Topic: Should the minimum wage be raised?
American Workers Do Not Deserve to Live in Poverty
By: Senator Harry Reid
It has now been over six years since Congress voted to increase the minimum wage. In that time, the cost of living has increased 12 percent, while the real value of the minimum wage has steadily declined. Minimum-wage employees working 40 hours a week, 52 weeks a year, earn $10,700 a year, more than $4,000 below the poverty line for a family of three. While Congress works to raise the minimum wage, it must also work to help businesses pay their employees higher wages.
American workers do not deserve to live in poverty. I, along with 34 of my Senate colleagues, introduced the Fair Minimum Wage Act of 2003 on January 7, 2003. This legislation would raise the minimum wage by $1.50 in two steps: 1) $0.75 sixty days after enactment; 2) $0.75 one year after that. Poverty has doubled among full-time, year-round workers since the late 1970s – from about 1.3 million then to 2.6 million in 2001 – and an unacceptably low minimum wage is a key part of the problem.
A minimum-wage increase will benefit millions of American workers. Seven million workers, many of whom are raising children, would directly benefit from the proposed minimum-wage increase. A $1.50 increase for full-time, year-round workers would add $3,000 to their income. A gain of $3,000 would have an enormous impact on minimum-wage workers and their families.
In order to ease the financial burdens a minimum-wage increase would have on businesses, I will support the Democratic economic stimulus plan, which would: increase the bonus depreciation deduction to 50 percent for this year; triple the amount small businesses are allowed to expense; extend a 50 percent tax credit on employer health premiums; and give a tax credit for businesses that invest in broadband Internet infrastructure.
Seven million workers would directly benefit from the proposed minimum-wage increase. Congress should act as quickly as possible to pass a minimum-wage increase that reflects the losses suffered as the result of our inaction in the past. No one who works for a living should have to live in poverty.
Raising the Minimum Wage Will Hurt, Not Help
By: Van Heffner
The proposed Daschle/Kennedy legislation would enact the largest-ever increase in the starting wage: $1.50 over 14 months. No study has examined the impact of such of a dramatic increase over such a short time span. However, it is logical to assume that a 29 percent increase in labor costs, coupled with premium increases averaging 15 percent for job-based health coverage, would impose a substantial burden on labor-intensive industries. Those sectors offering the most entry-level jobs suffered negative impacts from the last wage hike. Restaurants, grocery stores and department stores all had significant reductions in job growth.
This wage hike is being considered in an unpredictable economy where the unemployment rate is 6.0 percent and 8.6 million people are unemployed. Nearly 1.9 million of these individuals have been unemployed for 27 weeks or longer – the highest proportion in over 10 years. The unemployment rate remains above the pre-recession rates in 48 states.
The minimum wage is really a starting wage, for people beginning their work careers. More than 65 percent of minimum-wage employees move above the starting wage within a year. According to research from Florida State University and Miami University, Ohio, minimum wage hikes sharply reduce the rate at which employees move above the starting wage.
The minimum wage does not target those in need. The average family income of those earning the minimum wage is $43,850. Nationwide, 86 percent of those who would benefit from a minimum wage hike are teens living at home, people earning a second income, families without children or single adults. Only 14 percent of the beneficiaries are sole earners in a household with children.
A majority of the poorest families actually end up losing money after a minimum-wage increase. Research from Stanford University has shown that minimum wages are so poorly targeted that only one in four of the poorest families benefit. The other three-fourths of low-income families end up losing income because they pay higher prices for the goods and services they need.
A minimum-wage increase will not create jobs, help the nation’s economic recovery or better the lifestyle for America’s families.