If you had some money in the stock market last year, you probably did quite well. In 2013, all of the major market indices increased at rates we haven't seen since Bill Clinton was president. But if your job pays you close to minimum wage, chances are you were unable to invest in stocks. The market's explosive growth accentuates the widening gap between the have-mores and the rest of us.
Earning the minimum wage is a one-way ticket to persistent poverty. A full-time worker earning just the minimum would gross about $14,500 per year. That is 40 percent below the $23,500 poverty level for a family of four. Today's $7.25 hourly minimum wage has 32 percent less purchasing power than the $1.60 minimum had in 1968.
It would take a raise to about $10.77 in 2014 dollars to restore workers to where they were a half-century ago. Sadly, this issue has become heavily politicized.
Those who support raising the minimum wage say that doing so will help in several ways. First, by putting more money in the pockets of the poorest of the working poor, the economy as a whole would benefit, because those additional dollars will be spent. The economy prospers when money changes hands. When the have-mores part with their money, it usually is to buy financial instruments, i.e. more stocks, rather than more goods. That helps drive up the Dow, but doesn't create jobs.
Raising the minimum is a family-friendly policy that would benefit more than 28 million Americans. As economist James Galbraith put it, "With more family income, some people would choose to retire, go back to school or have children, making it easier for others who need jobs to find them. Working families would have more time for community life, including politics; Americans would start to reclaim the middle-class political organization that they once had. Because payroll- and income-tax revenues would rise, the federal deficit would come down. Social Security worries would fade."
Opposition to wage increases is based on beliefs that an increase (or that any minimum wage at all) kills jobs, that it would hurt business and that the increased cost of labor would just get passed on to consumers.
The facts do not support any of these beliefs. While some states have seen increases in unemployment following raises to their minimum wages, unemployment rates followed the national average in most states that enacted raises. Currently, 19 states have passed legislation to raise the minimum above the federal standard, and there is no evidence to suggest that their unemployment is any higher than those areas in the country where the minimum is still at $7.25.
It turns out that the largest employers of minimum-wage workers are McDonald's, Wal-Mart, and Yum! Brands, which runs Pizza Hut, Taco Bell and KFC. These corporate giants have seen profits increase by an average of more than 60 percent since the start of the Great Recession in late 2008. None of their corporate profits have gone to minimum wage earners.
A CNN report appearing Jan. 1 stated that the wage squeeze on the working poor and lower middle class resulted in sit-down restaurants like Red Lobster experiencing a 37.6 percent drop in earnings in the first quarter of fiscal year 2014. For many, taking the family out for dinner has become an unaffordable luxury. More empty tables mean fewer sales, fewer employees and more tax money going out in unemployment benefits, Medicaid and food stamps - safety-net programs Republicans oppose.
A November 2013 Gallup poll showed that 76 percent of all Americans favored raising the minimum wage, up from 71 percent in March 2013. That poll also reported a 69 percent majority want to tie the minimum wage to inflation. Even those who identified themselves as Republican favored raising the minimum by almost a 3 to 2 margin, but they opposed indexing by 43 percent to 56 percent. If politicians really want to help the economy and its workers, they will vote to put more money into paychecks.