federal minimum wage

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Minimum Wage, $14 Sandwiches and Regular Eaters

Regarding Michael Saltsman's "Why Subway Doesn't Serve a $14 Reuben Sandwich'"(op-ed, April 19): Costco COST -0.03% CEO Craig Jelinek advocates raising the minimum wage because, "At Costco, we know that paying employees good wages makes good sense for business."

Does Mr. Jelinek really mean to suggest that he is the best judge of what wage makes business sense for millions of other employers, each dealing with unique circumstances and business models? No, that can't be what he means. What he really means is that he supports an increase in the federal minimum wage because it would have no impact on Costco, given its current business model, while at the same time negatively impacting its competitors.

Jim Reardon

San Diego

Mr. Saltsman compares a $14 Reuben sandwich from the artisanal deli Zingerman's to a $5 sandwich from Subway, arguing that Zingerman's can afford to pay its employees a higher wage because it charges more. This argument incorrectly conflates higher prices with higher profit margins.

If McDonald's MCD +0.76% has taught us anything, it's that a business need not charge high prices to make high profits.

Danny Fischer

St. Louis

Politicians picking local Reubens over $5 footlongs? Come on out to the Phoenix airport, Terminal 4, Concourse D. There used to be a nice food court there. You could get a reasonably priced Wendy's meal or fast Asian fare on the way to your flight. All gone now, replaced by two sit-down restaurants owned and operated by businesses in the Phoenix area. A family of four can now get burgers to go for about $60, not including drinks. I wonder how many parents skip these pricey slow-food restaurants and settle for bags of free peanuts on their flight. I know, hungry children don't contribute or vote.

Tim Baze

Scottsdale, Ariz.

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Minimum Wage Is Now Central White House Economic Theme

Vice President Joe Biden stopped by the Florida Avenue Grill in Washington on Wednesday to thank the company for raising the “tipped wage” it pays employees. A few hours later, the White House’s economic team issued a report saying raising the minimum wage would lift wages and reduce poverty.

This came a few days after President Barack Obama devoted his weekly address to calling for Congress to raise the minimum wage from $7.25 an hour to $10.10. That came a few days after Mr. Obama went to Orlando and said Congress should raise the minimum wage, which came a week after Mr. Obama had a White House event in which he called for raising the minimum wage. And that was just eight days after he went to Connecticut to call for raising the minimum wage.

There have also been numerous tweets from White House officials calling for, you guessed it, raising the minimum wage.

We get it. We get it. The White House wants to raise the minimum wage. But Congress isn’t moving on this, so why is the White House beating the drums so hard?

Congress has mostly shut down for the rest of the year, with chances of sweeping changes to immigration or tax laws dwindling by the day. Efforts by Democrats and some Republicans to reauthorize expired unemployment benefits have faltered again and again. The clanking sound you hear coming from the Capitol is the sound of Congress slowly. Grinding. To. A. Halt.

In the minimum wage, the White House and Democrats see an issue that they believe could create some political tailwinds as they head into the turbulence of November elections. Polls show that a majority of Americans support raising the minimum wage, and the issue has divided Republicans in the past. Democrats in the Senate have not made a real attempt to bring a minimum wage increase to the floor for a vote yet, but they are happy to campaign and stump on the issue as much as possible.

Kentucky Secretary of State Alison Lundergan Grimes, who is running for Senate as a Democrat, and attempting to unseat longtime Republican Sen. Mitch McConnell, has made raising the minimum wage one of her central campaign platforms. Mr. McConnell has signaled he does not support raising the minimum wage.

The White House is also trying to gin up support at the state level, as Congress has yet to move. In February, Mr. Biden called a state lawmaker in New Mexico to try and rally support for raising the state’s minimum wage (the Democrats’ effort there failed). The effort might have had more success in Connecticut, where the House and Senate voted Wednesday to raise the minimum wage to $10.10 by 2017. The measure is expected to soon be signed into law.

A number of Democrats hope that calls for raising the minimum wage might create enough populist support that it could drive voters to the polls in November. It will take months before we know whether that strategy works.

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Chance of Wage Rise So Remote Lobbyists Pay Little Heed

Bloomberg, Annie Linsky and Kathleen Hunter

March 17

View original article here.

The odds that Congress will pass an increase in the U.S. minimum wage before the November elections are so low that even the nation’s lobbyists are largely ignoring it.

The AFL-CIO, the nation’s largest union group, won’t gear up for a push in Congress until a vote on an increase is scheduled in the Senate, said chief lobbyist Bill Samuel. His group, and business organizations that oppose raising hourly pay, are giving more attention to wage proposals in the states.

The National Retail Federation’s lobbying in Congress “has been at most a modest stab,” said David French, chief lobbyist for the Washington-based industry group that opposes the legislation. “When it is really around the corner, you’ll see the lobbying pick up, but it’s not going to require an all-out blitz.”

The proposal to raise the federal minimum wage to $10.10 an hour from $7.25 is being pushed by President Barack Obama, by U.S. Senate candidates in at least six states, and in campaign commercials in four states. Still, little pressure is being applied in Congress, nine senators said in interviews.

Instead, advocacy groups see the legislation as the beginning of a broader campaign that may span years. In at least eight states so far this year, a proposed increase in the state pay floor has cleared either the Senate or House, according to the National Conference of State Legislatures.

The federal minimum wage hasn’t been increased since 2009.

Vote Postponed

Senate Majority Leader Harry Reid postponed a vote in his chamber earlier this month to give labor unions more time to organize support, said a leadership aide who sought anonymity to discuss strategy.

