Kansas City Star, July 23, 2008: Full-time workers deserve more than poverty-level income
By DIANE STAFFORD
The Kansas City Star
When restaurants use chalkboard menus so they can change fast-rising prices easily, I understand why the nation۪s lowest-wage workers need a raise.
When the young woman at the next pump is crying because her $10 budgeted for gasoline is not enough to get her to work and back this week, I see why the minimum wage isn۪t a realistic, livable wage.
When I walk past nearly all the fresh fruit in the grocery store because it costs so much, I empathize with those who can۪t afford fruit at all.
Yet many Americans can۪t understand, see or empathize. And they۪re complaining that the federal minimum wage today rises 70 cents an hour.
Inflationary! Bad for business! Cause of higher unemployment! Tool for teens to spend more on video games!
Or so they say.
I say find something else to complain about. Inflation is fueled by forces far greater than the costs of employing the nation۪s least-skilled, entry-level workers.
Furthermore, that very same free market that minimum-wage critics champion already has set a higher wage floor for many jobs, based on competition for labor and the nature of the work.
The federal mandate, part of a three-step minimum-wage increase that finally began last year, is merely playing catch-up to real world conditions. The purchasing power of the minimum wage had plummeted to a 51-year low in 2006.
If the government wanted to mandate realistic wage floors to keep workers on pace with inflation, it would have ordered an increase to about $9.50 an hour instead of $6.55 an hour. That۪s the new rate, where it will stay until a year from today, when it rises to a preordained $7.25.
The federal increase actually makes little difference in Missouri. The state, as many others, took matters into its own hands after years of federal inaction and passed a law that trumps the federal rate.
In Missouri, as of Jan. 1, the wage floor became $6.65 an hour, and because the law indexed the rate to inflation, it will go up again next Jan. 1, based on the increase in the consumer price index.
In Kansas, state legislators have chosen to stay blind to the livability factor. The state has a bottom-of-the-national-barrel minimum wage of just $2.65 an hour. Fortunately, though, the federal minimum-wage law supersedes the Kansas rate for all but a few thousand workers in the state.
I recently participated in a conference call with economists at the University of California-Berkeley, who conducted extensive minimum-wage studies. The studies reached three principle conclusions:
•In adjacent metropolitan counties around the country that have different minimum-wage levels, there is no evidence of adverse employment effects in the higher-wage counties.
•Any slumps in employment, particularly among teens, after historic minimum-wage increases reflected overall unemployment increases due to cyclical economic conditions, not a specific loss attributable to the minimum-wage increase.
•There is no evidence of larger-than-routine business relocations or business closings in metropolitan areas because of minimum-wage levels those cities set above the federal rate.
The economists shot validity holes in a couple of earlier, oft-cited studies by minimum-wage opponents. Here۪s the substance of what Arindrajit Dube, one of the economists at the Berkeley Institute for Research on Labor and Employment, said:
Within the economic community, there۪s been a shift. Previous belief that minimum-wage increases caused job loss is now met with skepticism by most economists. Recent case studies show that the earlier anti-minimum-wage reports didn۪t reasonably provide statistical controls for economic conditions.
Dube and fellow economists Michael Reich and Sylvia Allegretto said that polarizing politics and ideology have gotten in the way of economic evidence.
Some of the fiery debate could be quelled, they said, by doing what Missouri has done indexing minimum-wage increases to inflation.
Their studies support the position of Bruce Raynor, general president of UniteHere, which represents about half a million low-wage workers in the hospitality, food and other service industries.
“To say minimum-wage increases are inflationary is mean-spirited and wrong,” Raynor said in a telephone interview. “These workers spend every penny they get to live. They۪re working to pay the rent, transportation and eat. It۪s nonsense that we۪re just talking about teens and housewives working for pin money. There are millions of working adults who are paid the minimum wage. Clearly, I don۪t think anyone believes people can live on $6.55 an hour.”
I challenge any minimum-wage critic to try.
And don۪t give me the argument that others in the household work, therefore the minimum-wage earner isn۪t the sole supporter. In some households they are the sole breadwinner.
I believe that anyone who works full time deserves more that poverty-level income. If a job is worth doing, it۪s worth a livable wage. Minimum-wage earners don۪t get a price break on a gallon of milk or gasoline.
Low-wage earners can make a livable wage and support themselves or the rest of us can support them through taxes and government subsidy programs.
Tipping consideration
As the federal minimum wage rises to $6.55 an hour today, it won۪t cause much notice in Missouri, where the wage floor already is higher, but it will apply to the Kansas work force.
Jim Holland, an attorney at Fisher & Phillips, notes an important consideration for employees who earn tipped income in Kansas. Federal law will continue to require Kansas employers of tipped employees to pay a base cash wage of $2.13 an hour. But the higher federal minimum of $6.55, up from $5.85 an hour, means that Kansas employers may have to pay more to make up the difference if employees۪ tip incomes aren۪t enough to reach the new minimum.
Missouri law requires employers of tipped workers to pay a base wage of at least 50 percent of the minimum wage, or $3.325 an hour, which is half of the current Missouri minimum of $6.65. If tipped workers don۪t earn enough tips to get them to a $6.65-an-hour rate, the employer must make up the difference.
To reach Diane Stafford, call 816-234-4359 or send e-mail to stafford@kcstar.com. Read her recent columns and Workspace blog at www.workspacekc .typepad.com.