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Minimum wage at the centre of the US presidential campaign

by Maxime Robin

The bill is just a few pages long and its terms are quite simple: to increase the hourly minimum wage from US$7.25 to US$15 for all workers in the United States.

In November 2015, a month when trade unions in sectors such as fast food mobilised workers in huge numbers, this bill was circulating in Congress. For want of agreement between Democrats and Republicans, the bill is currently on hold.

Almost half of the active population in the US would benefit from the minimum wage increase, if it were to go through. According to the statistics of the National Employment Law Project, 42 per cent of workers earn under US$15 an hour, and the percentage is even higher among women and ethnic minorities.

The issue has been back in the media spotlight since the start of the primaries, and will undoubtedly be discussed during the Democratic National Convention, which begins this Monday.

Not surprisingly, socialist Senator Bernie Sanders is the most fervent proponent of a federal measure setting the minimum wage at US$15, across the board, everywhere in the country. Hillary Clinton, the presumptive Democratic nominee - who Sanders has finally endorsed - had initially spoken in favour of a more modest rise, to US$12, but then went on to align with Sanders’ position, albeit with some nuances.

In short, Clinton is defending a minimum wage of US$15 in major cities and US$12.50 in less dynamic areas, where small businesses, she argues, would struggle to cope with an almost double pay increase.

Against this background, the Obama administration decided, in May, in one of the last major measures of its mandate, to extend overtime pay to employees earning up to US$47,476 a year, that is, to more than 4 million workers. As of 1 December, these employees will have to be paid overtime when they work more than 40 hours a week, an obligation that only used to apply to those earning up to US$23,660.

It is a measure clearly aimed at the lower middle class and government employees.

On the Republican side, it is difficult to really determine the position held by the iconoclastic candidate Donald Trump. Whilst he originally spoke out against the minimum wage rise at the beginning of his campaign, he subsequently qualified his stance.

When MSNBC asked him the question in August 2015, he responded that America had to compete economically with nations paying their workers low wages, so having “a low minimum wage is not a bad thing”. He went on to add that it was a false problem, because he had a plan to create thousands of well-paid jobs in the United States. He promised, in his customary style: “I’m going to bring back jobs, you will be surprised, very surprised. So that we won’t even have to be talking about the minimum wage.”

But in March, after having won the Indiana primary and secured his victory in the primaries, he said on CNN: “I’m looking at that [the minimum wage increase]. I’m very different from most Republicans. You have to have something you can live on. But what I’m really looking to do is get people great jobs so they make much more money than that, much more money than the $15.”

 

“It’s time we had a decent wage”

Some parts of the United States are not waiting for the vote in the US Congress or until the presidential campaign is over. First of all, 29 out of 50 states have higher standards than the federal minimum - typically, between US$8 and US$9 an hour.

In addition, workers are also mobilising and regular demonstrations are being held in the fast food sector throughout the country. On 26 May, for example, over a hundred employees gathered in front of the McDonald’s headquarters in the suburbs of Chicago. Their aim was to disrupt the annual shareholder meeting, being held in Oak Brook, a village in Chicago’s suburbs and the seat of the company since 1971.

“Nothing is going to stop us,” said Anggie Godoy, a cashier at McDonald’s, who had travelled from Los Angeles. “Now is the time that we have to unite and be stronger because it’s time that we had a decent wage. We are just trying to survive,” she explained to the ABC television network.

“We are all living in poverty regardless of what area we live in and McDonald’s just made $1 billion in profit during the first three months of this year.”

For the first time, this year, two states voted to raise the minimum hourly wage to US$15: California in March, followed by New York State in April.

Prior to that, the US$15 minimum wage had already been voted in at municipal level in a number of major cities in the west of the US, where everyday life is very expensive, such as Seattle or San Francisco. The latest big city to adopt the measure is none other than the capital of the United States, Washington D.C. It was a great victory for the local and national trade unions grouped within the national “Fight for 15” movement.

The mayor of Washington, Muriel Bowser, is in favour of the bill. “I see how much it costs to live in Washington D.C. And that cost is only going up. Even at $15, it’s tough to be able to afford to live in Washington, D.C.,” she told Associated Press.

Opponents of the minimum wage increase, such as the speaker in the House of Representatives, Republican Congressman Paul Ryan, or EPI - which presents itself as a "research organization" -, argue that it will have negative effects, will destroy many unskilled jobs and will cut off the first rung of the employment ladder for the youngest and least qualified workers.

Where does the truth lie? Some answers can be found in Seattle, which is pioneering the initiative: the city voted in favour of the US$15 minimum wage in 2014 and over the last two years has acquired the status of a pilot city.

The concrete effects of the US$15 minimum wage in Seattle are currently being studied by an economics professor from the University of Washington, Jacob Vigdor.

His research - financed by the city – reveals that, first of all, the minimum wage increase is being phased in gradually, so as not to deal a sudden blow to employers’ finances. It is currently at US$13 and will not go up to US$15 for another few years.

It has not had much impact on the city’s economy so far. Although food prices have risen slightly, the measure has not had any detrimental effects on employment.

The workers interviewed by Vigdor reported a noticeable improvement in their living standards. But they are also anxious, because many receive benefits of various kinds that decline in value as their wages rise. The increase is “helping people buy food and just the basic necessities of life, but I’d say that they are sceptical."

"One thing that we have heard from employers is that the minimum wage is working just fine for them now, but that’s not necessarily going to hold the next time a recession comes along” he said in an NPR radio interview.

Vigdor adds that it is easier, in a city like Seattle, the seat of tech multinationals like Microsoft or Amazon, to pull off such a measure.

He is more circumspect about more remote areas of the United States or those hard hit by recession, where the wealth has almost completely disappeared, like the rural areas of the “Old South” or the “Rust Belt”.

“And it might not work so well in a place that has uniformly higher poverty, doesn’t have as many of these tech sector jobs or other types of high-income employment to make it all work,” he concludes.

 

This article has been translated from French.

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