Obama’s Minimum Wage Call Sparks Familiar Debate in Challenging Economic Time
President Obama is pushing for a minimum-wage hike he says will give a needed boost to Americans struggling to make ends meet, but Republicans say would just work against an economy trying to recover and people trying to find jobs.
In his State of the Union address, Obama outlined the key proposals on his agenda for the second term, including a call to raise the federal minimum wage for the first time since 2009.
“Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong,” Obama said. “Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full time should have to live in poverty, and raise the federal minimum wage to $9 an hour. This single step would raise the income of millions of working families.”
Obama’s proposal would boost the nominal wage to $9 per hour by the end of 2015 – an increase of 24 percent from the current minimum of $7.25 per hour. Obama also suggested indexing the minimum wage to inflation after 2015.
Data from the Organisation for Economic Co-operation and Development (OECD) shows that the federal minimum wage in the United States is lower than it is in other developed countries when adjusted for currencies’ different levels of purchasing power. Even if the minimum were raised to $9 per hour, it would still be behind several OECD members. According to the The Economist, America’s current minimum wage is close to the lowest among OECD members, equaling 38 percent of the median wage in 2011.
Twenty states have minimum wages above the federal rate, compared to 15 in 2010. Washington state has a minimum wage of $9.19 – the highest at the state-level. San Francisco increased its minimum this year to $10.55, making it the highest mandated minimum wage in the nation.
The last time the U.S. had an increase in the minimum wage was in 2009. That minimum-wage legislation passed during the Bush administration in 2007, after Democrats had vowed to approve an increase if they won control of Congress in the midterm elections in 2006. Under the Fair Minimum Wage Act – which passed as part of a larger appropriations bill – the minimum wage increased yearly from 2007 until 2009, when it reached its current level.
Obama’s proposal drew the predicted response: liberal and labor groups said it would raise the spending power of the poorest workers and reduce poverty. On the other hand, conservatives and businesses said it would increase unemployment among low-skilled workers.
“President Obama’s remarks tonight show he understands that a higher minimum wage is key to getting the economy back on track for working people and the middle class,” said Christine Owens, executive director of the National Employment Law Project.
Overall, Republican leaders responded negatively to Obama’s proposals. Senate Minority Leader Mitch McConnell (R-Ky.) called Obama’s speech a “liberal boilerplate that any Democratic lawmaker could have given at any time in recent memory.”
Sen. Marco Rubio (R-Fla.) denounced the proposed minimum wage hike as bad policy.
“I want people to make a lot more than $9 an hour. I want people to make as much as they can,” responded Rubio to Charlie Rose on This Morning.
But Rubio made clear his belief that minimum wage laws do not work.
“Nine dollars is not enough. The problem is that you can’t do that by mandating it in the minimum wage laws. Minimum wage laws have never worked in terms of helping the middle class attain prosperity,” Rubio said.
Numerous studies have focused on the effects of raising the minimum wage in the past few decades, often coming to very different conclusions.
David Neumark and William Wascher conducted a comprehensive literature review on the employment effects of minimum wage and found that “among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries.”
Michael R. Strain, a research fellow at the American Enterprise Institute, says the minimum wage will make it more costly for firms to employ workers – particularly low-skilled workers who are most likely to earn the minimum wage. In addition, raising minimum wages may reduce employer job training and worker benefits.
Economists have generally agreed that minimum wages are price distortions that would reduce the demand for workers affected by the wage. But since the 1990s, that assumption has come under fire from an increasing body of research.
Raising minimum wages 20% gives me a hefty pay cut.
(If I was doing the job I was trained to do at the average wage for that training, I'd be making at least double what I am now...)
Raising minimum wages 20% gives me a hefty pay cut.
(If I was doing the job I was trained to do at the average wage for that training, I'd be making at least double what I am now...)
Increasing employment is the prime need to heal the economy.
Increasing employment is the prime need to heal the economy.
The reason we have so much entitlement costs and welfare is because wages have been artificially low for a long time. You used to be able to make a living as a retail clerk. It may not have been the best one, but in general, minimum wage work with frugality enabled many working class people to live on their own and even start families. Ralph Kramden was a bus driver, for example.
