The real deal on the minimum wage

The real deal on the minimum wage

Colorado workers are gathering at the Capitol at noon today, calling on the state legislature to ask Congress to raise the federal minimum wage to $10.10 an hour. Then the workers are heading a few blocks away to continue their rally at, appropriately, a McDonald’s.

No doubt, some state lawmakers will flatly oppose an increase of the minimum wage, which is $8 an hour in Colorado — higher than the federal minimum of $7.25 hourly.

Critics will argue that the people predominantly affected by the minimum wage are middle-class high schoolers flipping burgers for a few hours after school to buy new skateboards or video games. Lawmakers espousing this theory would benefit by stepping out of the Statehouse and toward the McDonald’s, where they’ll see workers who are parents and grandparents doing their very best to support their families on the $320 a week, at most, they make before taxes.

the fine print2Opponents will say that an increase in the minimum wage will hurt jobs. Some will cite a widely misinterpreted Congressional Budget Office report warning that 500,000 jobs — 0.3 percent nationally — could be lost if the minimum wage is raised. What they’ll likely fail to mention is that the research also said zero jobs or one million jobs could be affected. Five-hundred thousand was the middle number, so that’s what CBO went with.

Naysayers also will complain that the legislature shouldn’t involve itself in a Congressional fight.

Those views are out-of-touch and short-sighted.

A recent Wall Street Journal/NBC News poll shows that increasing the minimum wage to $10.10 an hour garners overwhelming national support, including 47 percent of Republicans surveyed.

Research tells us that warnings about job losses and economic damages are either grossly overstated or unfounded. A landmark 1993 study showed that raising the minimum wage had negligible to no impact on unemployment. A 2009 review of 61 scholarly research papers on the topic also showed, on average, no effect.

A 2010 study by one of the foremost researchers of the minimum wage, economist Arindrajit Dube at the University of Massachusetts Amherst, found that minimum wage increases don’t cost jobs, but actually can help stabilize workforces by decreasing turnover and job vacancies. Most recently, a 2013 study by the Center for Economic and Policy Research said “evidence points to little or no employment response to modest increases in the minimum wage.”

Congress has raised the minimum wage 22 times in the 75 years since it was created. But, for nearly 50 years, increases haven’t kept up with inflation. Had that occurred, the minimum wage would be $10.56 an hour. Instead, the purchasing power of minimum wage workers is the lowest it has been since 1955.

What can’t be overlooked in the all-too-misinterpreted Congressional Budget Office report are these potentially history-changing figures: a minimum wage increase would raise the earnings of 16.5 million Americans, and lift 900,000 people out of poverty.

The increasing debate over minimum-wage is spurring a much-needed national discussion about the ever-widening schism between the haves and have-nots. The issue is so ripe that, in a filing with the Securities and Exchange Commission earlier this month, the McDonald’s Corporation publicly acknowledged the “long-term trend toward higher wages and social expenses in both mature and developing markets, which may intensify with increasing public focus on matters of income inequality.”

You read that right, folks. McDonald’s – the nation’s quintessential low-wage employer – is talking about income equality. Attitudes are changing both morally and economically. Colorado lawmakers will be faced with a rally call for progress this afternoon. Let’s hope they take some time to step out of the Capitol and recognize the appetite for change.

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About the Author

Carol Hedges

Colorado Fiscal Institute director. Advocate for an adequate, sustainable and equitable revenue system to support widespread prosperity in the state.
hedges@coloradofiscal.org | @Carolhedges303

 

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