Wednesday, February 20, 2013
Raising the Minimum
It is hard to argue that as a society we have not “oppressed the hired workers in their wages.”
From 1967 until 2011 the richest quintile of the country has seen a 75% increase in income. The second quintile has gone up 42%, and the bottom 60% of the country has averaged about half that much. If we look more closely, we find that within that top quintile the richest 5% have had an increase of over 94%.
Before the Great Recession, the gap between the richest Americans and everyone else reached its highest level since the Great Depression. Since the recession (allegedly) ended in 2009, the top 1% has enjoyed an 11% gain in income. The other 99% has gained nothing. The median income today, adjusted for inflation, is 11% lower than it was in 1999.
For those of us who are followers of Jesus (or of the Hebrew prophets), the increasing gap between the richest and the poorest Americans is a major ethical problem. It may well be the most important ethical issue we face. Certainly, it is one of the most important economic problems we face.
Raising the minimum wage to $9.00 per hour would be a small step in addressing that growing gap. Adjusted for inflation, the minimum wage would need to be over $10.00 per hour to equal what it was in the 1960’s, so this is a modest step.
The Cato Institute argues that raising the minimum wage will cost jobs and hurt the very people it is supposed to help. Others argue that raising the minimum wage is like “giving a man a fish,” which will feed him for a day, rather than “teaching a man to fish,” which will feed him for a lifetime. Curiously, these same critics are not proposing any job training programs or new educational initiatives.
In the gilded age before the turn of the last century, the Social Gospel reformers argued that factory workers should be paid a living wage. The owners argued that any such windfall would be bad for the workers. They wouldn’t know what to do with the money and would inevitably squander it like the prodigal son, on “riotous living.”
In a recent column in the New York Times, Nobel laureate Paul Krugman acknowledges the theory behind the arguments against raising the minimum wage, but argues that “there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many “natural experiments” here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.”
Since the 1960’s worker productivity has doubled, but little of that gain has been shared with those doing the work, especially those at the bottom of the economic ladder. It’s time to give them a raise.