Raise wages; improve the economy

Individual consumers are buying less, class inequality is rising, and 12 million people are still unemployed. The problem is too few jobs and lousy wages.

In his State of the Union address, on Feb. 12, 2013, President Barack Obama called on Congress to increase the federal minimum wage from $7.25 to $9 an hour.

“This single step would raise the incomes of millions of working families,” said the president during of his speech. “For businesses across the country, it would mean customers with more money in their pockets.”

Economists analyzing the potential impact of raising the minimum wage have concluded that the proposed increase would have positive effects for low-income families without causing harm to businesses or raising the unemployment rate.

The White House pointed to companies that supported the increase as a way to reduce employee turnovers and improve productivity.  This list included the retail discount giant Costco and Stride Rite, a shoe company nearly 100 years old.

The minimum wage increase has many opponents, among them big businesses and conservatives who believe that the raise will not accomplish its goals.

However, many state and local governments have already set their own minimum wages above the current federal rate.

Research conducted by John Schmitt and David Rosnick at the Center for Economic and Policy Research found that San Francisco’s minimum wage jumped from $6.75 to $8.50 in 2004. Resulting increased income did not cut jobs or negatively affect businesses. In Santa Fe, New Mexico, a similar increase from $5.15 to $8.50 the same year had only positive results on the local economy.

The current level of the minimum wage in the United States is very low by any reasonable standards. According to government statistics, there are 4.4 million workers earning the minimum wage. This is still substantially lower than it was in the 1960s, accounting for inflation. However, worker productivity has doubled since then.

Christine Owens, the executive director of the National Employment Law Project, said in a statement “…one of the best ways to get the economy going again is to put money in the pockets of people who work.”

Consumers are buying less because they have less discretionary income. Taxes have gone up, and high unemployment takes the bargaining power out of most people looking for a job, allowing businesses to keep wages low.

Decreasing the purchasing power of most Americans would negatively affect the growth of the economy. The proposed minimum wage increase would put money back into the hands of families that desperately need it, allowing them to buy a bit more and, as a result, help keep others working.

As Americans, our most important focus should be on getting jobs back, improving wages, and restoring the growth of our economy. Our strength is not measured by the profits of our corporations or the value of our stock market. It depends, rather, on how many of our people have jobs and whether those jobs pay decent wages.