A Senate vote -- especially with no House action expected amid Republican opposition -- would create a list of targets for interest groups. This makes a decision on the vote a complicated choice for Reid, and for Democratic senators seeking re-election in states that voted Republican in the 2012 presidential contest.

If those senators vote no, they could suppress Democratic turnout. If they vote yes, they give opponents an issue to use against them.

“Right now each side is trying to shape the landscape around targeted lawmakers in states and districts,” said Republican strategist Ron Bonjean, who was an aide to former Senate Majority Leader Trent Lott. “There’s much more activity on the grassroots and communications level.” Lott is now a lobbyist at Patton Boggs LLP.

Four Democrats

At least four Democrats seeking re-election next year have expressed reservations about supporting a $10.10 minimum wage. They are Mark Pryor of Arkansas, Mary Landrieu of Louisiana, Mark Udall of Colorado and Mark Warner of Virginia. Landrieu and Pryor are running in states Obama lost in 2012.

Senator Joe Donnelly, an Indiana Democrat, said he too hasn’t made up his mind about the proposal Democrats have put on the table.

“We’re looking at it pretty carefully,” Donnelly said in an interview in which he said he supported the concept of an increase. “We’re going to wait to see the legislation.”

The perception that a federal wage increase is more of a political talking point than a real possibility saps enthusiasm from some senators who might be willing to work on the issue.

Senator Lisa Murkowski, an Alaska Republican who occasionally crosses party lines on issues, said Reid has said he will bring the federal minimum wage bill straight to the Senate floor without a committee vote. That is a deviation from the typical process, she said.

‘Not Legislating’

“To me that’s not legislating,” Murkowski said in an interview. “That’s an effort to message on an issue that the majority feels is going to be beneficial to them in an election. That’s not why I’m here. So whatever.”

Murkowski said she hears far more about a ballot measure in Alaska that would tie the state’s $7.75-an-hour minimum wage to inflation after 2016.

“There’s a lot of folks that don’t have any appreciation at all that we’re doing this on the federal level,” Murkowski said. “They know that we have got an initiative on the primary ballot and are paying attention to that.”

In addition to Alaska, state minimum wage increases are on the ballot or are being considered in South Dakota, Arkansas, California, Idaho, Massachusetts and Missouri, according to the Ballot Initiative Strategy Center, a Washington-based group that tracks voter initiatives.

State Wages

Twenty-one states and the District of Columbia have set their minimum wages above $7.25 an hour. The highest state level is currently $9.32 in Washington state, which in 1998 enacted an increase linked to the cost of living over opposition from retailers, restaurants and hotels.

Democrats see an advantage on the issue. Sixty-nine percent of Americans, including 45 percent of Republicans, support the president’s call to raise the federal minimum wage to $10.10 over the next three years, according to a Bloomberg National Poll released March 12. Twenty-eight percent of poll respondents oppose such action.

Six U.S. Senate candidates endorsed by Emily’s List are campaigning on the issue, said Marcy Stech, a spokeswoman for the Washington, D.C.-based group that supports Democratic women candidates who back abortion rights. So are an “overwhelming majority” of the 22 House contenders and six gubernatorial candidates endorsed by the group, she said.

895 Commercials

The minimum wage is the subject of campaign television commercials airing in Texas, Arizona,Illinois and New Jersey. So far, 895 commercials on the topic have run in those states, according to data complied by New York-based Kantar Media’s CMAG, which tracks advertising.

The desire to talk about the issue in the states rather than in Washington is sending some federal officials out of the nation’s capital.

U.S. Labor Secretary Thomas E. Perez went to Cambridge, Massachusetts last week to promote small businesses that support a boost to the minimum wage. Several weeks earlier, Massachusetts Senator Elizabeth Warren had held a similar event in Boston with second-ranking Senate Democrat Dick Durbin of Illinois.

Another reason for the slow lobbying in Washington has to do with congressional appetite -- it’s difficult to focus on two similar issues at the same time. Just last week Senate negotiators agreed on a plan to extend unemployment benefits for the long-term jobless, a priority for many of the same groups pushing for a minimum-wage increase.

“This unemployment insurance fight has gone on much longer than any one thought it would,” said Judy Conti, federal advocacy coordinator at the National Employment Law Project, a Washington-based group coordinating efforts to raise hourly pay.

Any good lobbying effort focuses on members who may be willing to support an issue. That may be why Republican Senator Ted Cruz of Texas hasn’t heard much on the minimum wage.

“If they are out there, they aren’t talking to me about it,” he said.

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Industry Behind Anti-Wage-Hike Letter

NYT, Eric Lipton

March 15

View original article here.

WASHINGTON — The National Restaurant Association did not disclose upfront its role in helping draft and circulate a statement signed by more than 500 prominent economists, including four winners of the Nobel Prize, urging the federal government to reject the proposal by the Obama administration to increase the minimum wage to $10.10 an hour, interviews with signers of the letter showed.

The statement was distributed to prominent economists nationwide under the name of Vernon L. Smith, a Nobel Prize-winning professor of economics and law at Chapman University in Orange, Calif., concluding that the minimum wage “is a poorly targeted antipoverty measure.”

Its release last week was intended to coincide with a Senate hearing on the proposed increase, which business groups, including the National Restaurant Association, oppose, saying it would force them to raise prices or cut employment because a portion of their work force is paid the minimum wage.

The $10.10 proposal, endorsed by the White House and leading Democrats in Congress but opposed by many Republicans, would increase the federal minimum wage, in phases over two and a half years, from the current $7.25.

