Free market ideologues are so blinded by their “pure” economic theory that they routinely ignore overwhelming evidence that government intervention in the economy is not always bad.
Insisting on a completely free labor market, which keeps workers at the lowest possible salary, has proved to be disastrous for workers’ lives as well as the economy as a whole.
In his recent column on the minimum wage (Daily News, Nov. 27), Dale Courtney follows the same “logic” as former Congressman Bill Sali. In a debate on the federal minimum wage in 2009, Sali embarrassed himself by proposing that the House pass a bill against the law of gravity. Sali and Courtney both believe that the law of supply and demand has the same hard predictive value as scientific laws.
Seattle now has a $15 minimum wage and previously, many restaurant owners warned that they would have to close down. Instead, eating establishments in the city have defied gravity and have increased from 134,000 in 2015 to 158,000 today. Seattle and San Francisco (also at $15 per hour) have experienced the highest small business growth in the nation.
A University of Washington study on the $15 minimum initially showed mixed results, but a followup analysis was more nuanced and positive in favor of a higher minimum wage. Originally, the researchers found a reduction in low paying jobs, but this was the result of a strong labor market of high paying jobs and not the $15 minimum wage.
Contrary to the predictions of libertarians such as Courtney, states that raise their minimum wage do not see lower economic growth or higher unemployment. Washington overall growth rate is 3.2 percent versus Idaho’s 2.4 percent. Our neighbor’s job growth this year has been 3 percent (second in the nation) versus ours at 2.8 percent. Washington’s unemployment rate has steadily declined to 4.4 percent as the minimum wage has risen.
Contrary to those who keep saying — in ignorance or denial — $7.25 is not just a starter wage for young people. According to the Congressional Budget Office, “88 percent of minimum wage earners are adults 20 or older.” In New York City, “73 percent of fast food workers are women, 70 percent are over the age of 20, more than two-thirds are the primary wage earners in their family, and 26 percent are raising a child.”
Another CBO study from 2014 showed that a $10.10 federal minimum wage would cause businesses to spend $15 billion more in salaries, but this would be only .003 percent of the wages they paid in 2012. That same raise, according to the Economic Policy Institute, would “reduce government expenditures on current income-support programs by at least $7.6 billion.”
According to the Restaurant Opportunities Centers United, their employees “use food stamps at double the rate and are three times as likely to live in poverty.” Nearly half of all fast-food workers rely on government assistance, which libertarians of course reject. Is their option to have employees standing on street corners after work?
A bill in Congress to raise the minimum wage to $15 gradually over six years will certainly be rejected, sadly, by the GOP Senate. I propose that this amount be increased to regional living wages over a longer period of time.
Using the Living Wage Calculator at the Massachusetts Institute of Technology, one Idahoan in a family of four (the ideal for some of our legislators) would need a salary of $22.71 per hour. With both parents working, they would only need to earn $15.79 each. A $15 federal wage indexed for inflation would almost cover working parents in Idaho, but in large urban areas, it will simply not be enough.
Australia’s minimum wage is $19.47, and its strong economy sailed through the Great Recession without a hitch. Talking off the top of his head, GOP Congressman Markwayne Mullin once said that the Aussies must pay $20 for Big Macs. Last August Down Under they cost $4.53, but you would have had to lay out $5.30 for one here. Where does the difference go, I wonder?
Nick Gier is President of the Idaho Federation of Teachers. Email him at email@example.com.