But wages have stayed flat or even declined in terms of purchasing power, leading to a lot of people who have to be subsidized in other ways just to do them. Your retail staff lives with their parents; in one of my jobs, we had some who worked from the homeless shelter. Your assistant managers need WIC to be able to feed their kids.
If wages don't rise and the private sector doesn't pay... (show more)
The reason we have so much entitlement costs and welfare is because wages have been artificially low for a long time. You used to be able to make a living as a retail clerk. It may not have been the best one, but in general, minimum wage work with frugality enabled many working class people to live on their own and even start families. Ralph Kramden was a bus driver, for example.
But wages have stayed flat or even declined in terms of purchasing power, leading to a lot of people who have to be subsidized in other ways just to do them. Your retail staff lives with their parents; in one of my jobs, we had some who worked from the homeless shelter. Your assistant managers need WIC to be able to feed their kids.
If wages don't rise and the private sector doesn't pay enough within reason to enable their staff to live, government will pick up the slack, and in doing so seize tremendous amounts of power. Until Repubs realize this, we are going to get hammered each time we raise the question and answer like this. (show less)
And the data used by the democrats is always the income wealth disparity gap. I would invite everybody to take a good look at those charts especially from the 80s to the present. If anybody doesn't see a real problem then, I suggest they are blind to reality.
But again, the real problem is that of systemic and circular arbitrary inflation that has become non competitive and unsustainable in todays 'global' economy. A monetary system that has no real value other than an arbitrary value becomes a disater that.........
And the data used by the democrats is always the income wealth disparity gap. I would invite everybody to take a good look at those charts especially from the 80s to the present. If anybody doesn't see a real problem then, I suggest they are blind to reality.
But again, the real problem is that of systemic and circular arbitrary inflation that has become non competitive and unsustainable in todays 'global' economy. A monetary system that has no real value other than an arbitrary value becomes a disater that.........
For those old enough to remember the old 33 1/3 rule that use to be the standard for most all domestic workplace commerce, you will remember that 'arbitrary' wages was hardly ever a disicussion in most workplaces. The big challenge back then was how to increase market and sales thus, increasing income for every component in the chain. Labor was a component of fixed percentages of gross revenue. As the revenue grew, employers either added employees or increased the exisiting employees wages and or benefits and bonuses. Then it began to get all corrupted from the 60s forward.
Consolidation of industries began to play into the hands of organized labor giving them an inordinate amount of leverage and power over those... (show more)
For those old enough to remember the old 33 1/3 rule that use to be the standard for most all domestic workplace commerce, you will remember that 'arbitrary' wages was hardly ever a disicussion in most workplaces. The big challenge back then was how to increase market and sales thus, increasing income for every component in the chain. Labor was a component of fixed percentages of gross revenue. As the revenue grew, employers either added employees or increased the exisiting employees wages and or benefits and bonuses. Then it began to get all corrupted from the 60s forward.
Consolidation of industries began to play into the hands of organized labor giving them an inordinate amount of leverage and power over those consolidated industries. Their arbitrary wage and benefit demands and its consequences, has since trickled down to every form and size of business in the U.S. today. As a consequence, it began the arbitrary and circular inflation of goods and services we have today. Now we have both industry and labor corrupted by greed causing inflation that eventually becomes unsustainable.
At the end of December 2012, $12.00 had the same buying power as $1.43 in 1950. The only other variable in this example is from the 80s when the Fed reserve began to fire up the printing presses spitting out fiat dollars to regulating market volitility as the government expaneded its global economic strategies which continues today at a dangerous and unsustainable level.
Our inflation rate (labor included) has already proven to be non competitive in the global marketplace and here we are increasing that divide even more with larbor rate increases while continuing to teeter on the brink of still mkore economic woes ahead. The problems for the old traditional capitalist nations are continuing to be a real threat going forward as unsustainability looms! (show less)
It is one more dishonest argument in a string of many and it's past time for the GOP to stop being drawn into these things and just call BS for what it is. The minimum is being treated much like the sequester - Obama pretends to debunk an argument no one is making while hoping people can't see the man behind the curtain. Enough.
