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A minimum wage that beats poverty

"I grew up hearing over and over, to the point of tedium, that 'hard work' was the secret of success. … No one ever said that you could work hard — harder even than you ever thought possible — and still find yourself sinking ever deeper into poverty and debt."

Barbara Ehrenreich, Nickel and Dimed: On (Not) Getting By in America.

House Speaker John Boehner sat on his hands during the State of the Union address as President Barack Obama called for raising the minimum wage, demonstrating how little he and his party care about the struggles of average people. Here is a chance to make work pay a little better so families can translate personal industry into financial rewards, and Boehner sits like a lump, signaling to his Republican colleagues that this isn't happening as long as he's in charge of the tee times.

Aren't conservatives always going on about the toll income taxes have on the initiative of people in higher income brackets? High taxes are a disincentive to working longer and earning more, they say. And don't those same economic rules apply to people in low income brackets? Give people the opportunity to make a real living at a job and they will work more. They won't need public assistance. They will pay taxes. All it takes is a slight adjustment to the formula of how much revenue goes to owners and bosses and how much goes to the people who get their hands dirty.

Only government can make this happen since the private sector won't. People at the low end know from tough experience that since the 1980s America's old chestnut about working hard and getting ahead no longer applies. From 1989 to 2010, real wages for high school-educated workers in the private sector grew by just 4.8 percent, even as U.S. productivity grew by 62.5 percent, according to the Economic Policy Institute. The income from those productivity gains went to people at the top, who apparently forgot to trickle it down.

America's social immobility problem was starkly illustrated in Ehrenreich's book. During 1999 and 2000, Ehrenreich tried to see what it was like to live on $7 an hour. She was a server in Key West, a nursing home aide in Portland, Maine, and a sales clerk at a Walmart in Minneapolis. What Ehrenreich found is you can't work full-time with wages that low and stabilize your life. She could afford to live only in the worst places like rented hotel rooms and rundown trailer parks. Some of her co-workers coped by living in their cars.

The book was originally published in 2001 but since then prospects for service workers haven't improved. The reason is politics. The U.S. Chamber of Commerce fiercely opposes minimum wage increases. In Boehner's Republican-controlled House a raise in the minimum wage from $7.25 to $9 and indexing it to inflation, as Obama proposes, has about as much chance of passing as a testament to Emma Goldman.

Critics claim that raising the minimum wage results in job losses. Bill Herrle, executive director of National Federation of Independent Business/Florida, called it a "job killer." Recent research doesn't bear that out. Economists at EPI say modestly raising the federal minimum wage "would create jobs" throughout the nation by getting money to families who would spend it and stimulate the economy. And the raise Obama is contemplating is modest. It would bring the inflation-adjusted value of the minimum wage to 1981 levels. (Florida's minimum wage is $7.79 as of 2013.)

Making every job a good job is doable. There is no dearth of restaurants in western Europe yet somehow all those restaurateurs manage to pay their servers a living wage. As travel book author Rick Steves advises, "European servers are well paid, and tips are considered a small 'bonus' — to reward great service." Compare that to tipped workers in America where the federal minimum wage of $2.13 per hour has not budged since 1991, which tells you why the restaurant industry employs seven of the 11 lowest paying occupations in the country.

"No one who works full time should have to live in poverty," Obama said in urging Congress to pass the wage boost. Too bad Boehner plans to sit the problem out.

A minimum wage that beats poverty 02/16/13 [Last modified: Friday, February 15, 2013 6:07pm]
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