Dick Meister: A decent living for all?

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Dick Meister, former labor editor of the SF Chronicle and KQED-TV Newsoom, has covered labor and politics for more than a half-century. Contact him through his website, www.dickmeister.com, which includes more than 350 of his columns.

Finally there's some good news for the millions of Americans who must to live on pay at or close to the legal minimum wage. Eight states are raising their minimum wage on January First, in line with state laws requiring the minimum to keep pace with inflation.

The raises to come are modest by any measurement. But any increase must be welcomed as desperately needed and hopefully as a major start toward increasing the minimum wage everywhere to a level that will provide a decent living to all working Americans, many of them living in poverty or near-poverty.

The minimum wage is just as important now as it was in 1938, when the wage law was enacted as part of the Fair Labor Standards Act, with a promise of guaranteeing workers "a standard of living necessary for health, efficiency and general wellbeing."

The federal rate was set at 25 cents an hour, with states and local governments free to set their own minimums, as long as they are above the federal rate.

Today's rates are much higher, of course, although barely adequate. The federal rate is $7.25 an hour, only about $15,000 a year for full-time workers before taxes and other deductions. Eighteen states, more than 100 cities and counties and the District of Columbia have higher rates, but their rates also are clearly inadequate.

During his 2008 election campaign, President Obama proposed raising the minimum to  $9.50 an hour by 2011. But even though that would merely adjust the minimum wage for inflation, Congress and the White House have done little to make it happen.

Some of Obama's Republican opponents in Congress actually have called for the minimum wage to be abolished, largely because their big money backers in the restaurant business, who employ about 60 percent of all minimum wage workers, are against it, as are many other business and corporate interests.

Congress' failure to act has left it up to the states. The eight that are raising their rates on New Year's Day include Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington.  Their rates will increase by 28 to 37 cents an hour to between $7.64 and $9.04. The National Employment Law Project (NELP) calculates that will bring nearly 1.4 million full-time minimum wage workers an extra $582 to $770 per year.

Another 400,000 will get raises as pay rates are adjusted upward to reflect new minimum wage rates. It's not just individual workers who will benefit from the raises. Like all low-wage workers, they must spend virtually every cent they earn, thus raising the overall demand for goods and services and the hiring of new employees to help provide them.

NELP estimates that the increased consumer spending generated by the raises will add $366 million to the gross domestic product and create the equivalent of more than 3,000 full-time jobs. Other estimates indicate that every dollar increase in wages for workers at the minimum creates more than $3,000 in new spending after a single year.

And we shouldn't forget that those earning the minimum include many of our most valuable yet needy and exploited workers.  Most work in the service or retail fields, as domestics providing home health care for the elderly and other household services or caring for the children of working mothers, for example. Others work in agriculture.

Many can't find full-time jobs even at the bare minimum.  More than one-third are the main or sole support of their families. Almost two-thirds are women, many of them single mothers. One-third are African-American, Latino or Asian. Many are recently arrived immigrants. Only a few belong to unions or have other protections aside from the law.

But wouldn't a minimum wage increase cause businesses to cut back their hiring, as opponents of minimum wage raises claim? No. Studies show that even during times of high unemployment, raising the minimum does not lead to a loss of jobs. Actually, the number of jobs has grown after each of the 19 times the federal minimum has increased over the past 73 years.

Consider this, too: Taxpayers are providing billions of dollars in subsidies to employers of minimum wage workers, since much of the money paid out in public assistance goes to families whose working mothers do not earn enough to be self-supporting. Private charities provide additional millions in aid.

There's no doubt employers are shifting a significant part of their labor costs to the general public, and no doubt that welfare costs could be reduced substantially if the minimum wage they had to pay was raised to a decent level.

Think of the benefits to society generally if the minimum wage workers who now must depend on government assistance could earn enough to make it on their own.

Think of the benefits to employers. As several studies have shown, raising workers' pay raises workers' morale and with it, their productivity, while decreasing absenteeism and replacement costs.

Think of the benefits to small retail businesses. Opponents of a minimum wage increase say they'd be hurt the most by a higher minimum wage, but it's far more likely they'd be among the greatest beneficiaries. For minimum wage workers have no choice but to spend most of their meager earnings in neighborhood stores for food and other necessities.

Tiffany Williams of the Institute for Policy Studies says raising the minimum wage "would be a step toward restoring dignity for millions of workers, enabling many ordinary working Americans to become part of the economic recovery rather than its collateral damage."

Hard to argue with that, or with Christine Owens, NELP's executive director,  who says the minimum wage increases "represent bright spots on an otherwise bleak economic horizon. Workers' buying power is the secret weapon in the fight to get our economy back on track. States are taking action to protect that critical buying power. Congress should follow their example to realize those benefits for the national economy."

