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What is a true minimum-wage increase? Part 3
** Minimum wage hikes discourage people from getting the training and skills they need to make more than the minimum. Basic economic theory tells us that it is best to let market competition set wages. For the most part, government intervention, no matter how well intended, often produces unexpected negative results. The minimum wage falls into this category. **
Date: 1/1/2014 7:39:59 PM ( 10 y ) ... viewed 7201 times Coalitions Press For Higher Minimum Wage
By Gerald B. Jordan, Inquirer Washington Bureau
POSTED: October 30, 1987
WASHINGTON — About 500 people from various labor and unemployment coalitions rallied on the west steps of the Capitol yesterday to appeal to Congress to boost the $3.35-an-hour federal minimum wage.
"We elect these people and they come up here and pay no attention to our needs," said Jim Carson, director of the People's Coalition in St. Louis. ''They slip their pay raises through with no problems."
Labor subcommittees in both houses are considering legislation that would raise the federal minimum wage to $4.65 an hour over about three years. The minimum wage has stood at $3.35 since January 1981. Labor unions have estimated that 6.7 million workers earn the minimum wage.
Several members of Congress, including Sen. Arlen Specter (R., Pa.), attended the rally, which preceded an afternoon hearing before the House Education and Labor subcommittee on labor standards.
Specter did not address the rally, opting instead to meet with groups of Pennsylvanians. He said he understood the push for a higher minimum wage but remained undecided.
"Could you live on $103 a week?" asked Carole Murray, 46, of Johnstown, Pa., citing housing and utility expenses.
Specter began to tell those crowded around him that he "couldn't maintain," when another questioner interrupted:
"The rent's not going down, water's not going down, gas is not going down. . . . I've heard the argument that increasing the minimum wage might increase the price of a hamburger a couple of cents, but I can't afford to go to McDonald's now."
House Education and Labor Committee Chairman Augustus F. Hawkins (D., Calif.) is co-sponsor of a minimum-wage bill, along with Senate Labor and Human Resources Committee Chairman Edward M. Kennedy (D., Mass.). Hawkins told the rally, "It's going to take a lot of fighting" to get the measure through.
Opponents say that an increase in the minimum wage would cost jobs. But Cardell Johnson, an organizer for the Philadelphia Unemployment Project, took issue with that.
"They're working for the corporate sector and not the people," Johnson said.
Supporters of an increase point out that the $6,968 paid annually to a full-time minimum wage earner is nearly $1,800 below the U.S. poverty level for a family of three.
"We've got to let them know that some of the money we're putting in their pockets could be put back in ours," said Harold Richard Jacobs, who has worked minimum-wage jobs for five years since he was laid off from his $9.75- an-hour job as a machinist in Erie.
At the House hearing, chaired by Rep. Austin J. Murphy (D., Pa.), workers talked grimly of trying to sustain families on low wages.
Rose Hummel of Johnstown told the panel that she made $5,867 last year
from her $3.85-an-hour job as a groom in a kennel.
"My life is made up of robbing Peter to pay Paul," she said, fighting back tears during her testimony. "I get tons of termination notices. They tell me that if I pay one month's bill, plus $10, they won't cut my utilities. But if I had the money to pay the $10 extra, I would have paid the bill in the first place. They don't know what it's like. They just don't know."
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Minimum-wage Increase Is Bad Economics
January 05, 2002|By Richard P. Contrastano Newington
``Hikes Squeeze Small Firms'' [Page 1, Dec. 31] pointed out that many small businesses will be adversely affected by new health insurance rate hikes. In contrast, ``State's Minimum Wage Rises To $6.70'' [Connecticut section, Jan. 1], reported how working families will benefit from the good will of government. Unfortunately, many Americans have been taught from early on how to play the game of big corporate evil vs. caring benevolent government.
