them in a much bigger way than saving .50 cents?

This is a potent issue for the Democrats in 2014. There is a rising discontent among Americans at the growing, massive gap between the wealthy and everyone else. Protests have cropped up all around the nation at fast food restaurants and corporate stores that don’t pay a living wage. The amount of people in poverty is growing and as is the number of people slipping out of the middle class. People are worried that Social Security and Medicare will be either privatized and killed by Republicans or go bankrupt from neglect. Many things need to be done and we have a Republican Party in Washington that wants to pass as few bills as possible.

Well…if one bill could get all the weight thrown behind it to be passed, I can’t think of one that would have a more profound impact on our economy, our society and everyone in the nation than raising the minimum wage to $15.

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PocketWatch
Member

Henry Ford, Libertarian and general hard-butt that he was, had it right. At a time when men were earning $1 an hour, he paid $5. It ensured that the very people that he had working for him could afford the product they were making.

What these fools and jokers constantly miss is that by paying people a living wage, they become…. wait for it…. BETTER CUSTOMERS!

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Nirek
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PW, wow, Ford paid $5 an hour back then?
My first job paid me $35 a week for forty hours work. Then I was drafted and took a pay cut. $99 a month! This was the mid 1960’s.

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PocketWatch
Member

I think I mistyped. It was a dollar a day, Ford paid 5 a day. Still a 500% increase over the going rate.

As I recall, a Model T was something like $250 new, not an inconsiderable sum back in the 1920’s.

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escribacat
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whatthel
Member
whatthel

Increasing the min. wage almost always wins when it’s on a ballot, and helps candidates who are for it.

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whatthel
Member
whatthel

Republicans always manage to do their worst.

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VegasBabe
Member

SPOT ON! Not a year goes by that utilities don’t rise, rents, cell phone bills, groceries, transportation, mail but gopers seem unable to support a minimal wage of $15.00. The last I heard, they were objecting to $10.00. With the support of Elizabeth Warren as well as a number of dem Congessional members, this is a fight that I think Obama could win if he gave it the attention and time it deserves. I realize he has quite a lot on his plate already but then….he asked for this job.

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Quick Brown Dog
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Quick Brown Dog

Something tells me Republicans bristle at the fact that the maximum wage isn’t $0/hour.

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PocketWatch
Member

One argument to use in refutation of the old saw that “XYZ will result in job loss,” here’s the reality…

1. Most jobs are created by small businesses
2. Small businesses don’t hire any more bodies than necessary
3. Small businesses don’t hire fewer bodies than needed to get whatever they do done
4. The idea that taxes, or increases in minimum wages, or anything else does NOT figure in the hiring practices of small businesses (in 15 years of consulting, it’s never come up even once)
5. The ONLY thing that affects a hiring/firing decision is NEED. A business needs someone to do something they don’t have the staff for, or, they need to get rid of someone that is either no longer needed or is not doing the work they’ve been hired for.
6. An increase in minimum wages or taxes or anything else affects ALL small businesses equally (theoretically), and therefore the playing field remains level, so even a competition argument is bogus.

In the end, just like the trickle down nonsense, the meme that increasing minimum wages or taxes as job killers SOUNDS right, but it really has no basis in reality. People buy what sounds right, though.

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funksands
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Since 1961, there’s been 20 minimum wage increases. Only once the following year (2008) did gdp drop. Only 4x did corporate profits drop. (1966, 1969, 1982, 2008)

Thereby proving to Republicans that minimum wage increases are a disaster for the economy.

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Nirek
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Ad, well done again. The minimum wage has not gone up like inflation has. It is about time it went up to give folks a livable income. As for Social Security, it is in good shape for several years but if the income limit for paying into the Trust Fund were raised to $250,000 Social Security would not have any problem for many many years.

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PocketWatch
Member

I’m old enough to remember the food fight that Congress had in the Reagan days over SS taxes. The SS administrators came to Congress and wanted a tiny increase to take care of the Baby Boomers 30 years down the road that demographics and simple math told them that was coming.

You’d have thought the world was coming to an end!

I remember clearly, because I commented to my mother about the fact that I doubted SS would even exist by the time I was retirement age, and we got into a big fight over it.

