Raise the minimum wage

Published 5:25 pm Tuesday, July 18, 2017

To the Editor:

Five years ago, nearly 5 million American workers, most of whom were not teenagers, earned only the federal minimum wage of $7.25 per hour or less, according to estimates by the U.S. Bureau of Labor Statistics. Twenty-nine states, plus the District of Columbia and nearly two dozen cities and counties, have set their own higher minimums. According to a 2014 Congressional Budget Office report, increasing the minimum wage to $10.10 would lift nearly a million people out of poverty. Economists from the Federal Reserve Bank of Chicago predicted that a $1.75 rise in the federal minimum wage would increase aggregate household spending by $48 billion the following year, thus boosting GDP and leading to job growth. The Economic Policy Institute stated that a minimum wage increase to $10.10 would create about 85,000 new jobs over a three-year phase-in period. The average age of workers who would be affected is 36 years old. A larger share of workers age 55 and older would receive a raise (16.1 percent) than teens (9.8 percent). More than half of all affected workers are prime-age workers between the ages of 25 and 54. The majority of workers affected by raising the minimum wage (55.6 percent) are women. Of workers who would receive a raise, nearly two-thirds (63.0 percent) work full time, nearly half (46.6 percent) have some college experience and more than a quarter (28.0 percent) have children.

Five percent of working Americans must rely on Federal income support programs such as SNAP (Food Stamps), SSI, Public Housing Assistance and Low Income Energy Assistance. This means that taxpayers are subsidizing businesses whose profits have risen to record levels over the past 30 years. According to James K. Galbraith, PhD, Professor of Government at the University of Texas in Austin, “because payroll- and income-tax revenues would rise [as a result of an increase in the minimum wage], the federal deficit would come down.” About 20.6 million people (or 30 percent of all hourly, non-self-employed workers 18 and older) are “near-minimum-wage” workers. According to a 2015 report from the National Low Income Housing Coalition, a worker must earn at least $15.50 an hour (over twice the federal minimum wage) to be able to afford to rent a “modest” one-bedroom apartment, and $19.35 for an unsubsidized two-bedroom unit (more than 2.5 times the minimum wage). The report stated: “In no state can an individual working a typical 40-hour work week at the federal minimum wage afford a one- or two-bedroom apartment for his or her family.”

It is often suggested that if the minimum wage is increased employers will cut jobs. A 1994 study by economists Alan Krueger, PhD, and David Card, PhD, compared employment in the fast food industry after New Jersey raised its minimum wage by 80 cents, while Pennsylvania did not. Krueger and Card observed that job growth in the fast food industry was similar in both states, and found “no indication that the rise in the minimum wage reduced employment.” Their findings were corroborated by economists Hristos Doucouliagos, PhD, and T.D. Stanley, PhD, in a review of 64 minimum wage studies. The authors found “little or no evidence of a negative association between minimum wages and employment.”

James Smith