Make Hard Work Pay — Again
By Marian Wright Edelman
Publisher note- This is a good article, but bad for small businesses that are trying to stay a float.
One of our country’s most cherished values is the idea that if you work hard you can get ahead, be part of the middle class, raise a family comfortably, and ensure your children will do better than you did. But this is a hollow promise to countless families today. The sad truth is you can work full time in America and not be able to meet your family’s basic needs. A parent working full time at the federal minimum wage of $7.25 an hour earns $15,080 a year before taxes. That’s $4,700 below the poverty level for a parent with two children. Two-thirds of the 16.1 million poor children in America live with an adult who works, and 30 percent live with an adult who works full time year-round.
As CDF’s recently released “The State of America’s Children 2014” report highlights, in no state can a parent working full time at the minimum wage afford a fair-market rent two-bedroom apartment and have enough left over to pay for food, utilities, and other necessities. Child care costs alone can eat up more than half of a parent’s paycheck: the average cost of center-based child care for an infant is $9,500 a year. Most experts agree that families need to earn twice the poverty level to be able to begin to provide adequately for their children.
Today, we have an opportunity to begin to realign our values by enacting the Fair Minimum Wage Act of 2013 which would raise the minimum wage from $7.25 to $10.10 an hour, the first increase since 2009, and raise the minimum wage for tipped workers for the first time since 1991. The current federal minimum wage is worth 32 percent less in inflation-adjusted terms than at its peak in 1968. If it had grown at the same rate as wages for a typical worker in America since 1968, it would already be $10.65 an hour. But if it had grown at the same rate as productivity of the economy during that period it would be $18.30 today. So increasing the minimum wage to $10.10 an hour would restore the minimum wage closer to what it would have been if it had kept up with average wages but still leave it far below what it should be, given productivity and economic growth since the late 1960s.
Nationwide, increasing the minimum wage to $10.10 would increase a full-time worker’s salary to $21,008 and put $31 billion additional dollars in the pockets of as many as 24.5 million low-wage workers according to the Congressional Budget Office (CBO), Congress’ official budget arbiter. It would lift 900,000 people above the official poverty threshold. Nearly 90 percent of those benefiting would be 20 years or older and over half would be working full time. According to the Economic Policy Institute those affected by the minimum wage increase earn on average half of their family’s total income. The Economic Policy Institute has also found more than a quarter of those benefiting would be parents.
Most importantly, the increase to $10.10 an hour would improve the lives of an estimated 14 million children — nearly one in five children in America — by helping their parents put nutritious food on the table, keep a roof over their families’ heads, and make sure their children get the health care they need to ensure they can develop to their full potential. And an increase in the minimum wage would not cost the government anything — as the CBO acknowledged, it might even save money in the short term as people with increased incomes need fewer government benefits and pay more in taxes.
The increase also would help spur the economy. Recent research from the Federal Reserve Bank of Chicago found that raising the minimum wage to $10 could increase U.S. gross domestic product by up to 0.3 percentage points in the short term. Some resist a minimum wage increase because of fears it would lead to job losses, but after extensive research the latest consensus in the field is that this is not the case. This is why more than 600 economists, including seven Nobel Laureates, have endorsed the increase to $10.10, saying in a joint letter to President Obama and congressional leaders: “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of the evidence now showing that increases in the minimum wage have had little or no negative effects on the employment of minimum-wage workers, even during times of weaknesses in the labor market.” And even if you don’t believe the newest research is the most valid, and look instead at all the research combined, as the Congressional Budget Office conservatively did in its February 18th report, CBO’s best estimate was that this change would reduce employment by 0.3 percent. Should we really deny a certain income boost to 24.5 million workers to spare a much smaller number uncertain job loss? Of course not. If Congress is worried about uncertain job losses from a minimum wage increase, they could offset them through complementary policies like changes to the Earned Income Tax Credit, which boosts employment among low- and mid-income earners, or private or public sector jobs programs.
Increasing the minimum wage would give an immediate pay raise to millions of workers in America who are still waiting for the country’s economic recovery to reach them. No one in rich America should be working full time and be forced to live in poverty. That’s why nearly three-quarters of Americans support raising the minimum wage, including a majority of Democrats, Republicans, and Independents. There is no reason for Congress to continue to deny hard-working Americans, many of them parents, a long overdue and needed pay raise. It’s long past time to begin to make work pay again.
Marian Wright Edelman is president of the Children’s Defense Fund whose Leave No Child Behind® mission is to ensure every child a Healthy Start, a Head Start, a Fair Start, a Safe Start and a Moral Start in life and successful passage to adulthood with the help of caring families and communities. For more information go to www.childrensdefense.org.