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.
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
RaÃºl 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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Source: Common Dreams