A Minimum-Wage Hike Is Good for The Nation, Despite What the Suits Say

March 19, 2014, 5:06 PM by  Darrell Dawsey


How little is enough?

The question was front and center this week as protestors in Detroit hit the streets — and briefly shut down a local McDonald’s —as part of a national push for increasing the minimum wage.

A Ronald McDonald lookalike and a prison-garbed masked man, both holding money bags, joined a crowd of protesters Tuesday outside a McDonald's restaurant in Detroit where workers say they were shorted on their pay.

The morning event was part of an effort in 33 U.S. cities to spotlight what organizers say are practices that deprive fast-food workers of their wages. The protest grows out of an ongoing campaign to raise wages to $15 an hour and promote the rights of low-wage workers.

Ask me, the Hamburgler’s got it right all the way around.

Obviously, wage theft is as wrong as it is prevalent in the fast-food industry. And even the practices that aren’t outright illegal — like denying workers their overtime — are still ethically odious (e.g., forcing workers to stand around waiting before allowing them clock in). Even the suits at McDonald’s corporate have vowed to investigate.

That’s nice of the suits. But you know what would be nicer? If businesses like Mickey D’s corporate gave as much of a damn about increasing the paltry minimum wages they pay even before a “uniform laundry deduction.” 

Instead, typical of most profit-hungry multinational companies, McDonald’s has a tough time reconciling the freighter loads of cash it sees annually with any need to share more of it with its workers. (In fact, it was the company’s colossally stupid and insensitive idea to give its employees a McBudget that highlighted the plight of Mickey D’s workers and gave more steam to minimum wage-increase efforts.)

At the state and local levels, it should probably go without saying that Republican leaders (like their federal brethren) and pro-business groups have been equally as cool to the notion of a hike, trotting out the usual worries over “jobs” and “small business owners.”  

Whereas the area chambers of commerce reflexively regard talk of a higher minimum wage as cause for lit torches and raised pitchforks, Gov. Rick Snyder tries to play more coy. His office contends that raising the state minimum wage is “not a burning issue” because the state minimum wage of $7.40 an hour already tops the hourly federal mark of $7.25. 

What's Another 15 Cents?

Apparently, it doesn’t matter that $7.40 isn’t close to cutting it either.

Conservatives argue that a minimum-wage hike would destroy jobs. However, one analysis of studies of minimum-wage increases shows that boosting the rate does not negatively impact job growth. In fact, some states that have recently seen minimum wage increases witnessed job growth slightly above the national average.

As for the argument that a minimum-wage hike would hurt small businesses, well, keep in mind that two-thirds of minimum-wage workers toil at companies with more than 100 employees. Further, the top three employers of low-wage workers are all making more money than before the recession. 

Most of those who holler about the impact on small business are really just using mom and pop to shield any hits the Fortune 500 would have to take. Further, some recent research shows many small business owners favor a minimum wage boost.

But that won’t stop the right-wingers from fighting to keep poor folks poorer. 

Just as interesting is the divergence in thought among those who favor a minimum wage hike. Even among proponents, there seems to be drastically varying valuations of a shift in the fry pit.

Mark Schauer, who hopes to replace Snyder as governor, has called for the state minimum wage to be raised to $9.25. . . over three years. As some point out, even that wouldn’t be enough to carry a family of three out of poverty. 

And last month, a group called Raise Michigan said it is kicking off a petition to increase the minimum wage to $10.10 by 2017. That effort was buoyed by a recent poll suggesting that a majority of state voters favor raising the minimum wage to just over $10.

Certainly, that’s preferable to the current figure. But consider that, between 1968 and 2009, the minimum wage as expressed in terms of today’s dollars actually fell — despite the fact that it went up from $1.60 to $7.25. To match the buying power of the minimum wage in 1968, the hourly rate would have to be $10.69, according to a Congressional Research Service report.

When you regard the gulf between what minimum-wage workers earn and what it really costs to live, is there really any surprise that so many of those on federal assistance are working folks? 

What does boosting the minimum wage mean for us, the taxpayer, then?

Lower Government Spending

A report released earlier this month by the Center for American Progress, showed that increasing the federal minimum wage to $10.10 would lower government spending on the SNAP program by $205.4 million in Michigan. A minimum-wage hike would mean that at least 110,000 state residents would no longer have to depend on SNAP for assistance.

And again, that’s if you raise the wage to still be about 60 cents less than what it should be in today’s dollars.

What does that say for demands by groups like Detroit’s vociferous D15, which argues that the minimum wage needs to be effectively doubled? 

Surely, the notion of a $15 minimum wage seems to be enough to make any corporate CEO’s head burst. And a former McDonald’s CEO went on record last year as saying the idea would “absolutely” kill jobs.

But those such as venture capitalist Nick Hanauer disagree. In a piece for Bloomberg last year, Hanauer argued that working people are the real job creators and, when they’re gainfully employed, our entire economy benefits: 

Traditionally, arguments for big minimum-wage increases come from labor unions and advocates for the poor. I make the case as a businessman and entrepreneur who sees our millions of low-paid workers as customers to be cultivated and not as costs to be cut.

Here’s a bottom-line example: My investment portfolio includes Pacific Coast Feather Co., one of the largest U.S. manufacturers of bed pillows. Like many other manufacturers, pillow-makers are struggling because of weak demand. The problem comes down to this: My annual earnings equal about 1,000 times the U.S. median wage, but I don’t consume 1,000 times more pillows than the average American. Even the richest among us only need one or two to rest their heads at night.

An economy such as ours that increasingly concentrates wealth in the top 1 percent, and where most workers must rely on stagnant or falling wages, isn’t a place to build much of a pillow business, or any other business for that matter.

Raising the minimum wage to $15 an hour would inject about $450 billion into the economy each year. That would give more purchasing power to millions of poor and lower-middle-class Americans, and would stimulate buying, production and hiring.

As Hanauer mentions elsewhere in his piece, $15 an hour may seem like a lot — until you consider that, had it tracked U.S. productivity gains since 1968, the minimum wage would be about $21.72 an hour.

But of course, even after decades of watching big businesses like McDonald’s give minimum-wage workers the short shrift, nobody is realistically calling for a $22-an-hour minimum wage. 

So corporate America should consider itself lucky. Because even the proposed mild minimum-wage hikes mean that the suits are still getting off cheap.

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