But the statement itself and the news release heralding the effort made no mention of the fact that the statement had been initiated by staff at the restaurant association, who through an intermediary asked Mr. Smith if it could be distributed under his name, the association and Mr. Smith acknowledged in interviews Friday.

“If that was not made clear, I will apologize for that,” said Sue Hensley, the senior vice president for public affairs at the National Restaurant Association. She said the restaurant association had distributed the statement the way it had because it was technologically the easiest method, not because of any intentional effort to hide the organization’s role.

Mr. Smith and several of the other economists who signed the statement said in interviews Friday that they had agreed to support it based on the merits of the argument, and that who had initiated it was unimportant.

“I am only interested in the ideas and the content,” Mr. Smith said, adding that “I really don’t know” who originated the statement.

But several others whose signatures are included, while saying they still agree with the message, acknowledged that they regretted that they had not been told who was behind the effort, with one calling such a move typical of “phony Washington.”

“I think they misjudged the economists they were aiming this at,” said Eugene F. Fama, a University of Chicago professor of finance who won the 2013 Nobel Memorial Prize in Economic Sciences. “If the people who had the interest in this just said, ‘We are doing this,’ they would have been better off.”

The National Restaurant Association took several steps that in effect distanced it from the role it played in creating the statement. They included asking a former Treasury Department official, James E. Carter, to approach Mr. Smith at Chapman University, and then paying him to use a database of conservative economists that Mr. Carter maintains to ask them to sign the statement distributed in Mr. Smith’s name, participants involved in the effort said.

Mr. Smith said he had been asked for input but had not written the statement, which was sent out with an opening that said, “Message from Vernon L. Smith.”

The statement was then distributed through an Internet site,economistletter.com, which is controlled by the Washington lobbying firm Urban Swirski. The firm’s clients include Darden Restaurants, the owner of chains including Red Lobster, Olive Garden and LongHorn Steakhouse.

Asked about the statement, Sandra Swirski, a former Senate aide who is a lobbyist at the firm, confirmed her role in helping gather signatures.

“I did circulate the letter for signatures, and I did it for the restaurant association,” she said in an email. “No one else.”

The restaurant industry statement is a reply, of sorts, to a similar statementsigned by more than 600 economists endorsing the increase of the minimum wage. That statement was distributed by the Economic Policy Institute, a Washington research organization that receives about 30 percent of its funding from labor unions.

But the institute was clear about its role in collecting signatures and promoting the statement once it was released in January. The statement became a target of lobbying against a wage increase; an advertisement in The New York Times by a nonprofit group run by a firm supported by the restaurant industry, Berman & Co., noted that some of the signers were, at least at some point, self-avowed Marxists.

The statements demonstrate the growing power of surrogate voices that interest groups pursue, in the hope that these endorsements will help them win votes in Congress.

“It’s not unusual in this town to reach out to others who have broader reach than you have on your own,” said Ms. Hensley of the restaurant association. She added that at least some of the signers of the statement had known of her group’s role in originating it, saying, “I don’t think that is a big shock.”

Robert E. Lucas Jr., another University of Chicago Nobel Prize-winning economist who signed the statement, said he, too, had been unaware that the National Restaurant Association had initiated it. But that does not bother him, he said, as he still opposes raising the minimum wage.

“I was convinced that the minimum wage was not a good idea in Milton Friedman’s class in 1960,” he said, referring to the University of Chicago economist, whose classes he took as a graduate student. “I don’t feel hoodwinked.”

Correction: March 15, 2014  An earlier version of this article misspelled the name of the prize won by Robert E. Lucas Jr. It is the Nobel Prize, not the Noble Prize.

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March 12, 2014, Fox News

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CNN News, March 5

President Obama speaks in Connecticut about "giving America a raise."

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Minimum Wage Boost Would Cut Food Stamp Tab by $4.6 Billion

WSJ, Eric Morath

March 5

View original article here.

Raising the minimum wage to $10.10 an hour would cut federal government outlays on food stamps by $4.6 billion per year, according to a study released Wednesday.

The estimate published by the Center for American Progress, a left-leaning think tank, is among the first to assess the effect of increasing the minimum wage on theSupplemental Nutrition Assistance Program(better known as food stamps). The study backs supporters who say the policy change would benefit not just low-wage workers, but also taxpayers by reducing government expenditures.

The group’s analysis found that increasing the minimum wage to $10.10 from the current $7.25 rate would lower total food-stamp aid by $4.6 billion, or 6% of the program’s budget.

“Our results show that a minimum-wage increase to $10.10 would reduce the need for 3.5 million people to support themselves on food stamps,” said Michael Reich, one of the study’s authors and an economist at the University of California, Berkeley.

The reduced food-stamp aid tied to the higher minimum wage offsets the possibility that some low-wage workers could lose their jobs and qualify for additional assistance, the authors say.

A separate report last month from the nonpartisan Congressional Budget Officefound an increase to $10.10 per hour would reduce employment by 500,000 but lift 900,000 Americans out of poverty.

The study released Wednesday underscores why many policymakers find an increase in the minimum wage so attractive. Unlike boosting welfare programs, raising the minimum wage doesn’t increase government spending, and in fact may reduce it.

“It’s not just low-income families that will be benefit from this, but the economy as a whole,” Sen. Sherrod Brown (D., Ohio) told reporters Wednesday.

The savings found in the study–$46 billion over 10 years—is much larger than the $8 billion reduction to the food stamp program over a decade that was included in the recently passed farm bill. Still, the total savings are extremely small compared to the government’s nearly $4 trillion annual budget.

