August 14, 2012. One of the best ways to speed up economic growth is to give a lift to the wages of the lowest paid workers.
Legislation awaits action now in Washington, D.C., that would boost the federal minimum wage in three 85 cent steps from $7.25 to $9.80 an hour. According to new estimates released today by the Economic Policy Institute (EPI), this proposal would benefit 1.5 million New York workers, raising their pay by $2 billion over three years. Nationally, more than 28 million workers would get a raise.
Contrary to the oft-cited claim that a minimum wage increase mainly benefits teenagers, 90 percent of New York workers directly affected are adults age 20 and older. Three out of five minimum wage earners work full-time.
Roughly 55 percent of affected workers are women. The parents of nearly 1 million New York children would benefit from a minimum wage hike. In these families, over half of family income is earned by a minimum wage worker.
The additional consumer spending resulting from a minimum wage increase will create 100,000 jobs nationally, accord ing to EPI. About 5,000 of those jobs would be in the Empire State.
A wage boost will assist New York’s growing legions of working poor and will lessen our most-extreme-in-the-nation income polarization. Wage disparities between high- and low-income households are a major contributor to this dubious distinction – and failure to raise the minimum wage has heightened that disparity.
In 1979, before New York’s income gap started to widen precipitously, a full-time minimum wage worker earned 42 percent of the state’s average weekly wage. Today, it’s 25 percent. If the minimum wage had maintained that 42 percent relationship to the average wage, it would be $12.88 an hour today, 78 percent more than $7.25.
With high unemployment and a weak economy, increasing the minimum wage is smart policy. It puts money in the pockets of people who spend a larger share of any increment of income than do those at higher income levels. It also helps small businesses who have reported since the recession began four years ago that poor sales are their biggest problem.
What is Washington waiting for?
Posted by James Parrott.