Robert Reich (4 myths about federal minimum wage increases…)

4 myths about raising the minimum wage

The federal minimum wage of $7.25 an hour has not been raised since 2009. This is the longest period without an increase since the introduction of the minimum wage, meaning that today’s minimum wage is actually worth a lot less than it was in 2009.

This is an insult to American workers and bad for our economy. It is high time to raise the minimum wage to at least $15 an hour.


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Today’s minimum wage is a beggarly wage. Full time minimum wage worker cannot afford to rent a two-room apartment in any city, county or state throughout the country. Meanwhile, billionaires like Jeff Bezos can afford DC Mansion with 25 bathrooms and 5 living roomsonly one from its many mansions.

The current minimum wage isn’t all that low because these workers are “worth” less than they were many years ago; vice versa. If the minimum wage had kept pace with productivity growth since 1968, today it will be over $22 an hour.

However, conservatives scare you with wage increases. Let’s debunk each of their theses.

Myth #1: If businesses have to raise wages, they will cut employee hours or cut jobs altogether.

Trash. Since at least the 1930s, critics have argued that setting any minimum standard for workplace decency would raise employers’ costs and kill jobs. child labor laws, 40 hour work weekas well as workplace safety laws. Look: decent treatment of employees is worth it.

In addition, the abundance research shows that the increase in the minimum wage does not lead to a reduction in the total number of jobs. Researchers studied 138 state minimum wage increases and found that the number of low-wage jobs remained virtually unchanged in the five years following the minimum wage increase, but paid more (see: Impact of the minimum wage on low-wage jobs*)

It’s an upgrade, not a job loss, and several research came to the same conclusion.

When I led the fight to raise the minimum wage in 1996., many conservatives predicted huge job losses. Well, I’m happy to report that after the promotion, Nearly 10 million low-wage workers received a raise without a drop in overall employment. It’s just a myth that a pay rise automatically means job loss.

Not to mention Benefits for the workers themselves. A wage increase to $15 an hour by 2025, as proposed in the Wage Increase Act, would give 32 million workers a raise.

Here’s the big takeaway: If your business model depends on paying beggarly wages to your employees, you shouldn’t be in business.

Myth #2: Small businesses won’t be able to afford higher wages and will go broke.

nonsense. The fact is that a higher minimum wage can actually lower the costs of small businesses.

How? First, a higher minimum wage attracts more potential employees into the workforce, thereby giving employers more choice in who to hire. This leads to higher performance and better service. Better service means more satisfied customers and customers. Higher paid workers are also more likely to staysaving businesses huge costs associated with recruiting, hiring and training new workers.

Exploring the San Francisco Airport confirms this: the researchers found that after the pay increase, most of the workers who received the promotion improved their overall performance. Higher wages have even led to fewer queues at airports. The researchers also found that employee turnover was down 34 percent, saving employers an estimated $6.6 million a year.

Smart entrepreneurs understand this. Henry Ford after the introduction of the “five dollar day” in 1914, when typical industry wages were half that, called it his best cost cutting strategy due to the resulting increase in performance.

Myth #3: If you raise wages, the prices of everything skyrocket and lead to widespread inflation.

Again wrong. The researchers found that for every 10 percent increase in the minimum wage, prices rise by less than half a percent. And this is a temporary price increase that occurs only in the month when the wage increase takes effect. It does not in any way cause inflation.

In fact, the minimum wage needs to be raised so that it can catch up with inflation. Due to inflation, the minimum wage now costs almost a third less than in 1968. And since it last climbed in 2009, it has lost 17 percent of its value. This means that compared to 2009, minimum wage workers are losing $3,950 annually, leaving them with less money in their pockets to spend and keep the economy going.

This is why a higher minimum wage will boost economic growth. 70 percent of the economy depends on consumer spendingso more money in people’s pockets means they can spend more goods and services that support the economy.

Yes, and raising the minimum wage will reduce the amount of money taxpayers spend on public assistance that families need because their breadwinners don’t earn enough to live. estimated that nearly half of the families of federal minimum wage workers participate in at least one safety net program that costs society $107 billion annually. That’s right: our tax dollars subsidize corporations that don’t pay a living wage.

Myth #4: Most minimum wage workers are teenagers who work on the side; they don’t need a pay rise.

More trash. Although this may have taken place in 1968. it’s definitely not now. Today only 1 in 10 workers who would benefit from a $15 minimum wage is a teenager. More than half of them are between the ages of 25 and 54. More than half of them work full-time, and more than a quarter have children. Nearly 8 million are mothers.

The current poverty wages are hurting people in their prime by preventing them from building wealth and financial security.

Raising the minimum wage will also help reduce racial and gender pay gaps. Increase in the minimum wage and expansion in the late 1960s narrowed the income gap between black and white workers. The wage increase will same effect todaybecause black workers, Hispanic workers, and women make up the bulk of today’s low wage workers.

Overall, raising the minimum wage is good for workers, good for business, and good for the economy. On top of all that, raising the minimum wage is the morally right thing to do. It should lift workers out of poverty, not keep them in it.

We are the richest country in the world, where the richest people on the planet live. We can and should treat our employees with the dignity and respect they deserve. It starts with paying them a living wage.