Other economists say minimum-wage increases are a poor poverty-fighting tool. The CBO study found that most of the increased earnings resulting from a minimum wage boost would flow to families earning more than the federal poverty line.

“The minimum wage fails to reduce net poverty because of its adverse effects on employment and poor ability to target workers living in households below the poverty threshold,” Joseph Sabia, a right-leaning economist at San Diego State University,wrote in a paper this week.  (Mr. Sabia previously has argued that minimum-wage increases hurt low-skilled workers particularly hard in times of high unemployment.)

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Business and the Minimum Wage

NYT Editorial Board

February 27, 2014

View original article here.

Much of the discussion about the Democratic proposal to raise the minimum wage to $10.10 an hour by 2016 has rightly focused on the workers who will clearly benefit from the move. But what about businesses? How would higher wages affect them?

The answer — contrary to a great deal of reflexive hand-wringing by some conservative think tanks and politicians — is surprisingly positive. Scholarly studies and the experience of businesses themselves show that what companies lose when they pay more is often offset by lower turnover and increased productivity. Businesses are also able to deal with higher costs by modestly increasing prices and by giving smaller increases to higher-paid employees.

The Senate majority leader, Harry Reid, says he expects to bring a minimum-wage increase proposal to the floor of the Senate for a vote in late March or early April. When he does, politicians from both parties need to put aside old canards and instead focus on research that suggests that a higher minimum wage has a powerful upside.

One 2013 study by three economists — Arindrajit Dube, T. William Lester and Michael Reich — compared the experiences of businesses in neighboring counties in different states and found less turnover in states that had raised the minimum wage. Workers were less likely to leave on their own, and managers were more likely to keep the workers they had on staff to avoid the cost of recruiting and training replacements.

Other studies on the effect of local minimum wage increases in places like San Francisco and Los Angeles have found similar results, according to arecent overview published by the Center for Economic and Policy Research in Washington.

These clear benefits might help explain why Gap, the apparel chain, said last week that it would raise the minimum pay of its hourly employees to $9 an hour in 2014 and to $10 next year, which will benefit 65,000 of its 90,000 workers. The company’s chairman and chief executive, Glenn Murphy, saidthe move would “directly support our business, and is one that we expect to deliver a return many times over.”

Some retailers pay their workers even more. Costco, one of the most successful retailers in the country, has a starting wage of $11.50 per hour for most entry-level jobs, and its average wage for hourly workers is $21 an hour. Patrick Callans, a senior vice president for the company, said that Costco’s higher pay and benefits “allows us to attract and retain great employees.” A 2006 management case study argues that the higher pay has also helped the company keep “shrinkage,” or theft, fraud and errors, low by industry standards. For national chains, paying more than the current $7.25 federal minimum is not such a shock. Twenty-one states and the District of Columbia already have minimum wages higher than the federal level.

There is another way in which a higher minimum wage helps businesses: by increasing consumer spending. When poor families earn more, they spend more. A group of more than 600 economists, including seven Nobel laureates, recently told President Obama and congressional leaders that an increase in the minimum wage would stimulate today’s weak economy. Even Walmart, the country’s largest retailer, has previously called on policy makers to increase the federal minimum wage. A spokesman for the company recently told Bloomberg News that it was “looking at” supporting the current Democratic proposal.

The argument that a higher minimum wage would hurt business is old and tired. There is clear and compelling evidence that the economy and companies enjoy real benefits when workers are paid more.

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NBC News, Frank Thorp

February 26

House Democrats launched a discharge petition on Tuesday meant to force a vote on legislation to increase the minimum wage and also highlight Republican opposition to the measure.

The rarely successful parliamentary move would need 218 signatures to force a vote to raise the federal minimum wage from $7.25 to $10.10 an hour. The petition currently has 155 signatures, all of which are Democrats.

The effort, which was officially kicked off at a rally in the Capitol this afternoon, is expected to fail.

Since 1967, only 12 measures have obtained the necessary signatures using a discharge petition to force action on the House floor. In many cases, even if members of the majority party support a measure, they will not buck their own leadership and sign onto a petition filed by the minority.

This particular situation occurred when the government shut down last year, and Democrats filed a discharge petition on a clean bill to reopen the government. While a number of moderate Republicans supported a clean bill to reopen the government, they would not sign onto the Democrat's petition.

With the current breakdown of the House, if all 200 Democrats signed the petition, they would need 18 Republicans to cross the aisle and sign it as well.

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Reid Delays Action on Minimum Wage

Senior Congressional Producer, Ted Barnett

CNN - February 25

View original article here.

Washington (CNN) – Senate Majority Leader Harry Reid on Tuesday delayed action for a few weeks on a bill to increase the minimum wage, a top political and policy priority of the White House and congressional Democrats this election year.

Reid blamed the delay on Republican “obstruction” that he said has clogged up the Senate calendar.

The move comes on the heels of a Congressional Budget Office report that found the wage hike could lift 900,000 people out of poverty but also lead to the loss of 500,000 jobs.

Democrats previously targeted March 6 for a vote on the bill written by Sen. Tom Harkin, D-Iowa, that would raise the minimum wage to $10.10 an hour and index future hikes to the inflation rate.

Reid now expects to get to it in late March or April.

Republicans oppose the measure, so it’s unlikely Democrats will be able to get the 60 votes needed to overcome procedural hurdles. Reid may not even have the support of all 53 Democrats and two independents who caucus with them.

While most Democrats support the bill, at least two centrist Democrats either oppose it or may want to change it. Republicans are sure to seize on any defections.

