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$10.10: The Low-End of Minimum Wage Hopes Gets DC Push

Though a full third less than the $15 "living wage" advocated by grassroots organizers, congressional push to increase federal minimum wage gets prominent backing

- Jon Queally, staff writer

Joining a growing national push for an increase of the federal minimum wage, a letter signed by more than 75 prominent economists, including seven Nobel laureates, urges congressional leaders to support legislation that would raise the lowest allowable hourly wage for U.S. workers from $7.25 to $10.10 by 2016 and index the wage to inflation for continued increases going forward.

Wage protesters stand outside a McDonald's in Oakland last year. (Photo: Ben Margot / Associated Press) Known as the Fair Minimum Wage Act, the bill supported by the economists was introduced by Sen. Tom Harkin (D-Iowa) in the Senate and Rep. George Miller (D-Calif.) in the House. If enacted, the law would raise the federal minimum wage in three incremental increases of $0.95 from its current level of $7.25 to the $10.10 level over two years.

“Let’s be clear: our federal minimum wage of just $7.25, which has not budged in more than four years, is now a poverty wage," said Harkin, who chairs the Senate Health, Education, Labor, and Pensions Committee, in a statement on Tuesday. "No American who works a full-time job should have to struggle to put food on the table or pay the bills. All around the country, we’re seeing the impact of growing income inequality and stagnant wages on millions of American families. Raising the minimum wage will help narrow the income gap and enable millions of low-wage working Americans to make ends meet."

The joint letter by dozens of economists—including Heidi Shierholz, Robert Pollin, Dean Baker, Robert Reich, and Joseph Stiglitz—was orchestrated by the Economic Policy Institute and the Center for Economic and Policy Research in Washington D.C. and presented at a press briefing on Tuesday aimed at attracting support for the Harkin-Miller proposal.

According to the economists' letter: "The increase to $10.10 would mean that minimum-wage workers who work full time, full year would see a raise from their current salary of roughly $15,000 to roughly $21,000. These proposals also usefully raise the tipped minimum wage to 70% of the regular minimum."

“This letter shows that moderate increases in the minimum wage are embraced by a broad array of prominent economists,” said EPI president Lawrence Mishel. “Research proves that raising the minimum wage is an important and effective policy instrument.”

Mishel use of the word "moderate" reflects the view of many that a much larger increase to the minimum wage is warranted given current economic inequality, the growth in poverty rates resulting from wage stagnation and a systematic assault on the social safety net now emanating from Congress. Even the economic think tank's own research shows that a $10.70 wage would be needed in order to bring pay back to levels, adjusted for inflation, that workers experienced in the late 1960's.

Going further, a group in Seattle called 15Now.org launched a national drive on Sunday calling for a $15 dollar minimum wage from coast to coast.

According to organizers there, all fights for minimum wage increases are commendable but what working people really need is a "living wage"—which means a wage that brings workers out of poverty in order to meet minimum standards of modern living.  Though the exact hourly rate can vary depending on geographic differences, most calculators show—including the Living Wage Calculator at MIT and a recent report by the Alliance for a Just Society—that a truly living wage for most Americans is well above $15 an hour. 

Throughout 2013 low-wage workers from the retail and fast food sectors staged rallies and protests calling for a living wage and dignity in the work place, paving the way for bolder calls from elected officials and a growing grassroots movement focused on wage disparity and the plague of inequality nationwide.

Despite more radical calls for a larger increase, the Harkin-Miller bill in Congress—which closely follows President Obama's public statements about the kind of wage increase he would support—remains the legislation receiving the broadest public support from elected leaders in Washington.

Tuesday's EPI press conference, featuring Sen. Harkin and Rep. Miller, can be watched here:

And the full letter supporting the bill and its signatories follows:

Dear Mr. President, Speaker Boehner, Majority Leader Reid, Congressman Cantor, Senator McConnell, and Congresswoman Pelosi:

July will mark five years since the federal minimum wage was last raised. We urge you to act now and enact a three-step raise of 95 cents a year for three years—which would mean a minimum wage of $10.10 by 2016—and then index it to protect against inflation. Senator Tom Harkin and Representative George Miller have introduced legislation to accomplish this. The increase to $10.10 would mean that minimum-wage workers who work full time, full year would see a raise from their current salary of roughly $15,000 to roughly $21,000. These proposals also usefully raise the tipped minimum wage to 70% of the regular minimum.

