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Saturday, October 22, 2016

Raising the minimum wage to $10.10 an hour, as proposed in the Fair Minimum Wage Act, would increase the total combined wages of blacks, Hispanics, and Asians by $16.1 billion, according to a new report from the Center for American Progress.

The report notes that if the Fair Minimum Wage Act were passed, 6 million workers would be lifted out of poverty – and 60 percent of them would be people of color. The reason is simple: despite making up only 32 percent of the total workforce, minorities represented 42 percent of minimum-wage workers in 2013.

As illustrated in the chart below, Hispanics would benefit the most from a wage hike, with an $8.5 billion total wage increase. Blacks closely follow, at $5.2 billion. Asians would receive a $2.4 billion increase.

CAP Chart

In addition to lifting millions of workers out of poverty, a minimum-wage hike would also reduce government spending, because fewer people would need to rely on safety-net programs like the Supplemental Nutritional Assistance Program (SNAP). In total, the Center for American Progress’ report attributes $46 million in savings over 10 years if the minimum wage were increased.

Many lawmakers on the right explain their opposition to a minimum-wage increase by arguing that it would hurt small businesses unable to afford the higher costs, and would result in massive layoffs.

However, as 602 economists pointed out in an open letter to President Obama and congressional leaders, past increases in the federal minimum wage had “little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”

In fact, the economists – seven of whom are Nobel laureates – argue that raising the minimum wage could have a “small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.”

Ultimately, raising the wage is both good policy and good politics. When, as the Center for American Progress reports, full-time minimum-wage earners make only $15,080 — $4,000 below the federal poverty line – a wage hike means helping those who need it most. And given Republicans’ desperate need to fix their image among minorities, raising the wage would also be a great political move for the GOP.

Photo: Pbarcas via Flickr
Chart via Center For American Progress

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  • Independent1

    From the article:
    “In total, the Center for American Progress’ report attributes $46 million in savings over 10 years if the minimum wage were increased.”

    I believe that’s a typo – it should read: “In total, the Center for American Progress’ report attributes $46 Billion in savings over 10 years if the minimum wage were increased” My add on: By approving a minimum wage increase, the GOP would actually realize a greater savings in the SNAP program over the next 10 years than what they had pushed for last year in cuts to SNAP which was 40 Billion over 10 years.

    And a couple additional positives that I’ve pointed out before:

    Washington State which has one of the the highest minimum wages enacted in any state, is actually outperforming the nation in job creation. Washington has seen absolutely no downside affect to its businesses while raising its minimum wage (it’s close to $10/hr).

    And McDonald’s outlets in Europe, where the minimum wage is $12/hr are actually more profitable than their outlets here in the U.S. Which I attribute to the fact that McDonald’s customers in Europe, which like here in America, probably include a fairly high percentage of minimum wage workers; and with a $12/hr minimum wage, the McDonald’s minimum wage earning customers can afford to order the more profitable items off McDonald’s menu, e.g., combo meals, unlike in America where most minimum wage earners are probably forced to order the lower priced (may $1 menu) items which have very little profit margin.

    Raising the minimum wage would be a win,win for not only American workers, but also for businesses and our government. Refusing to go along with raising the minimum wage is just one more example of the GOP’s ignorance with respect to running a government.

    • dtgraham

      I’m completely with you Independent1. Often it really helps just to look elsewhere and observe real world examples of what happens when various policies are enacted, as opposed to partisan economic theories that purport to explain what’s supposed to happen. Not that one country’s experiences can necessarily be grafted onto another country with the same results in every single instance, but it’s still a worthwhile exercise—particularly in regards to the minimum wage.

      I once thoroughly researched the European experience with the minimum wage when debating a Republican troll on this website one time, so I’m familiar with what you’re talking about there. Highlighting what has happened in higher minimum wage states like Washington, NY, etc.. is also helpful, and I’ll leave you with this website from rabble on the Canadian experience.