Let the minimum wage raises in eight states be just the beginning of raises in all states.  Let all Americans have the right to a decent living

Dick Meister, former labor editor of the SF Chronicle and KQED-TV Newsoom, has covered labor and politics for more than a half-century. Contact him through his website, www.dickmeister.com, which includes more than 350 of his columns.

Comments

has the effect of suppressing employment at the margin. So while getting a Sf worker getting $10 an hour is a good deal when that is significantly above what his job is actually worth to an employer, nobody can be surprised when that company hires less people. Or even relocates somewhere with only the federal minimum.

Business isn't a bottomless pit to be dipped into every time a self-serving, santimonious politician want to engage in some pork, and ultimately there isn't a free lunch. You can have more workers at lower pay rates or fewer workers at higher rates. By advocating a high minimum wage, you're effectively saying you want higher base pay AND higher unemployment.

Some of us think that such decisions are better made at the local level.

Posted by Guest on Dec. 23, 2011 @ 4:07 pm

On the one hand, you say businesses will relocate, on the other hand you say such decisions are better left locally. Seems to me that even if we accept your premise that increasing the minimum wage leads to more unemployment, the obvious solution is to raise the minimum wage nationally.

Personally, I think the whole premise is wrong. Businesses can't just "relocate" on a dime. There's a cost to relocating, and that cost probably exceeds the small increase in wages that they'll have to pay. And there are a whole myriad of reasons why a business owner chooses to locate where they do besides the minimum wage. If your premise was correct, we'd see all businesses leave California (and certainly San Francisco!).

Even more fundamentally, businesses don't hire people because they CAN. Businesses are NOT in the business of creating jobs. They hire people because they need work done. If they need the work done, they'll hire someone whether they have to pay $10 or $11. If they don't need it done, they won't hire even if they can get away with paying $7.

What does change with an increase in the minimum wage, is the purchasing power of consumers -precisely THOSE consumers who are most likely to spend every penny they get. For stimulating the economy, that's exactly what you want. More money in the pockets of working people means more demand for the stuff that businesses produce, means more growth for businesses and ultimately more jobs.

Posted by Greg on Dec. 23, 2011 @ 5:51 pm

relative to other locations, particular ones that are commutable. SF's problem is that there are three other Counties within 10 miles. Now, have you ever noticed that at each point where you leave SF, there are business parks, shopping malls and clear evidence of large scale business activity. Ever wondered why?

Twitter of course was not a "minimum wage" issue, but a payroll tax issue. But the principle is the same.

The SF Restaurant Association recently pointed out that a waiter in SF costs 50% to 100% more to employ than in Manhattan, which is hardly a low-rent area either. That can't make sense.

Of course it's harder for a restaurant to move. But they close all the time and their high cost base, made worse by the healthcare surcharge, is a major factor in the high turnover of restaurants.

It's also not true, as you suggest, that demand for labor is totally inelastic. In fact, it's price sensitive and if wages are artificially raised, and my payroll budget is fixed, then it's clear that I will either hire less, cut hours or lay some folks off.

There's no such thing as a free lunch, and interfering in a free market is ultimately aself-defeating zero sum game.

Posted by Guest on Dec. 24, 2011 @ 9:47 am

"Now, have you ever noticed that at each point where you leave SF, there are business parks, shopping malls and clear evidence of large scale business activity. Ever wondered why?"

Lack of space and desire for preservation of San Francisco's historic character may have something to do with it.

"The SF Restaurant Association recently pointed out that a waiter in SF costs 50% to 100% more to employ than in Manhattan, which is hardly a low-rent area either. That can't make sense."

You're right. It doesn't make sense. It's probably a load of horseshit, like much of the rest of their chicken-littleism.

"Of course it's harder for a restaurant to move. But they close all the time and their high cost base, made worse by the healthcare surcharge, is a major factor in the high turnover of restaurants."

As a foodie, I can tell you the main reason for the turnover. You actually have to be GOOD here to survive. San Franciscans are worldly people with refined palates. That's both good and bad for restaurants. It's good, because we're always willing to try new things and there's a market for good food, even if it's a bit expensive, that just doesn't exist elsewhere. That's why this is hands down, the best place for restaurants in the whole US (and yes I include New York in that). And you can see that in the number of businesses that exist here. Even with taxes, health care (which they skimp on anyway), mandatory sick leave, etc., nowhere else do you see the kind of vibrant restaurant culture that you do here. We pay good money for our restaurants. We just ask that in return they treat their workers right. If you don't like the deal, then you're welcome to go peddle your $15 sous-vide organic Australian lamb burger in low-tax, low-regulation St. Louis and see how long before you're out of business!

On the flipside, though, you're going to see a lot of turnover. Because that same customer base can quickly separate the wheat from the chaffe. Hype alone may keep you full for a few weeks while everyone tries you out, but if you're just mediocre, customers will go elsewhere. Mediocrity may cut it in San Antonio, but not in San Francisco.

