Business & Money

Increase in U.S. minimum wage urged

By Bryant Harris, IPS | Last updated: Jan 22, 2014 - 11:32:57 PM

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WASHINGTON - Seventy-five economists, including seven Nobel Prize laureates, recently sent an open letter to President Barack Obama and the U.S. Congress, urging them to raise the federal minimum wage.

The same day, the president formally endorsed legislation that would incrementally raise the minimum wage to $10.10 by 2016.

“I think the fact that you see such a broad based list of economists there means that the economic case for raising the minimum wage is really mainstream and increasingly the consensus view of the economics profession,” Jason Furman, chair of the White House’s Council of Economic Advisers, told a panel at the Economic Policy Institute, a Washington-based think tank.

Labor rights advocates are also backing the proposal. “We call on Congress to enact a jobs bill, invest in our future, raise the minimum wage to $10.10, and devote its full attention to restoring full employment and raising wages,” wrote Richard Trumka, the president of the AFL-CIO, a federation of unions.

The proposed legislation would raise the minimum wage by 95 cents per year over the next three years. This would increase the earnings of full-time minimum-wage workers from $15,000 to $21,000 per year.

Additionally, the bill would also seek to raise the minimum wage for tipped workers by 70 percent. Sen. Tom Harkin, one of the proposal’s co-sponsors, says the tipped minimum wage has not increased in 20 years.

Sen. Harkin argues that the fall in minimum wage is related to public policy that no longer guarantees an equal opportunity for low-income citizens.

“We used to agree that if you worked hard and played by the rules you could have a good economic stake in our society,” he said at a Jan. 14 panel discussion. “But in recent years it’s been alarming to see how these fundamental principles and values are being degraded in our public policies.”

The bill’s other sponsor, Rep. George Miller, partially attributed the relative fall in wages to corporate labor practices.

“Those in the corporate world, some of the largest corporations in the world, decided that they’re just going to take more,” he said. “They’ve assembled enough poor workers to make themselves rich.”

Senate Democrats intend to introduce the bill later this month.

The White House’s Furman contends that the proposed legislation would lift 1.6 million people out of poverty, while 8.6 million would witness a wage hike. Lawrence Mishel, the EPI’s president, estimates that as many as 27 million people will benefit from the proposal.

Depoliticizing the

minimum wage?

By many analyses, the United States is vastly overdue for an increase in its minimum wage. Mr. Furman and other economists note that when inflation is taken into account, today’s minimum wage is below where it was in 1950.

“The minimum wage was on an upward trend and reached its peak in 1968 and has fallen by one-third since,” Mr. Furman says.

“If you look at the poverty rate and don’t take into account public policy, it’s actually gone up since 1967. When you’re cutting the pay for people at the bottom by one third, you shouldn’t be that surprised that you’re not making progress on poverty.”

Part of the reason for this tardiness clearly comes down to political wrangling. The Harkin-Miller bill would thus also link and “index” future wage increases to inflation, taking the decision-making process out of the polarized confines of the U.S. Congress.