      Not mentioned in the article is the Ontario Convenience Stores Association being just fine with the new Ontario minimum wage of $11.00 per hour, according to the OCSA CEO Dave Bryans. The minimum was also just raised to $11.00 per hour in my home Province and our unemployment rate remains at 5.4%. The Canadian unemployment rate has been fluctuating between 6.5% and 7.0% lately. The last 10 year inflation rate average was 1.8%, and the consumer price index is very similar to America’s.

      • Independent1

        Thanks for feedback and the link. So there’s a contingent in Canada just like here that tries to sell the misinformation about raising the min wage will cost jobs. I especially appreciated the comments in the article from the link you provided that proves that’s justs not true. From the article:

        So is this, in fact, true? Does increasing the minimum wage = job losses?

        Happily, Ontario has some recent history to rely on in answering this question. The province raised the minimum wage four times between 2007 and 2010, from $7.75 to $10.25 an hour. According to the foes of minimum wage increases, there should have been job losses every year as a result. But in fact, year-to-year unemployment rates stayed the same or decreased in Ontario in each of those years with the exception of 2009, the year of the economic downturn.

        A better example might be Québec, which raised its minimum wage for nine consecutive years between 2005 and 2013, increasing the rate from $7.45 to $10.15 during that period. Out of those nine years, unemployment increased just once — again in 2009.
        It’s interesting too that Canada has been well ahead of us with respect to adjusting its min wage (I attribute that to the retardness of the GOP) – already having gotten their min wage over $10. Maybe that’s why the Canadian middleclass as displaced the American middleclass with respect to being on average the wealthiest on the planet. I briefly saw an article somewhere on that yesterday – the American middleclass is no longer the wealthiest on the planet.

        • dtgraham

          Yes there is a contingent that still squawks about minimum wage increases in Canada. Their arguments are preposterous given the history of frequent minimum wage increases in the Provinces that never seem to bear out their arguments. Their reasons never change despite all conceivable evidence to the contrary. I sometimes think that the modern North American upper 1% and their allies are more a religion of abstract ideals than they are a political philosophy. They have their mantra which they keep repeating over and over again. It never changes and it doesn’t have to make observable sense. The greedy rich are what they are no matter where you live. The only thing I would add is that they don’t have the media platform or the ability to lobby financially in Canada the way they do in America.

          I saw those reports on the Canadian middle class too. It presents an interesting conundrum for the parties on the left and center/left up here. All of them have been working with President Obama’s White house/re-election team, and have been picking up some of their best tactics. The NDP finance critic (Nathan Cullen) specifically mentioned his party’s relationship with the President’s team and I saw two members of President Obama’s staff being interviewed at the Liberal party convention. The reason this is relevant is because I’ve never seen those parties talk about the middle class so much (especially the NDP) as recently. Ever. Extreme focus on middle class rhetoric has been a successful Democratic party strategy in the U.S. in more recent times, but it’s something you never hear in Canadian politics. I don’t ever recall talk about the middle class before but now it seems to be all you ever hear, and it sounds so odd up here. This is obviously a tactic that they’ve recently been taught by Obama’s team, but now with the recent revelation of the strength of the Canadian middle class vis-a-vis the rest of the world …where do you go from here with it? I would suspect that strategy is going to be altered some fairly quickly.

          I appreciate President Obama’s team support for my party (NDP) very much, but I suppose that not all winning political strategies are necessarily universal. It’s more at the operational end of things that the Obama team’s knowledge has been a great asset. I’ve been wondering how it was decided which Canadian progressive parties that Obama team members were chosen to work with. It must have been something like, “how much do you like trees?” (Green party) or “how much of a socialist are you?” (NDP)

          As to your last paragraph Independent1, I wouldn’t discount any nation with an annual GDP of 17 trillion dollars. It just has to be distributed a little better, that’s all. The United States is a very wealthy nation.