Higher minimum wages don't kill jobs
Wed, 04/12/2006
President Ford once said, "The American wage earner and the American housewife are a lot better economists than most economists care to admit."
That might explain why, despite the sky-is-falling cries of "neo-economists" who predict unemployment, Americans consistently support raising the minimum wage. Why? They don't believe these hired Chicken Littles - with good reason.
It's never been clearer than today that higher minimum wages do not increase unemployment. Ironically, we have the Bush administration and this Republican Congress to thank for that. Their shamefully historic neglect of the federal minimum wage, mired at $5.15 an hour for eight years and counting, has led many states to pick up their slack. The result is a national patchwork of minimum wages, which have repeatedly demonstrated no negative economic impact of raising the lowest legal wage.
At the high end, the reigning champion, in the Northwest corner, weighing in at $7.63 an hour - Washington state. But don't get too excited. That's just $15,870 a year for a full-time worker.
I was proud to file the 1998 initiative that took the politics out of the issue and made Washington the first state to annually adjust its minimum wage for inflation. And I was even prouder when voters approved it by a 2-to-1 margin. Since then, Oregon ($7.50), Vermont ($7.25) and Florida ($6.40) also have indexed their minimum wages.
Back in 1998, corporate lobbying groups trotted out their think tanks to warn of catastrophic consequences if we voted "yes." Well, eight years after we ignored them, Washington state should now be the poster child for runaway minimum wage-induced job loss. Is it?
"The Washington state economy right now is a job engine drawing people in from the sidelines and into the job market," said Greg Weeks, director of the Washington's Employment Security Department's economic-analysis branch. This March 2006 statement came with a job-growth report that showed Washington outpacing the rest of the nation, with a 3.5 percent gain over last year.
As of January 2006, 12 of the 17 states with minimum wages higher than the federal level have state unemployment rates lower than the 4.7 percent national rate, according to the Bureau of Labor Statistics. Washington state is one of them.
Since our state began regularly increasing its minimum wage in 1999, employment in sectors that traditionally pay at or near the minimum wage have posted sustained job growth, according to Employment Security Department data.
For example, eating and drinking establishments have added jobs every single year except 2002, the year the post-9/11 recession began, causing job losses in all sectors. From January 1999 to January 2006, restaurant and bar employment in the state increased 10.1 percent, while overall non-farm employment increased by 7.9 percent.
Back in 1998, the Chicken Little neo-economists also said that employers in high-wage Western Washington may be able to withstand minimum wage increases, but those in lower-wage Eastern Washington would suffer. This was a real cause for concern, especially in places like Spokane, where leaders have struggled for decades with strategies to increase the number of higher-paying jobs.
Guess what? A December 2005 report by state Regional Labor Economist Jeff Zahir finds that is finally happening in Spokane County. There are 4,800 fewer jobs paying less than $20,000 than there were a year ago. And those jobs didn't disappear. Zahir found evidence that the workers simply moved up to the higher $20,000-30,000 wage bracket, which posted a gain in similar numbers.
Bottom line: the neo-cons who control America are flat-out wrong on this issue.
Since 1997, the cost of a loaf of bread has gone from $.86 to $1.04; the cost of a dozen eggs has gone from $1.15 to $1.45; and the cost of a gallon of gas has gone from $1.26 to $2.32, according to the Bureau of Labor Statistics. But the lowest legal wage hasn't gone up one stinkin' dime. And during that period, Congress has voted itself eight pay raises totaling $31,600, or three full years' pay for a federal minimum wage worker.
At least the neo-cons aren't conning voters, who'll continue to raise the minimum wage every chance they get.
Rick Bender is president of the Washington State Labor Council, AFL-CIO and can be reached at wslc@wslc.org or 281.8901.