Robert Reich on Minimum Wage Increases
Despite the fact that the House yesterday voted to increase the state minimum wage to $8.00/hour, putting it at odds with a version passed by the State Senate in May, the fact that both bodies have voted for an increase is a good indication that when all the dust settles Massachusetts will have one of the highest minimum wages in the country. This is a clear victory for working people in our state.
On the heels of the recent action by the House, erstwhile Cantabrigian and Progressive stalwart Robert Reich has published a guest editorial on Taegen Goddard's Political Wire analyzing the prospects for increasing the federal minimum wage law. He writes that as the November mid-term elections draw closer, we should expect Democrats to "a minimum wage amendment to anything that moves in the Senate." The fact is, 80% of Americans support an increase and the former Labor Secretary lays out a strong case for why now is the time:
Most Americans understand itÂs a matter of simple fairness. The current minimum is $5.15 an hour, which comes to $10,712 a year for a full-time worker. These days, a garden-variety chief executive takes home $8 million a year, which comes to $3,846 an hour. The Bush tax breaks have given them an extra $60 an hour...
The basic question is what a decent society can afford to pay its lowest-paid workers. Between 2002 and 2005, American productivity grew 10 percent yet workers in the bottom tenth of the income range still lost ground, with average wages dropping 3 percent in real terms.
Reich calls for the wage to be increased to $7.00 an hour with strict penalties to employers who don't comply. I tend to support living wages rather thanminimumm wages, as at even $7/hour a full time worker with no overtime makes just $14,560 a year. Reich claims that the marginal benefit of of increasing the wage is lost after more than 2 dollars, as employers may lose the incentive to higher one more worker.
Apart from the basic premise of a state-mandated minimum wage which many free-marketers disagree with, another sticking point when debating such regulation has to do with tying future increases to cost of living or inflation. In his article, Reich suggests that a problem Republicans have is that each time the oppose minimum wage increases, they come off as grinches to the 80% of Americans who support the raise. To avoid this situation in the future, Reich thinks it would be politically expedient for Republicans to just bite the bullet this time, support an increase, but make sure they index it to inflation so they don't look bad each time they vote it down in the future.
Politics make strange bedfellows, I know, but the issue of indexing has created an on alliance in Massachusetts. While Governor Romney's office has not said whether they favor one plan over the other (House v. Senate), perhaps with an analysis similar to Reich's, the Globe reports that the Governor "has repeatedly expressed support for a minimum wage indexed to inflation." On the same note, the group Neighbor-to-Neighbor which organizes low-wage families had wanted an indexing provision in the House version like the Senate had passed.
It were the moderate Democrats like Westport Representative Representative Michael J. Rodrigues who killed indexing in the House. He told the Globe:
"It has been my position and the position of the speaker that putting it on automatic pilot is very poor fiscal and economic policy."
Bad fiscal policy or just fodder for the other party?
Neighbor to Neighbor has a very clear, easy to understand PDF about why an increase is important for Massachusetts' working families.
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