It is time to raise the minimum wage

The walkout this week by restaurant workers to protest poor wages is indicative of a major problem we have in this country. We have a poverty problem in this country with far too many people living in poverty or paycheck to paycheck. As I have noted in earlier posts, the disparity between the “haves” and “have-nots” has grown wider at the same time our socio-economic class mobility has greatly diminished. Where we are born and to whom we are born are now greater indicators of success than they used to be. To compound the problem, those who are in the upper income echelons are having a more difficult time appreciating the challenges faced by those who are not. More on this later.

In Barbara Ehrenreich’s book “Nickeled and Dimed in America,” she chronicled her efforts and those of her co-workers, in trying to live on minimum or near-minimum wage jobs. Her conclusion is these jobs perpetuate poverty. She notes a variety of factors which include not being able to afford healthcare, not being able to save, poor food habits as fast food was the cheapest and most convenient food, being a slave to the work schedulers, being tied to mass transportation schedules due to gas prices, and having to work more than one job. She also noted in the restaurant jobs, people having to work when they are sick, because they needed the pay. Getting by was the best you could hope for. Getting ahead was quite difficult as you were treated like a commodity. I would add this contention is supported by Dr. Cornel West and Tavis Smiley’s book “The Rich and the Rest of Us.” A summary of the key findings in the book can be gleaned from the attached post.  https://musingsofanoldfart.wordpress.com/2012/10/20/the-rich-and-the-rest-of-us-a-must-read/

Currently, the federal minimum wage is $7.25 per hour. In some places, the state or local minimum wage is higher (Illinois, California have $8.00; Arizona is $7.47 and the city of San Francisco is $9.79, e.g.). Yet, a living wage is higher in these locations. A living wage varies by geography and is based on the cost of living to provide shelter, food, healthcare and basic necessities. Attached is a link to a MIT website that will allow you to see the calculation of living wage by area. http://livingwage.mit.edu/.

Per this MIT website, in my home county in North Carolina, a living wage is now $10.02 for a single adult and $19.68 for a one parent, one child family. In other higher cost of living areas, the living wage can be a few dollars more. As of this writing, President Obama has proposed an increase in the federal minimum wage from $7.25 to $9.00. While not enough, the increase is a tangible step forward. Per a Gallup Poll in March 2013, this proposal is supported by 70% of Americans. The result is even higher for women, Democrats, moderates, non-whites, adults who earn less than $24,000 per annum, and young adults. 2/3 of Americans who are seniors, Independents, and earners between $24,000 and $60,000 support the change. It is only beneath 67% for men, Republicans conservatives,and upper middle class earners and above.

Those who decry this change cite that we will end up with fewer jobs as a result. I have seen data on both sides of this argument. To me, there is a huge cost of turnover in retail and restaurant jobs due to lost productivity of the staff, but also of the department and store manager. The manager has to spend more time back-filling a job or making sure people are on the floor, than focusing on customer service and selling merchandise. Any measure a retail company can do to reduce this churn shows up in better productivity. Per the attached link, Costco seems to believe this, as they pay their people far more than the minimum and are doing quite well. http://money.cnn.com/2013/08/06/news/economy/costco-fast-food-strikes/index.html.

We have a problem in this country, which will only get worse, if we do not remedy it. This is a key reason I have been a staunch supporter of Obamacare. While imperfect, it does speak to the healthcare insurance needs of those who are now uninsured. And, many of those who cannot afford insurance are working in retail and restaurants. Yet, we must pay people better. Will it cause the number of jobs to go down? My guess is for some employers it might, but for many it won’t. In my consulting work with retail and restaurant employers, I have observed the employers who treat their employees as commodities will never have the productivity and customer service of those who treat their employees as key in their ability to sell products and serve customers. These latter companies work back from how can we serve the customer better.

And, when you hear someone who is doing more than fine financially state that increasing the minimum wage is a poor investment of money, please respond the better off people are, the less they will depend on those so-called hand-outs the well off seem to hate. I do not like to use the term hand-outs, as helping people survive in tough times is an appropriate investment of resources, yet for an audience that tends to use this term freely, it is an argument that might resonate. Plus, the more we all have to spend, the better off the economy will be. Let’s increase the minimum wage. It is time.

Advertisements

4 thoughts on “It is time to raise the minimum wage

    • Marsha, you are so right. Both Hugh and Barney have written posts about how high the ratio of CEO pay to the average worker in the US is versus that of other countries like Great Britain or Germany. The US ratio is 30 times higher than other countries. Take care. BTG

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s