It is one more dishonest argument in a string of many and it's past time for the GOP to stop being drawn into these things and just call BS for what it is. The minimum is being treated much like the sequester - Obama pretends to debunk an argument no one is making while hoping people can't see the man behind the curtain. Enough.
The minimum wage affects the quality of your employees. If you pay $9 an hour, and work them part-time at that, you are not going to get many who give a damn about your business, and the history of heavily minimum-age reliant industries shows this. Ironically, these jobs are the most important. One rude cashier can cost you far more business than you think.
The minimum wage affects the quality of your employees. If you pay $9 an hour, and work them part-time at that, you are not going to get many who give a damn about your business, and the history of heavily minimum-age reliant industries shows this. Ironically, these jobs are the most important. One rude cashier can cost you far more business than you think.
<a href="http://www.youtube.com/watch?v=ca8Z__o52sk&feature=player_embedded" rel="nofollow" target="_blank">http://www.youtube.com/watch?v=ca8Z__o52sk&feature=player_embedded</a>
And, one might add...Milton Friedman was invited to Chile in order to put its economy in order. He did, Chile rebounded gang busters...with his "laissez faire" economics. And this administration would have America go back to the 1500's Guild System of Economics???? Sad. Pray. Amen.
<a href="http://www.youtube.com/watch?v=ca8Z__o52sk&feature=player_embedded" rel="nofollow" target="_blank">http://www.youtube.com/watch?v=ca8Z__o52sk&feature=player_embedded</a>
And, one might add...Milton Friedman was invited to Chile in order to put its economy in order. He did, Chile rebounded gang busters...with his "laissez faire" economics. And this administration would have America go back to the 1500's Guild System of Economics???? Sad. Pray. Amen.
Unfortunately, the presence of so many illiegal aliens has brought back the situation that was the original impetus for the Fair Labor Standards Act minimum wage and overtime provisions. Despite attempts to industrialize The South, it had proven remarkably difficult to improve the dismal standard of living throughout The South. The South was caught in a race-based economic death spiral. Whenever a union formed or in other ways working people attempted to improve wages and conditions, the employers simply threatened to bring in black labor and the... (show more)
Unfortunately, the presence of so many illiegal aliens has brought back the situation that was the original impetus for the Fair Labor Standards Act minimum wage and overtime provisions. Despite attempts to industrialize The South, it had proven remarkably difficult to improve the dismal standard of living throughout The South. The South was caught in a race-based economic death spiral. Whenever a union formed or in other ways working people attempted to improve wages and conditions, the employers simply threatened to bring in black labor and the workers quickly came to heel. Today the only place outside the bar and restaurant industry that minimum wage is really a factor is in work for which there is considerable competition from illegal labor, e.g., agriculture, food processing, and residential construction.
The bar and restaurant industry is vehemently opposed to increases in the minimum wage because few states and the FLSA allow what is referred to as a "tip credit" towards the MW. Few bar and restaurant employees actually make the minimum wage, generally bus help, bar backs, etc. and even they commonly get some share of the wait staffs' tips.
As was the case in The South when the Civil Rights Act and Great Society social welfare programs largely eliminated the surplus black agricultural labor, elimination of illegal labor would quickly result in automation of much agricultural work on the Southern border and in California although that automation might well result in somewhat higher food prices. In the early '60s few Southern farmers would buy a mechanized cotton picker because they could get Black labor for next to nothing, by the mid-70s there was no hand labor in the cotton fields. Likewise, tobacco farming was all by hand and many tobacco farmers still kept a mule to draw a sledge where the hand cut tobacco was placed. By the '70s, there was no hand labor in the tobacco patch. Now, I'll admit that that labor didn't go get a better job somewhere else; for the most part they went on welfare and either moved to the projects or to the city, so the cost was transferred to the larger society, but that is what is happening with the cheap illegal labor seeing so much use today, the larger society is paying the social costs so the employers can get cheap labor. (show less)
Sorry, not interested.
You want to raise the minimum wage? Do it as part of a law that makes it illegal for a union contract to base wages on the level of the minimum wage.
Sorry, not interested.
You want to raise the minimum wage? Do it as part of a law that makes it illegal for a union contract to base wages on the level of the minimum wage.