More to fuel the minimum wage debate

An Associated Press article published on Fox News website on July 19, 2014 titled “Job growth picks up in states that raised minimum wage” brought some interesting data to consider when debating increases in the minimum wage. I’ve included excerpts below, but you can read the whole article at http://www.foxnews.com/politics/2014/07/19/job-growth-picks-up-in-states-that-raised-minimum-wage/.

advertisementMaybe a higher minimum wage isn't so bad for job growth after all.

“The 13 U.S. states that raised their minimum wages at the beginning of this year are adding jobs at a faster pace than those that did not, providing some counter-intuitive fuel to the debate over what impact a higher minimum has on hiring trends.

Many business groups argue that raising the minimum wage discourages job growth by increasing the cost of hiring. A Congressional Budget Office report earlier this year lent some support for that view. It found that a minimum wage of $10.10 an hour, as President Obama supports, could cost 500,000 jobs nationwide.

But the state-by-state hiring data, released Friday by the Labor Department, provides ammunition to those who disagree. Economists who support a higher minimum say the figures are encouraging, though they acknowledge they don't establish a cause and effect. There are many possible reasons hiring might accelerate in a particular state.

"It raises serious questions about the claims that a raise in the minimum wage is a jobs disaster," said John Schmitt, a senior economist at the liberal Center for Economic and Policy Research. The job data "isn't definitive," he added, but is "probably a reasonable first cut at what's going on."

…

Some economists argue that six months of data isn't enough to draw conclusions.

"It's too early to tell," said Stan Veuger, a scholar at the American Enterprise Institute. "These states are very different along all kinds of dimensions."

For example, the number of jobs in North Dakota — which didn't raise the minimum wage and has prospered because of a boom in oil and gas drilling — rose 2.8 percent since the start of this year, the most of any state.

But job growth in the aging industrial state of Ohio was just 0.7 percent after its minimum rose to $7.95 from $7.85. The federal minimum wage is $7.25.

Veuger, one of the 500 economists who signed a letter in March opposed to an increase in the federal minimum, said the higher wages should over time cause employers to hire fewer workers. They may also replace them with new technologies.

The Congressional Budget Office cited those factors in its February report. But in addition to job losses, the CBO also said a higher minimum could boost paychecks for another 16.5 million workers.

Sylvia Allegretto, an economist at the University of California, Berkeley, said that research comparing counties in states that raised their minimums with neighboring counties in states that did not has found no negative impact on employment.

Restaurants and other low-wage employers may have other ways of offsetting the cost of higher wages, aside from cutting back on hiring, she said. Higher pay can reduce staff turnover and save on hiring and training costs.

Poverty and the minimum wage

By CEO/Executive Director Laura Gray

I’m always torn when I get something urging me to contact my Senator and Congressman to do something like raise the minimum wage. You might think that it’s an automatic “yes” for someone who works in an organization that serves the homeless. Obviously, my heart is pulled to a mission that helps people who are among the poorest of the poor.

But, the pull of my heart is balanced by my head. I have an undergraduate degree in Economics and an MBA in Finance. I realize that raising the minimum wage will raise costs for a lot of businesses. That increase will be passed on to us as consumers, some of whom are the very people whose increased minimum wage will have to absorb the rising prices.

But, I also realize that right now a single mother with two kids working 40 hours per week will still be below the poverty level. She’ll qualify for other forms of government subsidies, so in a way businesses that don’t pay minimum wage are increasing the cost of subsidies taxpayers have to support.

There are a lot of other arguments on both the head and heart sides of the issue. Unfortunately, the answer isn’t easy despite all of the passionate opinions on both sides.

Jobs Matter: "When Good Out Weighs the Bad"

By Employment Job Coach Connie Taylor

The minimum wage for Missourians remained at $5.15 for 10 years until a law was passed in 2006 to increase it each year for cost of living/inflation changes.  The minimum wage increased to $5.85 in 2007, $6.55 in 2008, $7.25 in 2009, and in January 2014 it increased to $7.50.

Advocates for higher minimums say it’s past time to make the wage floor do a better job reflecting the cost of living. According to polls, most Americans say the current minimum, at whatever level, isn’t enough to provide a livable wage for a full-time worker trying to maintain a household.

Although $7.50 an hour is less than most of our families need to survive, is it an improvement for entry-level employees. Due to limited education (no high school diploma or high school equivalency) and little or no work history, many of our clients earn minimum wage and work less than 25 hours per week until they prove themselves on the job. Once they reach full time 40 hour weeks, their income is still less than $16,000 a year.

Last week, I called one of our residents to check on his progress. He said that he was actually on his way to my office to talk. His very words were, “I have good news and bad news.”  I was unsure what to expect knowing that he had only been on his job for a few weeks.  I later discovered that his dilemma was much like most of the families we serve. Now that he was earning an income ($7.50 an hour) he would no longer be eligible to receive TANF cash assistance ($232 a month). In fact, the money he was expecting had not been deposited in his account the day before. His first paycheck, which was for less than 40 hours, was only around $40.00. He would have to wait another week before he would receive any additional income. Sadness gripped my heart as I thought about his circumstances and his inability to see past his current circumstances of “not enough.”

Then the good news. His job was offering him an opportunity to transfer to a new location where he would be scheduled 40 hours a week and considered a full time, regular employee. He would no longer be required to float between two stores miles apart. 

 

The highlight of our conversation was that his employer was very pleased with his work. Because he had proven his ability to perform his job duties and displayed responsibility and trust, he is now moving up to a better, full time position. He was told that his income is likely to increase by $1.00 an hour over the next few months, as long as he remains stable.

Good news for a job well done!