An impressive lineup of seventy-five prominent economists, including 7 Nobel laureates and 8 former presidents of the American Economic Association have signed a letter to Congress and the President of the United States proposing a minimum wage of $10.10 per hour.
The letter also explains the economic benefits of such a measure.
Increasing minimum hourly pay would mean an annual salary increase from $15,000 to $21,000 for minimum-wage employees working full time and full year. The economists also propose raising the tipped minimum wage to 70% of the regular minimum.
Current minimum wage is a “poverty wage”
Senator Tom Harkin, the current Chairman of the Senate Health, Education, Labor, and Pensions Committee, said:
“Let’s be clear: our federal minimum wage of just $7.25, which has not budged in more than four years, is now a poverty wage. No American who works a full-time job should have to struggle to put food on the table or pay the bills.”
“All around the country, we’re seeing the impact of growing income inequality and stagnant wages on millions of American families. Raising the minimum wage will help narrow the income gap and enable millions of low-wage working Americans to make ends meet.”
Harkin, along with many other lawmakers as well as economists, business people and academic, stress that apart from being the morally right thing to do, raising the minimum wage also makes economic sense. It adds $22 billion into the economy and increases jobs over a three-year period by 85,000 as a result of greater consumer demand.
Congressman George Miller said:
“No one who works hard every day and plays by the rules should live in poverty. The time has come for America’s low-wage workers to get a raise.”
“The American people already know what so many economists understand: a decent minimum wage is not just a matter of basic fairness for hard-working families. It’s also good economic policy that will spur consumer demand and create jobs.”
Lawrence Mishel, President of the Economic Policy Institute, said “This letter shows that moderate increases in the minimum wage are embraced by a broad array of prominent economists. Research proves that raising the minimum wage is an important and effective policy instrument.”
The Harkin-Miller Minimum Wage Bill
Harkin and Miller introduced “The Fair Minimum Wage Act” which would raise the minimum wage in three phases of $0.95 each, from the present level of $7.25 to $10.10 per hour.
The Bill also indexes the minimum wage to the annual inflation rate.
The Bill would also increase the base wage paid to tipped employees from the present $2.12 per hour over a phased six-year period to 70% of the full minimum wage. The current tipped workers’ minimum wage has remain unchanged since 1991.
In his 2013 State of the Union message President Barack Obama pledged to provide an increase in the national minimum wage to $9. Obama said “No one who works full time should have to live in poverty.”
Thousands of fast food workers across the United States staged strikes last year over wages. The organizers of the strikes called for a nationwide minimum wage of $15. Demonstrations were seen in hundreds of cities; in Chicago workers marched down Michigan Avenue chanting “we cannot survive on $7.25.”
According to the Economic Policy Institute, 89.1% of all jobs in the fast food industry consist of front-line workers who receive an average hourly wage of $8.94. First-line supervisors are page on average $13.06 per hour.
Does the minimum wage kill jobs?
Economists have been debating for decades about the pros and cons of having a minimum wage. Studies have come out with conflicting and contradictory findings for as long as the theme has been debated.
In the Eurozone, Germany, with an unemployment rate of 5.2% has no minimum wage, while Spain and Greece do, and their unemployment rates are consistently over 25%.
A study of studies carried out by researchers at the University of California-Irvine found that most studies have demonstrated that raising a minimum wage does more harm than good.
The authors wrote:
“A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries.”