Democrats at national and local levels support wage hikes, despite the fact that many economists believe minimum-wage increases actually hurt low-skill workers. Minimum-wage jobs are entry-level jobs, many of which are part-time and are often filled by teenagers. The majority of minimum-wage employees work their way up to better paying jobs within a year as their skills begin to improve.
According to the National Federation of Independent Businesses, raising the minimum wage does nothing to close the income gap between America's richest and poorest families. With yet another minimum-wage hike, small businesses in Connecticut will be hardest hit. This would be unfortunate because the nation is in a recession and we're trying to create jobs. The net result will be even more layoffs and the hiring of fewer employees because many small businesses would not be able to sustain the cost of doing business.
In addition, wage hikes often translate into higher prices for consumers.
Minimum wage hikes discourage people from getting the training and skills they need to make more than the minimum. Basic economic theory tells us that it is best to let market competition set wages. For the most part, government intervention, no matter how well intended, often produces unexpected negative results. The minimum wage falls into this category.
Calvin Coolidge once said, ``The chief business of the American people is business.'' It is amazing to me the kind of pressure we put on businesses in America.
Small businesses are the backbone of the American economy, and yet we saddle them with burdensome taxes, regulations and their portion of Social Security for each employee. It's no wonder that so many business fail within a few years.
As long as working Americans want to believe increasing the minimum wage is actually a good thing, Democrats will continue to use the issue as a political tool.
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The History of Minimum Wage
Published December 6, 2013
- Minimum wage requirements were instituted by Congress in 1938 as part of the Fair Labor Standards Act (FLSA). Minimum wage was originally set at $0.25 per hour, a price agreed upon by members of Congress after pulling data on the average national salaries. The rate has fluctuated over the years in response to inflation and the state of the economy. It has averaged $6.60 an hour in purchasing power in current dollars. Over the last 65 years, it hit its lowest of $3.09 in 1948 and its highest of $8.67 in 1968. The last increase occurred in 2007, when Congress raised it over a period of two years from $5.15 per hour to $7.25 an hour. Certain states institute higher minimum wages than the national rate, such as Washington State, which has the highest minimum wage at $9.19 an hour. The average across states is currently $7.57 an hour, compared to the national minimum wage of $7.25.
When is Minimum Wage Increased:
- The minimum wage is usually raised only in times of economic growth and low unemployment. In 1990, with unemployment in the country dropping to 5.4%, Congress increased minimum wage and did so again in 1996 when the unemployment rate decreased to 5.1%. SInce the Great Depression, the government has only raised minimum wage when unemployment was over 7.5%.
- Who Earns Minimum Wage:
Those who make the minimum wage usually fall into one or two of the following categories: young adults, or those with a low-level of education. Over half of those earning minimum wage are between the ages of 16 and 24. Many minimum wage jobs are considered “learning wage” positions. This means that they are entry-level positions filled by workers with limited education and experience. These jobs are intended to help workers develop the skills to become more productive and earn raises.
- Minimum Wage Variations:
San Francisco raised its minimum wage to $10.55 in January of 2013, offering the second highest minimum wage in the country. Santa Fe offers the third highest at $10.51. Georgia, on the other hand, offers a minimum wage of $5.15, though this threshold is only applicable to employers with six or more employees.
New York’s minimum wage will increase to $8.00 on December 31, 2013, $8.75 on December 31, 2014 and $9.00 on December 31, 2015. Washington State's minimum wage increases annually by a cost-of-living adjustment that voters approve.
How Minimum Wage Affects the Economy
- Economists debate whether raising minimum wage stimulates the economy or causes more unemployment. Some argue that raising minimum wage actually causes companies to fire employees, lower salaries or enforce hiring freezes, all of which have a negative impact on the economy.
- There is no general consensus among economists about the real impact of minimum wage on the state of the economy. The variables that factor into the relationship make it unlikely that minimum wage increases have a direct effect on employment. Price levels, central bank policy, and wage agreements make it difficult to draw concrete conclusions, economists can only make their best assumptions.
** Last Updated: December 6, 2013
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