Democrats make minimum wage pitch: $12 by ’20

1 May 2015 | Author: | No comments yet »

Congress to propose bill raising US minimum wage to $12 by 2020.

Top Democrats laid down their minimum-wage marker on Capitol Hill on Thursday, setting up their party’s middle-class-focused economic message heading into the 2016 elections campaigns. “This is a key piece of our effort to grow the economy from the middle out not from the top down,” said Sen. The good news is that there’s a new proposal coming out today to raise the federal minimum wage to $12.00 by 2020, along with some other useful features I’ll get back to in a moment.

Tomorrow, the Raise the Wage campaign, including business leaders and workers, will deliver 100,000 petition signatures to LA City Council calling for a $15.25 minimum wage and paid sick days. The latest move comes on the heels of a report commissioned by the California Restaurant Association, which claims restaurant “servers make an average of $12.57 per hour in tips, bringing their current hourly wage to over $21 when added to the minimum wage.” Disputing the conclusions of the study, the Restaurant Opportunities Centers-United says restaurant workers make an average annual salary of $28 thousand. Democrats have tried multiple times to raise it. “It isn’t right that somebody who’s going to work every day, working 40 hours a week, is living on the streets or isn’t capable of putting food on the table,” said Sen. But before we re-engage in this age-old dance, let us consider the findings from a recent book that exhaustively analyzes decades of research on this question of the impact of increases in the minimum wage. There are nearly 738,000 workers who are too discouraged to look for jobs, 2.6 million workers who remain long-term unemployed and another 6.7 million who are employed part-time only because they cannot find full-time jobs.

These figures are being bandied about because of efforts by restaurant proprietors to incorporate their workers’ gratuities into any minimum wage hikes. But Republicans, with a few exceptions, have grown consistently move opposed to minimum wage increases in recent years, arguing that any hike would tamp down economic growth.

The issue has gained further attention in recent months thanks to rallies by fast-food workers and moves by employers including McDonalds and Walmart to raise minimum wages. I’m just saying that if you’re sick of “he-said, she-said” debates on the issue, you might want to cut through the noise with the help of some highly credible research. The goal is to foster broader economic growth — a report from the Economic Policy Institute found that nearly 38 million Americans would see their wages increase with the new $12 figure. Kathy Hoang, Director of the LA Chapter of Restaurant Opportunities Centers United (ROC-United) – founded in 2001, ROC United advocates to improve wages and working conditions for the nation’s restaurant workforce. Bobby Scott (D-Va.) in their respective houses carries “the full and enthusiastic support” of Obama, who has repeatedly called for a higher minimum wage. “This federal floor is an indispensable part of who we are as a nation,” Perez said.

Bowen Award, annually awarded by Princeton University “to the book making the most important contribution toward understanding public policy related to industrial relations and the operation of labor markets.” The book was also featured as Cornell University’s book of the month in November of 2014. But the bill will be a rallying point for Democrats on the campaign trail — not only congressional candidates, but probably for the party’s presidential hopefuls as well. Poverty wages and lack of jobs have also been at the core of the unrest in places like Ferguson and Baltimore, where protests broken out after the deaths of Michael Brown and Freddie Gray, respectively.

Their proposal would also index the federal wage to the median wage and, importantly, eliminate the $2.13 tipped wage over time, which would help shrink the gender wage gap since women hold two-thirds of tipped-wage jobs. Under the new legislation, the increase from $7.25 to $12 would take place over five years, starting with an $8 wage and increasing by $1 per year through 2020. In Gray’s neighborhood in Baltimore, more than a third of households are in poverty, and 51.2% of households reported that their annual income is less than $25,000. “In our country, no one who works hard in a full-time job should have to live in poverty.

The reason minimum wages may not boost incomes at the bottom is because there is a significant probability that higher minimum wages could result in fewer jobs. The increase to $12 an hour, from the current $7.25 rate, would be much steeper than 40% increase in phased in between 2007 and 2009 or 39% bump considered last year. And it’s good news for taxpayers, who currently spend billions of dollars annually subsidizing the low wages provided by companies that pay poverty wages.

But Democratic leaders said Thursday that the $12 by ’20 goal was a realistic and achievable goal that they feel Democratic candidates will have no trouble embracing going into 2016 — highlighting, in Perez’s words, “remarkable differences” between the parties. “I want to hear what the Republican presidential candidates have to say on this,” Murray said. “I’m confident that a Democratic woman running for president and anyone else who chooses to knows the importance of this issue and helping lift American workers to a better place. In 2013, more than 1.5 million workers earned $7.25 an hour while more than 1.7 million workers earned less than that thanks to the tipped minimum wage. Finally, this new research tracked workers over time and found that increases in minimum wages had negative medium-run effects on the ability of low-skilled workers to rise up the income ladder. The paper finds that during the late 2000s, effective minimum wages rose by nearly 30 percent and estimates these increases reduced the employment-to-population ratio of working age adults by 0.7 percentage points.

So far, only eight states have passed legislation eliminating this kind of sub-wage, requiring all workers to be paid a statewide minimum wage before tips. The restaurant industry, which employs almost half of all minimum-wage workers, has raised concerns with similar measures include in state and local proposals. As Congress has been slow to act, a number of states have taken the matters into their own hands and increased their state minimum wage above the federal threshold.

The fact that we need to account for negative employment effects shows up in a careful analysis done by the Congressional Budget Office last year on President Obama’s proposed minimum wage hike to $9 or $10.10. Keeping the minimum-to-median ratio around 50 percent, which this proposal would do, would put it “in line with the international average and with the U.S. historical average during the 1960s and 1970s.” In many states, tipped workers (for example, waiters and waitresses) currently have a minimum base wage of only $2.13 an hour.

These workers are still supposed to make the regular minimum – employers are required to make up the difference if adding tips to the base wage doesn’t get a tipped worker all the way there – but this requirement is difficult to enforce in practice. Eliminating the subminimum wage for tipped workers would thus likely help reduce their poverty rate, which is nearly twice as high as the rate for non-tipped workers nationwide. The workers, who on 15 April took to the streets in what was the largest low-wage workers protest in US history, say that a dollar or two more in pay is not enough and continue to lobby for $15 an hour. “We are encouraged to see that our elected leaders are beginning to hear our calls for change and discussing wages and inequality in our country. While $12 by 2020 is a good first step, it still falls short of what working Americans need to raise our families,” Shannon Henderson, who works at a Walmart in Sacramento, California, said in a statement emailed to the Guardian. “At just $10 an hour with no guarantee of full-time hours, I’m struggling today to care for my two young children.

Some people reasonably assume that making low-wage workers more expensive would lead employers to hire fewer of them, and this proposed increase is larger than many past increases (though still below the $15 that many advocates have called for). A particularly interesting absorption mechanism is more efficient production from better-paid workers, leading to lower turnover, fewer vacancies, and a more highly motivated staff. There are other programs that help low-income households as well, such as SNAP (food stamp program) and Temporary Assistance for Needy Families (TANF).

Studies suggest that the EITC was responsible for 60 percent of the 8.7 percentage point increase in labor force participation of single mothers between 1984 and 1996.

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