Saturday, July 26, 2008

Minimum Wage Increase? You're Crazy!

Differing political factions are already at each other's throats over the July 24th raising of the federal minimum wage to $6.55 per hour. Part of a three year phased in total increase that will be finalized next year, the federal minimum wage will rest at $7.25 per hour for non tipped employees, with states such as Minnesota receiving exemptions for businesses that make less than $500,000 per year.

The usual cry and hullabaloo coming from the far right about the increase contain mostly all of the same types of arguments of supply and demand. They whine about employers having to lay off employees to save money, and employ illegal workers. They bald faced call this a Communistic government for allowing for the increase in wages to the poorest of the poor, while they themselves threw the economy into the toilet with their no money down speculation on stocks and bonds of all kinds. Since they have screwed the pooch, as they say, they figure that it must be the poor that become the fall guy once again with their baloney arguments of the minimum wage being the cause for the ills of the country.

Let's tear a big giant gaping hole in their argument.

In 2006, the Fiscal Policy Institute released a report on their findings about just these claims of higher minimum wages causing job losses and higher prices, and, you know, the whole world going to hell in a hand basket. A non partisan group, they focus on nothing but tax, wage, and economic issues, and how they affect the quality of life for Americans. In the Executive Summary of their report entitled "States with Minimum Wages above the Federal Level have had Faster Small Business and Retail Job Growth", they give data that shows exactly what the title of their report says.

They examined the argument that higher minimum wages cause small employers ( those with 50 workers or less) to experience sharp cost increases, thereby lowering employee levels and found it to be a baseless contention. As a matter of fact, the Institute found that in states that have traditionally had a higher than federally mandated minimum wage, the total job growth was larger and faster, especially in the retail sector, who employ the country's largest minimum wage workers. They state in their report that "The simplistic introductory economics prediction that an increase in the minimum wage will result in job loss clearly is not supported by the actual job growth record."

In fact, quite the opposite holds true. In what they call the 'Henry Ford' effect, higher minimum wage gives small business employers an incentive to hold on to workers due to the higher costs involved in training new employees. And of course, the businesses involved make more money overall, because an employee is much more likely to purchase products produced at their place of employment if they have more money to spend, which in turn actually boosts the economy overall.

Going into detail, the study further shows data that supports their findings by showing growth data in the ten states and the District of Columbia that traditionally have had higher minimum wages than federally mandated. Between 1998 and 2006, the latest years for which data was available at the time of their report, the Institute shows that in those ten states the number of small businesses GREW by 5.4%, while in the other 40 states, the growth was smaller at 4.2%. That may not sound like much, but when we're talking about the overall economy, that's a huge difference. Also in these same states with higher minimum wages, job growth GREW by 6.7% vs. 5.4%, again a big difference.

Within the retail industry, higher wage states saw new retail businesses increase by 0.6%, while lower wage states actually had declines of 0.3%. Combining retail and other small business growth in total, the report finds that between 1998 and 2006, states with higher minimum wage laws saw an increase in total employment levels of 9.7% compared to 7.5% for lower wage states. Even more telling are the numbers showing that in just the retail sector, job levels increased by 10.2% in higher wage states, and just 3.7% in lower wage ones.

The Institute also found the argument that employers would cut back workers hours as a result of the increased wage to be false. If anything, the study finds that between 2005 and 2006, median and mean hours increased

So the simplistic THEORETICAL supply and demand arguments hold no water. Going to an even higher level of economic indicators, the Institute points out that the wage increases of 1996 and 1997, in a 1999 Economic Report Of The President show NO adverse effects on either employment levels or small business levels.

It seems to boil down to one thing and one thing only. The brainwashing by corporate America of the American people that dictates lower wages are good for you is just that, brainwashing. If it saves one penny for business, then the far right will lie right to your face and make you believe it. Even as all of the data shows the exact opposite of the issue they are decrying, they'll come up with fabricated and phony side issues to distract you from the fact that you're ultimately going to have less money in your pocket. This latest increase of 70 cents per hour is going to break no one's bank, nor is it going to allow for the poorest of the poor to be riding around in big black armor plated SUV's. What the arguments against increasing wages for all Americans to a living wage really are, are arguments in favor of a dual class system of haves and have nots. That's how simple it really is.

Don't believe the phony pro-corporate mumbo jumbo of higher wages meaning less employment. Those arguments are made by either the brainwashed or the corporate shills who come up with made up numbers and discard out of hand actual research studies that prove them to be completely misleading everyone. Forget Arnold's trying to force state workers in California to live on the new $6.55 per hour, let's have Congress, the President, and the Supreme Court, along with every CEO in America be forced to live on minimum wage for one full year, and you'll see them come running back to increase the wages of all Americans to a level of unprecedented proportions. End of Story.

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