Incidentally, I don't know how much you eat out, but if you do, I'm curious about something. Take one piece of "onerous" legislation (written by the hated Chris Daly no less) which was vehemently opposed by the GGRA: mandatory paid sick days. Now me... I'm glad that waiters don't have to choose between coming to work with a head cold and not getting paid anymore. Not just for their sake, but for mine! Are you seriously telling me that in the service of your "free market" ideology, you'd rather have more sick waiters coughing in your food? Really? To me that seems like cutting off your nose to spite your face.

Let's move on...
"It's also not true, as you suggest, that demand for labor is totally inelastic. In fact, it's price sensitive and if wages are artificially raised, and my payroll budget is fixed, then it's clear that I will either hire less, cut hours or lay some folks off."

If your payroll budget is so fixed and inflexible that when you have more customer demand (due perhaps to more people with money in their pockets from a higher minimum wage), you still refuse to hire more people and grow your company in response to the extra demand... well then I say you're a lousy businessperson who will soon be outcompeted by someone with a more realistic outlook on life.

"There's no such thing as a free lunch"

Except if you're a big corporation that thinks it can extort something for nothing from the taxpayers. In that case, every day's a holiday and every meal's a feast I guess.

Posted by Greg on Dec. 24, 2011 @ 4:41 pm

Your post is simply nonsense.

Minimum wage increases do not decrease hiring. Here is the link to the latest, of many peer reviewed papers, showing that the common myth assumed by many economists (that establishing minimum wages decreases employment) is simply false.

http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009.00723.x/full

Posted by Eric Brooks on Dec. 23, 2011 @ 7:27 pm

"The Minimum Wage - Washington's Perpetual Myth" by Matthew B. Kibbe of George Mason University, which concludes:

"Regardless of the intentions of its supporters, the proposed minimum-wage legislation cannot achieve their stated goal of raising the real income of the poor to a more livable level. Indeed, it is an extremely shortsighted policy that can only breed destruction, by eliminating the jobs of those who need work most: the poor, the young, and those suffering from discrimination.

What has been touted as a matter of basic economic justice turns out to be a self-serving issue for many of its supporters. If the minimum wage is increased, labor unions and their influential friends in Congress will make big gains. Unfortunately, everyone else will lose.

In the long run, however, such policies will hurt every-one. As unemployment increases, business becomes more and more unproductive, and the overall quality of life declines, all Americans will suffer."

Posted by Guest on Dec. 24, 2011 @ 10:38 am

Everybody has one, including Matthew Kibbe, who's a HUGE asshole in his own right. He's the CEO of an outfit called "Freedomworks," which is a tea party agitprop group whose other partner is the aptly named Dick Armey.

As such, I'm hardly surprised that Matty Kibbles holds the opinion that he does. What he doesn't do is offer one shred of evidence that his opinions have any relation to reality.

What you're doing, guest, is you're using an rhetorical trick. You're trying to back up an empty, discredited opinion, by bringing up a supposed "expert" to make said opinion sound more legit. But that "expert" offers no actual evidence, and is in fact just another hack who holds the same empty, discredited opinion.

Posted by Greg on Dec. 24, 2011 @ 4:55 pm

"By advocating a high minimum wage, you're effectively saying you want higher base pay AND higher unemployment."

Not necessarily. The constraints might also be satisfied by higher base pay AND a lower return to capital, f'r instance.

The "free market" is touted as a near-miraculous way of achieving optimal outcomes within given constraints. Since the minimum wage applies to all workers and all employers, I don't see it leaving the playing field all that much less level than it would otherwise have been.

So raise the minimum wage, and let the market sort it out, say I. Does that make me, like, a Chicago School socialist?

Sort of off the topic of free lunches, I'm curious. What does the difference between a free lunch and compound interest look like, subjectively speaking, from atop a trust fund? I might consider volunteering, if anyone is doing a study. Even if I have to give back the fund at the end, it'd be fun while it lasted.

Posted by Guest on Dec. 29, 2011 @ 1:38 pm

I would like to ask a question. I work for a large medical facility in the Pa. area. The company policy is to take one half hour for lunch. Certain employees take an hour. When I brought it to the managements attention they acted as if they just heard about it, one comment they made is that they cannot keep track of these certain employees. These employees work along with me at times and it does affect me especially when we are super busy. I have to hustle until they decide to come back from their HOUR lunch!!!!!!!!! Myself and my co-worker all have to sign in and out for lunch,(of which the nurses tell me at times my co-workers take 45 min.) My question is, where can I go from here for policy purposes, I feel as though I am being abused, both physically and emotionally. I am on my feet ALL day!!! I do not want to jeopardize my employment. Usually I work in a separate area from my co-worker, but when needed I assist them with transports, discharges etc..when needed.
The people taking an hour lunch have a different title, but also rotate and assist me in the area I am daily assigned to.

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