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Minimum rage: momentum builds in US to address low pay

by Ari Paul

 

The strikes at fast food restaurants and Walmart stores across the United States last year have had a clear political impact, bolstering the movement to raise the nation’s minimum wage to the extent that it may be a key factor in this year’s Congressional elections.

In his State of the Union address in January, President Barack Obama vowed to raise minimum wage for workers at federal contractors to US$10.10 an hour.

Unions and other worker groups involved in the recent wave of low-wage retail strikes are pushing for a wage floor of US$15 an hour.

The federal minimum wage is currently US$7.25.

According to the US Department of Labor, 3.6 million people in the country are working for minimum wage, making up about five per cent of the hourly-paid workforce.

“Raising the minimum wage is not an alternative to unionising,” said Amy Traub, a senior policy analyst at Demos, a liberal policy institute.

“Unions see it as a way to raise the floor for the labour market, which has undermined all workers at all levels of the economy. Unionised workers are feeling this pressure. Raising that floor will raise the position of everyone in the US economy.”

Traub added that labour support for a minimum wage increase had a political advantage, saying unions can “also use it to focus people on the economy and the inability of more and more of us to make ends meet.”

The nation’s Congressional Budget Office (CBO) stated that raising the federal minimum wage to US$10.10 an hour would see the loss of 500,000 jobs but would lift nearly one million families out of poverty.

It would also increase the income of some 16.5 million workers, according to CBO data.

Business advocates trumpeted the findings, vindicating their stance that raising federal standards on wages would increase unemployment.

In an email interview with Equal Times, Century Foundation fellow and labour attorney Moshe Marvit said: “I’m not certain how useful this estimate is because the report makes clear that there is a two-thirds chance that the reduced employment will be between almost zero to one million. Therefore, it takes a mid-point of 500,000. Such a broad range seems to indicate that the CBO was unsure of actual reduced employment.”

He added that the current wage gap was more pressing than any fear of unemployment fluctuation as a result.

“The current minimum wage is simply unsustainable and unconscionable. It’s not right that individuals who work full-time should be paid at a rate that falls below the poverty line.

“Raising the minimum wage is a good first step. If the CBO report proves correct, and unemployment rises, then further action should be taken to increase employment.”

 

“The conservatives are dead wrong”

In a statement, AFL-CIO President Richard Trumka dismissed the findings as well as the conservative embrace of the numbers.

“Every time momentum builds for lifting wages, conservative ideologues say it will cost jobs. Every time they’ve been dead wrong.

“Being consistently wrong and not caring about workers are the only two things conservative economists can be counted on for.”

Traub said of the report: “It used some flawed studies that used discredited methodologies.”

Unions and other advocates for raising the minimum wage have pointed to several positive indicators, including the fact that despite being staunchly anti-union Walmart – the largest private employer in the US – is considering supporting the governmental move to raise the minimum wage.

The clothing giant, Gap, also recently announced plans to raise its hourly pay rate in the US.

Traub said this was an inevitable outcome of stagnant wages hurting the consumer economy.

“It would increase their sales and boost productivity,” she said of the impact of a federal wage increase on the big retailers. “Their employees are also their customers.”

Traub also stressed that the pressure of this change has come from a unionisation push in the sector as well.

“There’s just been more militancy among low-wage workers,” she said. “Here in the US that’s a big part of why this is on the agenda now.”

Marvit agreed that if the Democrats can make the minimum wage a major campaign issue this year and deliver on a promise for raise, the party will be held in higher esteem among union members and progressives, a demographic that has been frustrated with the Obama administration’s economic policy.

“I think that the Democrats putting an emphasis on minimum wage—as opposed to say, the deficit—shows that income inequality is a high priority,” he said.

“However, the minimum wage is not enough. Democrats also need to push for more progressive tax policy, increased employment, infrastructure and education investments, and other policies that will lead to less income inequality in the long term.”

 

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