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Good News For Our Neediest Workers

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Here's some good news for the new year: Ten states are set to raise their minimum wage rates on January first.

The National Employment Law Project (NELP) calculates that the increased rates will boost the pay of more than 850,000  low-income  workers in Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont and Washington.

The rates, raised in accord with state laws requiring automatic adjustments to keep pace with the rising cost of living, will go up by 10 to 35 cents an hour depending on the state. NELP figures that will mean $190 to $510 more a year for the four million workers who are paid at the minimum in those states.

That may not seem like much in today's economy, but most of the workers are living at or near the poverty level, and it will mean a lot to them and their families. Another 140,000 needy low-paid workers will get indirect raises as pay rates are adjusted upward to reflect the new minimum wage in their states.

Nineteen states plus the District of Columbia will now have rates higher than the federal minimum.  But though the increases in state minimum wages are vital, what's needed now is also to raise the federal minimum so that all minimum wage workers are paid at a higher and uniform rate. The federal rate has remained at $7.25 an hour  – about $15,000 a year for the average minimum wage worker – since it was set in 2007, although inflation has continued to erode its purchasing power.

A bill now pending in Congress would raise the federal rate to $9.80 an hour by 2014, set the rate for tipped workers at 70 percent of that, and provide for the rates to rise to match future increases in the cost of living.

Federal action is badly needed, notes NELP's executive director, Christine Owens, to "make sure workers earn wages that will at the very least support their basic needs. But earning an income that meets basic needs shouldn't depend on the state where a working family lives."

OK, but won't increasing the pay of minimum wage workers discourage employers from hiring more workers and thus weaken the economy and hurt jobless workers? That's often claimed by fiscal conservatives, but it's simply not so.

NELP cites a large body of research clearly showing that "raising the minimum wage is an effective way to boost the incomes of low-paid workers without reducing employment." NELP notes in particular research showing that "even during times of high unemployment, minimum wage increases did not lead to job loss."

On the contrary. NELP estimates that increased spending by workers paid at the new state minimums will pump an estimated $183 million into the economy, creating the equivalent of more than 100,000 full-time jobs. Other estimates indicate that every dollar increase in wages for workers at the minimum rate would trigger more than $3000 in new spending.

But can employers afford to pay a higher minimum? Wouldn't it be a burden on small businesses, as those opposing a raise often claim? No. NELP found that more than two-thirds of minimum wage workers are employed by large companies, and that many of the companies could easily afford a raise, especially since they "have fully recovered from the recession and are enjoying strong profits."

There's no excuse for inaction.  Ten states have done the right thing for their neediest working citizens. It's time for Congress and President Obama to do their part.

Copyright © 2012   Dick Meister