‘The wages of thin’

Minimum wage hasn’t kept up with inflation, costs

By Ken Esten Cooke— We hope the U.S. Congress, in its ever-gridlocked state, can find some room to find common ground on a rise in the minimum wage. Proposals from advocates have ranged from lifting it from its current $7.25 per hour to $9, and even as much as $15, but any rise would give relief to America’s working poor.

Currently, 69 percent of adults say to raise the minimum wage to at least $9, according to a recent CBS News poll of 1,100 Americans. (More than half of those say $10.10 should be the target.) Predictably, the young, poor and politically liberal favor a rise in the rate more than the older, wealthy conservatives who were polled.

Regardless of political leaning, it should be realized that there is a societal cost to low wages in the form of helping those who cannot make their way on a minimum wage paycheck. Even some libertarian-leaning Republicans advocate for a rise in the rate. One Silicon Valley millionaire, Ron Unz, points to the huge subsidization costs associated with low wages — including everything from food stamps, to medical care at the emergency room for those who can’t afford health insurance. Rising student debt could also be alleviated by a rise in the minimum wage, he claims.

Even as income distribution skews toward the top earners in an unhealthy way, minimum wage hasn’t even kept up with the cost-of-living. Last week, a study by a University of Massachusetts professor of economics cited that the spending power of the $7.25 minimum wage, or the “real wage” adjusted for inflation, is worth 32 percent less than it was in 1968. He claims a 10-percent increase in the minimum wage would reduce poverty by two percent.

Some states already have raised their benchmark rate, and municipalities like Austin have tied some economic development projects to what is considered a living wage.

Here in Fredericksburg, the healthy job market (an anomaly among the still struggling national economy), along with relatively high housing costs, have meant many employers must offer more to compete for the best applicants in the worker pool.

Opponents always claim such raises in the minimum wage as “job killers.” We respect their point in that, indeed, some businesses will choose to make fewer hires to compensate for the jump in wage costs.

Yet higher-paying jobs may save money for taxpayers, given the above-cited subsidization costs. With rising transportation, housing and medical costs, workers are struggling. Congress would do a service to this country by facing and acting on the reality of the working poor.

 

 

 

 

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