Froma Harrop is a nationally syndicated columnist .
Congress is apparently too busy tending to the highest-income Americans to pay much attention to the lowest-income Americans. Washington Republicans are now hard at work extending investment tax cuts that will enrich folks making more than $10 million a year by an average $500,000. They have no time for raising the minimum wage –– in addition to having no interest in it. At $5.15 an hour since 1997, the federal minimum wage lingers at a 50-year low when adjusted for inflation.
So the job of maintaining a basic level of decency in the labor market falls to the states. Some that have long mandated higher minimum wages are raising them still more, while other states that have relied on the federal government’s sorry standards are taking matters into their own hands for the first time. Right now 18 states and the District of Columbia have minimum wages above the federal level, and that list is sure to grow as the public demands progress.
The most stunning change is taking place in Michigan. There the state’s minimum wage will jump from $5.15 an hour to $7.40 by July, 2008. This is “great for the entire country,” Henry Williams, a Dearborn car washer, told The Detroit Free Press. What makes the Michigan story even more interesting is that the new minimum wage law, signed by Democratic Gov. Jennifer Granholm, was passed almost unanimously by the Republican-controlled legislature.
Numerous other states have taken action. The minimum wage in Maine, now $6.50 an hour, will rise to $7 by October, 2007. Connecticut’s legislature passed a bill to hike the minimum from $7.40 to $7.65 next year. In Vermont, the minimum wage has recently risen from $7 to $7.65.
A voter initiative drive in Nevada has put the matter on the November ballot. And pro-labor forces are trying to do likewise in Arizona, Montana and Ohio. The threat of a grassroots ballot initiatives have frightened some conservative lawmakers to raise the minimum wage on their own. That has happened in Arkansas, where the state’s General Assembly is taking up the issue.
The political ramifications go beyond setting a wage floor. Putting such bread-and-butter questions on the ballot could help progressive candidates by bringing more liberals to the polls, as well as low-income voters, who, sadly, often bypass elections. Such a turnout might be especially helpful to Democratic candidates for governor in Arizona and Ohio.
Some state legislatures are driving right through the objections of their Republican governors. Rhode Island lawmakers hiked the state’s minimum to $7.40 next year, despite a veto threat by Republican Gov. Donald Carcieri. He relented and signed the legislation.
Two months ago, the Maryland legislation overrode Republican Gov. Robert Ehrlich’s veto of a rise in the minimum wage to $6.15 an hour. Ehrlich had theatrically denounced the bill as a “job killer.” The New York State Legislature also raised the minimum wage over Gov. George Pataki’s dead veto. Now at $6.75, it will rise to $7.15 next year.
(Two states, Ohio and Kansas, have official minimum wages that are below the federal level. When that happens, the higher federal rate applies. In Ohio, the Republican-dominated legislation has just approved moving the official rate to $5.15 an hour, which is something to note, if not celebrate.)
The cheap-labor people, led by chambers of commerce everywhere, never admit that their motive is to beat down the wages of their lowest-paid workers. Their voices drip with concern as they warn that any increase in the minimum will cost the jobs of the most vulnerable, especially black, workers.
Those arguments happen to not be true. Reputable economists say that a reasonable hike in the minimum wage does not seem to job losses: It may even make businesses healthier.
A recent study by the Fiscal Policy Institute in New York confirms this view. It found that small businesses actually grew faster in states that kept their minimum wages above the federal level. From 1998 to 2003, job growth for small businesses in states with higher minimum wages was 6.7 percent, versus 5.3 percent in states stuck at $5.15 an hour.
Surprisingly, job growth was even more robust in the retail sector, where the wages tend to be low. And the total number of small retail businesses grew 0.6 percent in high-minimum-wage states, while they actually fell 0.3 percent in states that relied on the federal standards.
What is the explanation? Part of it is that higher wages lead to higher productivity. That is, the workers get more done in the same amount of time. The better pay encourages them to stay at the job and gain experience. And employers don’t have to waste resources finding and training new people.
The report also notes what economists call the “Henry Ford effect”: If you pay workers more, they can buy more. That boosts the overall local economy. And the biggest winners are the small retail businesses, who, according to the propagandists, are supposed to be hurt most.
The surge in action at the state level contrasts with the unseemly obsession among Republicans in Washington to relieve the richest citizens of their tax obligations, while driving down the pay of the poorest. Few numbers say more about society’s respect for work and the people who do it than the minimum wage. Frankly, $5.15 won’t buy you a chicken sandwich at Starbucks – yet the Republican leadership shows no twinge of conscience over paying Americans that for an hour of their labor.