Arkansas Democratic Sen. Mark Pryor is against the increase, according to aides and senators involved in the issue. Pryor, who is facing a tough re-election, may be the most endangered Democrat in the Senate and he regularly votes against his caucus.

Another threatened Democrat, Sen. Mary Landrieu of Louisiana, told CNN there is “broad base support” in her state for a hike in the minimum wage. But she may want to change the Harkin bill in order to boost wages for service-industry workers.

“I am supporting an increase in the minimum wage. I have not committed to this specific bill,” Landrieu said. “I’m talking with others, Republicans and Democrats, about the tip wage in particular. For many of our industries, that’s important.”

Republicans argue an increase in the minimum wage would lead to job losses, as the CBO reported.

“CBO indicated we would lose from 500,000 to a million jobs with the minimum wage increase our friends on the other side are recommending,” warned Senate Republican Leader Mitch McConnell, who is facing his own re-election challenges in Kentucky.

“Couple that with CBO’s estimate of 2.3 million fewer jobs created under Obamacare and you’ve got a pretty big hit on an economy that is already suffering from way to much joblessness,” McConnell said. The 2.3 million figure cited by McConnell has been contested.

Another GOP senator up for re-election, Sen. Lindsey Graham of South Carolina, echoed those concerns.

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Texas Governor Rick Perry vs. Illinois Governor Pat Quinn

February 21, 2014

Pat Quinn argues that the minimum wage increase will help.

Rick Perry argues that it's not the government's place to put restrictions and limitations on an already unstable thing.

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Obama Should Leave The Minimum Wage Issue To States And Cities

Merrill Matthews. Forbes Magazine.

View original article here.

In his State of the Union address, President Obama praised the states for acting ahead of Congress and raising the minimum wage higher than the current federal rate.

But the president couldn’t stop there; he wants Congress to give the country a raise.  That’s bad economics, bad policy and bad federalism.  If there is going to be a minimum wage increase, then states and cities ought to set it.

Democrats are turning more populist as a way to change the subject from Obamacare’s disastrous roll out and the stagnating wages and slow economic growth that are a direct result of the president’s economic policies.

And high on that populist agenda is increasing the minimum wage from $7.25 an hour to $10.10.  Only last year Obama was asking for an increase to $9.00.  So don’t be surprised if the Democratic minimum-wage bidding war soon embraces union efforts to raise it to $15.00.

The minimum wage has been with us since 1938, when it was included in President Roosevelt’s Fair Labor Standards Act (FLSA).  The U.S. Supreme Court had ruled an earlier provision unconstitutional, but in United States v. Darby(1941) the Court embraced a very expansive reading of the Commerce Clause and upheld the FLSA unanimously.

Most economists have long recognized that the minimum wage is terrible economic policy because (1) it prices the least-skilled workers, who tend disproportionately to be minorities, out of a job and (2) it imposes price controls on one of the most important factors of production, labor.  And yet recently some economists have abandoned one of the most basic rules of economics: prices matter.

Employers are consumers of labor.  If workers are willing to take X for their labor, employers will hire them; if the government forces employers to pay 2X, they may take a pass or consider other options, like new technology.  And if people will work for ½X, employers might go on a hiring binge.

However, the negative impact varies for different employers, different industries, different states and even cities.  What employers can and will pay for workers in California, and especially high-cost San Francisco, may be much more than a similar employer will pay in Mississippi.  And what an employer will pay for engineers in the low-unemployment tech industry will be higher than want a small hamburger-stand owner will pay for counter help.

So why have a national minimum wage that imposes the same price floor on every state and region?  If there is going to be a minimum wage, why not let states decide?

In fact, the states are already doing just that.  According to the National Conference of State Legislatures (NCSL), 21 states have set the minimum wage higher than the federal law.  Eleven of those states’ minimum wage is somewhere below $8.00 an hour; 8 place their wage between $8.00 and $9.00, and Washington state and now Oregon are above $9.00.

Even cities are jumping on the bandwagon.  The most recent is the small Washington town of SeaTac, near the Seattle airport, which raised the minimum wage to $15.00 an hour for specified service-based companies.  Albuquerque passed an increase to $8.50 in 2012.  Last year the District of Columbia passed a minimum wage increase to $11.50, to begin in 2016.  And two Maryland countries passed the same increase, to being in 2017.

The irony is that a nationwide minimum wage is likely to be either ineffective or very damaging, depending on where a person lives and the job being sought.

A federal minimum wage set high enough to help people in high-cost states would be so high that it would have a big negative impact on low-skilled workers in the low-cost states.  Conversely, a minimum wage set low enough to not be detrimental to workers in low-cost states would do little for those in the high-cost states, because so many already make that much or more.

States are reasserting their power and independence in a number of areas such as gay marriage, abortion, physician-assisted suicide, the sale and use of marijuana, and tort reform.  Congress should stay out of the minimum wage fight and let the states decide if they want to make that move.

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Raising minimum wage is 'the right policy'

Mitchell Schnurman. Dallas Morning News.

View original article here.

A divided Congress may not raise the minimum wage, but why not Texas or maybe Dallas?

Last year, five states approved increases in the minimum wage, largely because it’s not high enough to keep full-time workers out of poverty. Twenty-one states and Washington, D.C., now require most employers to pay more than the federal minimum of $7.25 per hour.

In New Jersey, the governor vetoed a bill to raise the minimum wage, and residents responded by passing a constitutional amendment.