Now, we have a funding problem? BS! We have a political weak-kneed, can’t-do-math problem. This subject always gets a rise out of me!

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escribacat
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Well said, Adlib. The fact is, we are all paying to subsidize these underpaid workers anyway, through our tax dollars. So theoretically I’d have to pay more for a big mac or a crappy shirt from China at Wal-Mart. I’m paying to subsidize their work force anyway. There’s nothing more galling than the idea that Wal-Mart underpays their people and then tutors them how to get food stamps paid for by you and me. And this is all accompanied by the chorus of GOPers who wail incessantly about how they are the only people who work. And besides, take Costco as an example. They pay their workers much better than comparable corporations and they still offer bargains galore.

I can’t imagine how anyone survives on $7 an hour, much less supports a family. I’ve seen rightwingers argue that no self respecting adult would still be working in such a crummy job, that they should have advanced into something better. Well, all the “something betters” got shipped overseas. When I was a 15 year old, I got a job at McDonalds and most of my co-workers were around my age. Nowadays, it’s moms and dads working there because there’s nothing else.

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mad_as_heck13
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mad_as_heck13

I get so mad when I see the Walmart ads where they compare a receipt from a (probably union) grocery store with their prices, and then brag on how they’re helping families save money. Yeah, off the backs of the Walmart associates. You know any savings are coming off the cost of labor. Not just their workers, but the workers overseas making a pittance to produce cheap goods at the rock-bottom prices Walmart demands. I hear the other side saying, “That’s easy for you to say. Some people can only afford Walmart prices.” It’s a vicious circle. People can only afford Walmart prices because THEY DON’T MAKE A LIVING WAGE. And in the meantime, they may be paying taxes to subsidize workers who have to reply on government programs because THEY don’t make a living wage. The minimum wage increase is in all our interests. I’ll gladly pay $2 for that McDouble. “A rising tide lifts all boats,” right?

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agrippa
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agrippa

Increasing the minimum wage to $15 an hour is an excellent idea; it would very useful.
But, that will have to wait until the Democratic Party gains the HoR.

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funksands
Member

Ad, this is a really good piece. It also will tie in nicely to the new piece on MMT that I am working on.

If Democrats DON’T pursue this policy as a primary plank in their platform, then they are either cowards or utterly tone deaf to the mood and preferences of the electorate outside of the DC chattering class.

The main benefit of this political winner is that it will actually help people! Wow! After trillions and trillions of dollars have flowed from the pockets of the lower-middle class into the pockets of the wealthiest of us, yanking a few bucks back will be attacked as “class warfare”. Wags will shake their heads and endlessly debate the effect on “work ethic”, “productivity” and even the “moral hazard” of a higher minimum wage, while 90% of the rest of America will actually support it because its a good idea.

I’m no so concerned about how it strengthens Social Security, because funding SS is simply a political challenge rather than a mathematical one. If making the bottom line of SS makes it politically stronger, then good.

I’m not totally convinced that it will increase hiring (see below)

It will undoubtably create more economic activity and lessen dependence on State agencies

A average of 1,492 minimum wage studies showed the average effect on employment rates to be “0”.
I think that’s interesting.

There were many factors that were likely to occur in some form in the majority of the studies:

1. Reduction in hours worked – Inconclusive
2. Reduction in non-wage benefits – Little or no change
3. Reduction in training – Inconclusive
4. Changes in employment composition (upgrading skill level of employees) – No evidence of change
5. Higher prices – “A 10% minimum wage increase led to no more than a 4% increase in food prices and no more than a .4% increase in overall prices”
6. Improvements in efficiency – Inconclusive
7. More efficient workers – Inconclusive
8. Wage compression for more skilled employees – Broad consensus that raising the minimum wage does indeed to lead to broader wage compression for higher earners in the community.
9. Reduced profits – Inconclusive. U.S. studies show minimal decrease in profits. British studies showed a noticeable decrease.
10. Increase in demand – Conclusive evidence that economic activity increased significantly in communities with minimum wage increases.
11. Reduced turnover – Conclusive evidence that employers experienced much lower turnover after minimum wage increases.

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

I’d be interested to get your take on this. If the NET result of a higher minimum wage is simply that those workers lives are better, then that in itself is a good enough reason for me.

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