My Word: Workers’ pay should be tied to inflation: Back the Fair Wage Act

Kimberly Starr and James Decker/for the Times-Standard
Posted: 03/20/2013 02:39:27 AM PDT

We are long overdue for a raise in the minimum wage. Working class people  of Eureka need a victory that will improve their lives — and the Fair  Wage Act will be that victory. The minimum wage must be indexed to  inflation to insure that those at the bottom share in the growth of our  economy. We must reverse the trend of 2 percent of the people in the  U.S. solely capturing all the benefits of improved productivity and  innovation. It is theft of peoples’ time, labor and ideas.In  Eureka, we cannot rely on politicians. We’ve come together and created  an ordinance to strengthen our community by giving the lowest paid  workers a long overdue raise.

The federal minimum wage was  first established in 1938 when FDR signed the Fair Labor Standards Act,  which also established the 8-hour day, paid overtime, and child labor  protections. The FLSA emerged, over the violent opposition of  businessmen, due to strikes, pickets and other actions of brave working  people. In 1938, and with every worker-benefiting amendment to the FLSA  since, politicians, business leaders, and think tanks have opposed the  minimum wage, claiming myriad suffering the “minimum wage horror” would  cause the fall of the American empire, devastation of businesses, “more  misery and unemployment than anything since the Great Depression” (Ronald Reagan, 1980). However, the minimum wage and its increases  improved economies of all sizes, holding only benefits for employers and workers alike.

From 1938 to 1968 , the purchasing power of the minimum wage increased by  over 140 percent. Minimum wage workers saw a positive upgrade in their  living standards as wages rose in step with productivity growth.

If the federal minimum wage kept pace with improved productivity of  workers it would now be over $20 an hour. Had it increased with the  rising cost of living, even by conservative calculations, it would be  over $10.50. California is a high cost-of-living state with the lowest  minimum wage on the west coast, $8 an hour. It’s time to raise wages and tie them to inflation.

As we circulated the Fair Wage Act  throughout Eureka, the responses were no surprise: People want and need  to bring home decent pay. People know their time and labor are valuable. Corporate profits are at record highs; it is past time for those  profits to be shared with the workers who produce them.

Forces  that oppose higher wages say they’re concerned about job loss — never  considering job loss when it comes to raising CEO pay. Increasing the  minimum wage, especially during high unemployment times, has been found  throughout various geographical areas and time periods, to either have  no effect on employment or, more often, stimulate job growth. We have 75 years demonstrating that as wages rise, employment rises.

Humboldt folks might find relevant a study by Princeton economists comparing the effect on employment in New Jersey to employment across the river in  eastern Pennsylvania, after New Jersey raised the minimum wage and  Pennsylvania did not. The border there is slight, neither a barrier to  commerce nor employment. Employment rose in New Jersey when wages rose.  Employment stayed the same in Pennsylvania with the stagnant minimum  wage. This pattern happens throughout the U.S. where one county raises  wages and the neighbor county does not. Employment improves where the  minimum wage is higher.

Recently, calling for too small a  raise, the president nevertheless spelled out a strong case to the  nation for raising the minimum wage: “ … our economy is stronger when  we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. … still liv[ing] below the poverty line. That’s wrong. Tonight, let’s declare that in  the wealthiest nation on Earth, no one who works full-time should have  to live in poverty … . It could mean the difference between groceries  or the food bank; rent or eviction; scraping by or finally getting  ahead. For businesses across the country, it would mean customers with  more money … . Let’s tie the minimum wage to the cost of living, so  that it finally becomes a wage you can live on.”

People and the economy need a boost in Eureka. Most minimum wage workers, a majority  of whom are women, support households. Too many households are  struggling on low wages to meet rising food, housing, transportation and health care costs, with no retirement fund. A higher minimum wage is  just. It will help start an economic surge in our communities,  increasing spending, business viability, and creating new jobs. Support  the Fair Wage Act.

Kimberly Starr and James Decker, Eureka residents, are signatories to the Fair Wage Act initiative. For more information, visit fairwages.org.

http://www.times-standard.com/guest_opinion/ci_22829946/workers-pay-should-be-tied-inflation-back-fair

Advertisements

Restore the Purchasing Power of the Minimum Wage

this article by Charles Hugh Smith, for the rest of it go to

http://www.oftwominds.com/blogmay12/restore-min-wage5-12.html

Actually, it’s easily addressed with one simple act: restore the minimum wage to its 1969 level, and adjust it for the inflation that has been officially under-reported.If you go to the Bureau of Labor Statistics Inflation Calculator and plug in $1.60 (the minimum wage in 1969 when I started working summers in high school) and select the year 1969, you find that in 2012 dollars the minimum wage should be $10 per hour if it were to match the rate considered “reasonable” 43 years ago, when the nation was  significantly less wealthy and much less productive.

The current Federal minimum wage is $7.25, though states can raise it at their discretion. State rates runs from $7.25 to $8.25, with Washington state the one outlier at $9.04/hour.

In 40 years of unparalleled wealth and income creation, the U.S. minimum wage has declined by roughly a third in real terms.“Official” measures of inflation have been gamed and massaged for decades to artificially lower the rate, for a variety of reasons: to mask the destructiveness to purchasing power of Federal Reserve policy, to lower the annual cost-of-living increases to Social Security recipients, and to generally make inept politicians look  more competent than reality would allow.

The full extent of this gaming is open to debate, but let’s assume inflation has been under-reported by about 1% per year for the past two decades.  That would suggest the minimum wage should be adjusted upward by about 20%, from $10 to $12/hour.

All those claiming such an increase will destroy the nation (or equivalent hyperbole) need to explain how the nation survived the prosperous 1960s paying the equivalent of  $10-$12/hour in minimum wage. Exactly what has weakened the economy such that the lowest paid workers must bear the brunt of wage cuts?

Charles Hugh Smith

http://www.oftwominds.com/blogmay12/restore-min-wage5-12.html

MINIMUM WAGE FACTOID: The Gasoline Index

In 1968 an hour’s pay at minimum wage ( $1.60)  would buy almost 5 gallons of gasoline (@ $0.33/ gal.) but today in Eureka an hour’s minimum wage ($8.00) will buy a little less than 2 gallons of gasoline (@ $4.37 per gallon.)

If the minimum wage had been increased at the same rate as the price of gas, the minimum wage would be over $21.00 per hour today.

http://www.infoplease.com/ipa/A0774473.html

Study: Raising the Minimum Wage Results in Modest Boost to Local Economies – Santa Fe, New Mexico

Santa Fe Living Wage: A Case Study

http://www.nmvoices.org/wp-content/uploads/2012/07/Minimum-Wage-report-web-8-12.pdf 

“The Santa Fe metropolitan area provides an ongoing real-time experiment in the impact of a fairly high minimum wage on the economy. Santa Fe currently has the strongest economy in New Mexico. Since April of this year, Santa Fe employers have been required to pay a minimum wage of $10.29 an hour.

The Santa Fe Living Wage ordinance initially set the Santa Fe wage at $8.50 an hour in 2004. It was raised to $9.50 in 2006 and, because it is indexed, has increased at regular intervals since that time. The unemployment rate in Santa Fe County—at just 4.7 percent—is the lowest of New Mexico’s four metropolitan areas. Job growth in Santa Fe is now at 2.1 percent, which may not seem impressive until one considers that the other three metropolitan areas are still losing jobs. Most of the job growth was in the leisure and hospitality sector—the sector most affected by the living wage floor.

The record in Santa Fe demonstrates that it is possible to have a fairly high cost of living and a fairly high minimum wage along with low unemployment and strong job growth.”