Several cities have set higher rates, too. Voters in SeaTac, Wash., approved a rate of $15 an hour for some workers. New York City’s new mayor is pushing a higher minimum, even with statewide increases already in the pipeline. In Santa Fe, N.M., the minimum rises to $10.65 on March 1.

Since the minimum wage was established in 1938, the federal rate has been raised 22 times. The most recent was in 2007, and support for an update is strong.

About 70 percent of Americans want to raise the minimum wage, according to a Quinnipiac poll last month. More than half of Republicans are on board.

At least 20 states are considering action this year, according to the National Conference of State Legislatures. At the same time, President Barack Obama and Democrats are calling to increase the federal rate to $10.10 by 2016.

“This is the right policy for the country and the people who live in Dallas, Texas,” said Mayor Mike Rawlings.

No state has more on the line. Almost 2 million low-paid Texans would get a raise if the minimum wage hit $10.10. That’s nearly twice as many potential beneficiaries as the next-closest state, according to a December analysis.

Almost one-third who would benefit are parents, and almost two-thirds work full-time.

Opponents insist that raising the minimum wage would lead to job cuts, hurting the people that it’s supposed to help. Evidence on that is mixed, both in academic journals and real life, which provides cover for politicians on both sides.

Rawlings, a longtime business executive, said he has reservations about regulators dictating to companies. Over the long term, he believes that education is the path to higher pay and less income inequality.

“But in the short term, this is the best we can do,” Rawlings said about raising the minimum wage. “It’s one tool we have, and paying $10 an hour is not going to kill this economy.”

He’s right about the economy, because Texas and Dallas have been leading the way in job growth, especially during the recovery. But unlike peers in other states, Rawlings’ hands are tied.

In 2003, the Texas Legislature prohibited municipalities from setting their own minimum wage, except in a few instances. These pre-emptive laws are in place in about 10 states, said Paul Sonn, general counsel of the National Employment Law Project.

While they ensure uniform rules, they prevent adjustments to the market. A family of four in Dallas must earn about $10,000 more per year than a family in San Angelo to get by, according to a family budget calculator.

Several cities in other states have enacted their own rates to counter those higher costs. Albuquerque, N.M., for example, has an hourly rate about $1 higher than the rest of the state. Santa Fe’s rate is a few dollars higher.

“They see this both as a way to address local living costs in high-cost regions — and to build momentum for increasing the state minimum wage, when state leaders are slow to act,” Sonn said.

Dallas has carved out its own space with payday lenders, primarily through planning restrictions. But state lawmakers refused to allow a local election on mass transit several years ago. They rejected Medicaid expansion, costing large hospitals billions.

Rawlings also cited conflicts over education; he’d like to start the school year earlier.

He said officials are locked out on the minimum wage, too.

“As a city, we ought to be part of the discussion,” Rawlings said.

Austin has found a way to set a higher standard. On projects that involve a city incentive, such as tax breaks or waived fees, the city now requires companies to pay at least $11 an hour in wages. State law allows for exceptions in a city contract, and Austin leaders approved the latest change last fall.

Voters in both red and blue states have approved minimum-wage increases, according to Arindrajit Dube, an associate professor of economics at the University of Massachusetts. Since 1998, he said, 10 states have approved increases, with no rejections.

Texas has a different history. In a 1997 election in Houston, 3 in 4 voters rejected an increase in the city’s minimum wage. Opponents, led by the food service industry, outspent supporters by 20-to-1 in the campaign, according to news reports at the time.

Would the outcome be different today? We should be talking about it.

[fedminimumwage]

History of Changes to the Minimum Wage Law

US Department of Labor.

View source here.

Early in the administration of the FLSA, it became apparent that application of the statutory minimum wage was likely to produce undesirable effects upon the economies of Puerto Rico and the Virgin Islands if applied to all of their covered industries. Consequently on June 26, 1940, an amendment was enacted prescribing the establishment of special industry committees to determine, and issue through wage orders, the minimum wage levels applicable in Puerto Rico and the Virgin Islands. The rates established by industry committees could be less than the statutory rates applicable elsewhere in the United States.

On May 14, 1947, the FLSA was amended by the Portal-to-Portal Act. This legislation was significant because it resolved some issues as to what constitutes compensable hours worked under FLSA. Matters involving underground travel in coal mines and make-ready practices in factories had been decided earlier in a number of U.S. Supreme Court decisions.

Subsequent amendments to the FLSA have extended the law's coverage to additional employees and raised the level of the minimum wage. In 1949, the minimum wage was raised from 40 cents an hour to 75 cents an hour for all workers and minimum wage coverage was expanded to include workers in the air transport industry. The 1949 amendments also eliminated industry committees except in Puerto Rico and the Virgin Islands. A specific section was added granting the Wage and Hour Administrator in the U.S. Department of Labor authorization to control the incidence of exploitative industrial homework. A 1955 amendment increased the minimum wage to $1.00 an hour with no changes in coverage.

The 1961 amendments greatly expanded the FLSA's scope in the retail trade sector and increased the minimum for previously covered workers to $1.15 an hour effective September 1961 and to $1.25 an hour in September 1963. The minimum for workers newly subject to the Act was set at $1.00 an hour effective September 1961, $1.15 an hour in September 1964, and $1.25 an hour in September 1965. Retail and service establishments were allowed to employ fulltime students at wages of no more than 15 percent below the minimum with proper certification from the Department of Labor. The amendments extended coverage to employees of retail trade enterprises with sales exceeding $1 million annually, although individual establishments within those covered enterprises were exempt if their annual sales fell below $250,000. The concept of enterprise coverage was introduced by the 1961 amendments. Those amendments extended coverage in the retail trade industry from an established 250,000 workers to 2.2 million.

