Why America Needs a Living Wage Now

What does the current minimum wage actually do for the Large Corporations who have made the minimum wage part of their basic wage scale? A lot actually. Firstly, it allows the U.S. Taxpayer to subsidize the giant Corporations who fully realize that just about every full time minimum wage earner in America (Average age 35) will qualify for some kind of “Public Assistance” due to their minimum wage status. In essence, the Large Corporations paying minimum wage fully know that they are being subsidized and therefore adding to their bottom line, courtesy of the U.S. Taxpayer.

Utilizing the U.S. Bureau of Labor Statistics CPI Inflation Calculator the 1980 $3.35 minimum wage has the buying power today of $9.51 per hour. The Grocery bag costing $3.35 in 1980 will cost you $9.51 today and that’s bad, but that’s not the whole story. The cost variables of living today are far greater than variables in 1980. In essence the “buying Power” of the $9.51 today is less than the buying power of $3.35 in 1980. The argument is not simply about the amount of money in your hand. It is about the real 2014 value of that money in your hand. The actual cost of simply living and being a productive, well-nourished, safely sheltered and informed citizen today is far different than in 1980 and far more expensive. The CPI does not even take that into account.

The far more complex American Society we are in today simply costs more to live in.
A $10.10 Minimum wage is wholly insufficient to lift the poor out of poverty. It is like giving water wings to a drowning man so he can barely keep his head above the water. It helps , but it does not address the person’s actual predicament. No one can maximize the American Dream on a $10.10 minimum wage.
In order to keep pace with inflation and lift the poor from the dire straits of poverty, it is my view that America must mandate a $12.12 living wage today and not over a two year transition.

IS THERE AN ALTERNATIVE? No. Other programs, including food stamps, Medicaid and the earned-income tax credit, also increase the meager resources of low-wage workers, but they do not provide bargaining power to claim a better wage. In fact, they can drive wages down, because employers who pay poorly factor the government assistance into their wage scales. This is especially true of the earned-income tax credit, a taxpayer-provided wage subsidy that helps lift the income of working families above the poverty line.

Conservatives often call for increases to the E.I.T.C. instead of a higher minimum wage, saying that a higher minimum acts as an unfair and unwise tax on low-wage employers. That’s a stretch, especially in light of rising corporate profits even as pay has dwindled. It also ignores how the tax credit increases the supply of low-wage labor by encouraging more people to work, holding down the cost of labor for employers. By one estimate, increasing the tax credit by 10 percent reduces the wages of high-school educated workers by 2 percent.

There are good reasons to expand the tax credit for childless workers, as President Obama recently proposed. It is a successful antipoverty program and a capstone in the conservative agenda to emphasize work over welfare. But an expanded E.I.T.C. is no reason to put a hold on raising the minimum wage — just the opposite. A higher minimum wage could help offset the wage-depressing effect of a bolstered E.I.T.C., and would ensure that both taxpayers and employers do their part to make work pay.

HOW HIGH SHOULD IT BE? There’s no perfect way to set the minimum wage, but the most important benchmarks — purchasing power, wage growth and productivity growth — demonstrate that the current $7.25 an hour is far too low. They also show that the proposed increase to $10.10 by 2016 is too modest. That is why I propose a “Living Wage” be established at the ground floor of $12.12 per hour.
The Economic Policy Institute says the results of the wage debate are clear. Decades of research, facts and evidence show that increasing the minimum wage is vital to the economic security of tens of millions of Americans, and would be good for the weak economy.

The night before signing the Fair Labor Standards Act, in a radio fireside chat, Roosevelt said, “Do not let any calamity-howling executive with an income of $1,000 a day … tell you … that a wage of $11 a week is going to have a disastrous effect on all American industry.”

Democratic Candidate for U.S. Representative, NC-03