This policy would directly provide higher wages for close to 17 million workers by 2016. Furthermore, another 11 million workers whose wages are just above the new minimum would likely see a wage increase through “spillover” effects, as employers adjust their internal wage ladders. The vast majority of employees who would benefit are adults in working families, disproportionately women, who work at least 20 hours a week and depend on these earnings to make ends meet. At a time when persistent high unemployment is putting enormous downward pressure on wages, such a minimum-wage increase would provide a much-needed boost to the earnings of low-wage workers.

In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.

Sincerely,

Henry Aaron, Brookings Institution

Katharine Abraham, University of Maryland

Daron Acemoglu, Massachusetts Institute of Technology

Sylvia Allegretto, University of California, Berkeley

Eileen Appelbaum, Center for Economic and Policy Research

Kenneth Arrow, Stanford University*+

David Autor, Massachusetts Institute of Technology

Dean Baker, Center for Economic and Policy Research

William Baumol, New York University+

Jared Bernstein, Center on Budget and Policy Priorities

Josh Bivens, Economic Policy Institute

David Blanchflower, Dartmouth College

Alan Blinder, Princeton University

Heather Boushey, Washington Center for Equitable Growth

Clair Brown, University of California, Berkeley

Gary Burtless, Brookings Institution

David Cutler, Harvard University

Sheldon Danziger, Russell Sage Foundation

Angus Deaton, Princeton University+

Gregory DeFreitas, Hofstra University

Peter Diamond, Massachusetts Institute of Technology*+

Avinash Dixit, Princeton University+

Arindrajit Dube, University of Massachusetts, Amherst

Ronald Ehrenberg, Cornell University

Henry Farber, Princeton University

Nancy Folbre, University of Massachusetts, Amherst

Robert Frank, Cornell University

Richard Freeman, Harvard University

Claudia Goldin, Harvard University+

Robert Gordon, Northwestern University

Darrick Hamilton, The New School

Heidi Hartmann, Institute for Women’s Policy Research

Raúl Hinojosa-Ojeda, University of California, Los Angeles

Harry Holzer, Georgetown University

Marc Jarsulic, Center for American Progress

Lawrence Katz, Harvard University

Melissa Kearney, University of Maryland

Adriana Kugler, Georgetown University

Mark Levinson, SEIU

 

Frank Levy, Massachusetts Institute of Technology

Lisa Lynch, Brandeis University

Julianne Malveaux, Past President, Bennett College

Ray Marshall, University of Texas, Austin

Alexandre Mas, Princeton University

Eric Maskin, Harvard University*

Patrick Mason, Florida State University

Lawrence Mishel, Economic Policy Institute

Alicia Munnell, Boston College

Samuel Myers, University of Minnesota

Manuel Pastor, University of Southern California

Robert Pollin, University of Massachusetts, Amherst

Michael Reich, University of California, Berkeley

Robert Reich, University of California, Berkeley

William Rodgers, Rutgers University

Dani Rodrik, Institute for Advanced Study

Jesse Rothstein, University of California, Berkeley

Cecilia Rouse, Princeton University

Jeffrey Sachs, Columbia University

Emmanuel Saez, University of California, Berkeley

Isabel Sawhill, Brookings Institution

Thomas Schelling, University of Maryland*+

John Schmitt, Center for Economic and Policy Research

Robert Shapiro, Georgetown University

Heidi Shierholz, Economic Policy Institute

Dan Sichel, Wellesley College

Timothy Smeeding, University of Wisconsin, Madison

Robert Solow, Massachusetts Institute of Technology*+

A. Michael Spence, New York University*

William Spriggs, AFL-CIO

Joseph Stiglitz, Columbia University*

Lawrence Summers, Harvard University

Peter Temin, Massachusetts Institute of Technology

Mark Thoma, University of Oregon

Laura Tyson, University of California, Berkeley

Paula Voos, Rutgers University

* Nobel laureate
+ Has served as American Economic Association president

 

 

 

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