Congress further broadened coverage with amendments in 1966 by lowering the enterprise sales volume test to $500,000, effective February 1967, with a further cut to $250,000 effective February 1969. The 1966 amendments also extended coverage to public schools, nursing homes, laundries, and the entire construction industry. Farms were subject to coverage for the first time if their employment reached 500 or more man days of labor in the previous year's peak quarter. The minimum wage went to $1.00 an hour effective February 1967 for newly covered nonfarm workers, $1.15 in February 1968, $1.30 in February 1969, $1.45 in February 1970, and $1.60 in February 1971. Increases for newly subject farm workers stopped at $1.30. The 1966 amendments extended the fulltime student certification program to covered agricultural employers and to institutions of higher learning.

In 1974, Congress included under the FLSA all no supervisory employees of Federal, State, and local governments and many domestic workers. (Subsequently, in 1976, in National League of Cities v. Usery, the Supreme Court held that the minimum wage and overtime provisions of the FLSA could not constitutionally apply to State and local government employees engaged in traditional government functions.) The minimum wage increased to $2.00 an hour in 1974, $2.10 in 1975, and $2.30 in 1976 for all except farm workers, whose minimum initially rose to $1.60. Parity with nonfarm workers was reached at $2.30 with the 1977 amendments.

The 1977 amendments, by eliminating the separate lower minimum for large agricultural employers (although retaining the overtime exemption), set a new uniform wage schedule for all covered workers. The minimum went to $2.65 an hour in January 1978, $2.90 in January 1979, $3.10 in January 1980, and $3.35 in January 1981. The amendments eased the provisions for establishments permitted to employ students at the lower wage rate and allowed special waivers for children 10to11 years old to work in agriculture. The overtime exemption for employees in hotels, motels, and restaurants was eliminated. To allow for the effects of inflation, the $250,000 dollar volume of sales coverage test for retail trade and service enterprises was increased in stages to $362,500 after December 31, 1981.

As a result of the Supreme Court's 1985 decision in Garcia v. San Antonio Metropolitan Transit Authority et.al., Congress passed amendments changing the application of FLSA to public sector employees. Specifically, these amendments permit State and local governments to compensate their employees for overtime hours worked with compensatory time off in lieu of overtime pay, at a rate of 1 1/2 hours for each hour of overtime worked.

The 1989 amendments established a single annual dollar volume test of $500,000 for enterprise coverage of both retail and no retail businesses. At the same time, the amendments eliminated the minimum wage and overtime pay exemption for small retail firms. Thus, employees of small retail businesses became subject to minimum wage and overtime pay in any workweek in which they engage in commerce or the production of goods for commerce. The minimum wage was raised to $3.80 an hour beginning April 1, 1990, and to $4.25 an hour beginning April 1, 1991. The amendments also established a training wage provision (at 85% of the minimum wage, but not less than $3.35 an hour) for employees under the age of twenty, a provision that expired in 1993. Finally, the amendments established an overtime exception for time spent by employees in remedial education and civil money penalties for willful or repeated violations of the minimum wage or overtime pay requirements of the law.

In 1990, Congress enacted legislation requiring regulations to be issued providing a special overtime exemption for certain highly skilled professionals in the computer field who receive not less than 6 and one-half times the applicable minimum wage.

The 1996 amendments increased the minimum wage to $4.75 an hour on October 1, 1996, and to $5.15 an hour on September 1, 1997. The amendments also established a youth sub minimum wage of $4.25 an hour for newly hired employees under age 20 during their first 90 consecutive calendar days after being hired by their employer; revised the tip credit provisions to allow employers to pay qualifying tipped employees no less than $2.13 per hour if they received the remainder of the statutory minimum wage in tips; set the hourly compensation test for qualifying computer related professional employees at $27.63 an hour; and amended the Portal-to-Portal Act to allow employers and employees to agree on the use of employer provided vehicles for commuting to and from work, at the beginning and end of the work day, without counting the commuting time as compensable working time if certain conditions are met.

The 2007 amendments increased the minimum wage to $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009. A separate provision of the bill brings about phased increases to the minimum wages in the Commonwealth of Northern Mariana Islands and in American Samoa, with the goal of bringing the minimum wages in those locations up to the general federal minimum wage over a number of years.

[fedminimumwage]

Making the Case for Raising the Minimum Wage

Former Congressman Joe Sestak. Huffington Post.

View original article here.

When I entered Congress in 2007, the year the recession began, the second vote I took was to raise the minimum wage $1.40 to $7.25 an hour. I did so recognizing an important fact: This first increase of the minimum wage in 10 years was still less than the minimum wage in 1968 when adjusted for inflation ($10.74).

The reduction in the real value of the minimum wage from half a century ago is particularly tough today because the majority of those working for minimum or low wages are no longer young teenagers. For instance, 68 percent of fast-food workers are adults, of whom over a quarter have children. And 65 percent are woman, all working longer for less.

Nevertheless, arguments are raised that again hiking the wage will cause people to lose their jobs since the cost to business will increase. Others argue that a minimum-wage increase will boost the economy and decrease poverty, thereby reducing reliance on taxpayer-funded assistance such as Medicaid and food stamps.

What we're missing today is pragmatic leadership where leaders are willing to say, "Here's where we are, here's what I think we have to do based on the facts, here's measurable benchmarks that we need to hit, and if we don't, hold me accountable." So what are the facts?

