Minimum wage hike = smart politics

Commentator Robert Reich

TEXT OF COMMENTARY

SCOTT JAGOW: The Pennsylvania legislature just raised the state's minimum wage above $5.15 an hour, the federal level. It's the 19th state to do that. Meantime, Congress hasn't touched the minimum wage in a decade. Democrats want to make it a priority this summer, but Republicans are fighting back. Commentator Robert Reich says the GOP would be wise to choose another battle.


ROBERT REICH: Between now and the midterm elections in November, Senate Democrats will be looking for every opportunity to add a minimum wage amendment to anything that moves in the Senate.

The reason is simple. In poll after poll, more than 80 percent of Americans say they favor an increase. It's a matter of fairness. People ought to be paid more than $5.15 an hour, which comes to $10,712 a year for a full-time worker.

At a time when garden variety chief executives are taking home $8 million a year, which comes to $3,846 an hour, and when the Bush tax breaks have given the highest paid an extra $60 an hour, it seems downright medieval for Republicans to deny someone a measly $1.85 an hour increase.

Now, we can't raise the minimum wage too much, probably not more than another $2 without causing some employers to decide it's not worth hiring that extra person.

From a purely economic perspective, a better way to make sure poor workers get a decent wage is through the Earned Income Tax Credit, a reverse income tax that supplements the wages of workers on the bottom by about $3,000 a year.

But the minimum wage is also a moral statement about the minimum value of work in our society, and it's been dropping. In the late 1940s and '50s, the minimum wage stayed about half of the average wage of non-supervisory workers. It's now down to 31 percent, its lowest portion since World War II. After adjusting for inflation, today's minimum wage of $5.15 is at its lowest level since 1955. In today's dollars, it was $7.71 an hour in 1968.

The last time it was increased was 10 years ago, and that increase has been completely eliminated by inflation.

The basic question is what a decent society can afford to pay its lowest paid workers. Between 2002 and 2005, American productivity grew 10 percent, yet workers in the bottom tenth of the income range still lost ground with an average wage drop of 3 percent in real terms.

Some of this drop can be attributed to a flood of low-skilled, undocumented immigrants willing to work for peanuts, which is why unscrupulous employers are willing to run the risk of hiring undocumented workers.

So here's the deal. Raise the minimum to $7 an hour and also increase dramatically penalties on employers who fail to pay it. If Republicans were smart, they'd add another provision: Index the minimum wage to inflation, so they no longer have to take unpopular votes on the minimum wage every election season.

SCOTT JAGOW: Robert Reich teaches public policy at the University of California in Berkeley. In Los Angeles, I'm Scott Jagow. Thanks for listening and have a great day.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...