Fact one, conclusive studies show that if a minimum wage does not exceed 50 percent of the average hourly wage, people will not lose their jobs. This is primarily because the cost of the wage increase is less to a business owner than having to keep training new people because lower wages mean higher turnover.

Fact two, the current federal minimum wage of $7.25 an hour is about one third of the average hourly wage in America ($20.24). Therefore, we could raise the minimum wage to $10.12 (50 percent of the average hourly wage) and people would not lose their jobs.

Fact three -- and proof of the 50 percent rule -- there are a number of studies that show no job loss when the minimum wage was raised, as long as it was not above 50 percent of the average hourly wage. One local study was on fast-food restaurants in New Jersey that raised the minimum wage to 47 percent of the average hourly wage; there was no evidence of any job loss when compared to fast-food restaurants across the border in southeastern Pennsylvania whose minimum wage was 16 percent less.

Fact four, by not raising the minimum wage, taxpayers will continue to subsidize the salaries of minimum/low-wage workers at large corporations like Walmart and fast-food franchises like McDonald's. A typical Walmart that employs 300 low-wage workers costs taxpayers up to $1.9 million a year because these workers' wages are low enough to qualify them for Medicaid and food stamps. Even the food assistance portion of these low-wage salaries could get cut if the Senate passes the federal farm bill, which reduces food stamps. Is it now the government's role to subsidize the wages for a large corporation like Walmart, which had $17 billion in U.S. profits last year so it can maximize such profits? It costs taxpayers $1.2 billion each year in public assistance to subsidize McDonald's minimum wage workers.

We should keep in mind that since the mid-1980s, income for the majority of our working families has declined in real terms as families are working harder -- often now with both spouses working -- and still not even staying in place. In fact, the median level of household income has declined about $4,000 in real terms since 1999.

As the former vice chairman of the Small Business Committee in Congress, I know we must remove the excess tax and regulatory burdens we place on small businesses, particularly since small businesses generate 65 percent of all new jobs. But the facts show that as long as the minimum wage is not raised above 50 percent of the average hourly wage, franchises such as McDonald's won't lay off workers as they continue to make a profit.

The facts support why I voted in 2007 to raise the minimum wage, and I would do so again today. And it would also help stop large corporations from having the taxpayer subsidize their employees' wages, even as the corporations maximize their profits.

[fedminimumwage]

Mixed Results in U.S. Study of Increasing Minimum Wage

Annie Lowrey. New York Times.

View original article here.

WASHINGTON — A popular Democratic proposal to raise the minimum wage to $10.10 an hour, championed by President Obama, might reduce total employment by 500,000 workers by the second half of 2016. But it would also lift 900,000 families out of poverty and increase the incomes of 16.5 million low-wage workers in an average week.

That is the conclusion of a detailed assessment of how raising the minimum wage would affect incomes, employment and the federal budget. The report was released Tuesday by the nonpartisan Congressional Budget Office.

The complicated, nuanced analysis provides fuel for both supporters and critics of the policy, which would affect millions of low-wage workers and businesses — showing it might lead to fewer jobs, but also higher incomes.

Republicans said the report demonstrated the damage that raising the minimum wage in a weak economy could do.

“This report confirms what we’ve long known,” said Brendan Buck, a spokesman for House Speaker John A. Boehner of Ohio. “While helping some, mandating higher wages has real costs, including fewer people working. With unemployment Americans’ top concern, our focus should be creating — not destroying — jobs for those who need them most.”

But Democrats stressed that the proposal would lift millions of families out of poverty. Some also criticized the budget office’s employment analysis, with Representative George Miller, a California Democrat, calling it “outdated.”

“The C.B.O. made it absolutely clear: raising the minimum wage would lift almost one million Americans out of poverty, increase the pay of low-income workers by $31 billion and help build an economy that works for everyone,” said Representative Nancy Pelosi of California, the minority leader.

The budget office found that lifting the federal minimum wage, currently $7.25 an hour, would have a complicated effect on the labor market, acting as both a boon and a burden for businesses and workers.

Over all, the budget office estimated that lifting the minimum wage to $10.10 and indexing it to inflation would reduce total employment by about 0.3 percent, or 500,000 workers. But it cautioned that its estimate was imprecise, with the job losses likely to fall in a range from scant to one million.

The proposal would result in winners and losers among the low-wage workers it would focus on, the report found. Some low-wage workers would fail to find a job because of a higher minimum wage, for instance. Thus, some families would see their earnings fall sharply.

But increasing the minimum wage would bolster the earnings of about 16.5 million workers: $5 billion a year more for families living in poverty, $12 billion a year more for families earning from one to three times the poverty threshold.

The budget office analyzed two proposals in its report. The first would increase the minimum wage to $10.10 by mid-2016 and would tie it to the Consumer Price Index, so that it would increase with inflation over time. It would also increase the minimum wage for tipped workers.

The second proposal would increase the minimum wage to $9, without any indexing for inflation. That would have much smaller effects, the budget office found. It would reduce employment by 100,000 workers by the second half of 2016, and push about 300,000 people above the poverty line.

The higher minimum wage would reduce employment in two main ways, the budget office report said. Businesses facing higher labor costs would raise prices, passing those higher costs on to their customers. That would lead their customers to cut back on their purchases, meaning that businesses would need fewer workers.

Raising the minimum wage would also make hiring low-wage workers more expensive relative to other investments, like new machinery. Businesses might then reduce their use of low-wage workers and shift their spending toward other things, like automated systems.

But a higher minimum wage would also leave millions of families with more cash to spend, helping bolster demand throughout the economy.