A Christmas gift for McWorkers – raise the minimum wage
The Economic Policy Institute estimates an increase in the minimum wage to $10.10 would benefit 30 million workers
The inflation-adjusted wages of non-supervisory workers in retail – who weren’t particularly well paid to begin with – have fallen almost 30 per cent since 1973.
‘Tis the season to be jolly – or, at any rate, to spend a lot of time in shopping malls. It is also, traditionally, a time to reflect on the plight of those less fortunate than oneself, for example, the person on the other side of that cash register.
The past few decades have been tough for many American workers, but especially hard on those employed in retail – a category that includes both the sales clerks at your local Walmart and the staff at your local McDonald’s. Despite the lingering effects of the financial crisis, the US is a much richer country than it was 40 years ago. But the inflation-adjusted wages of non-supervisory workers in retail – who weren’t particularly well paid to begin with – have fallen almost 30 per cent since 1973.
So can anything be done to help these workers, many of whom depend on food stamps – if they can get them – to feed their families, and who depend on Medicaid – again, if they can get it – to provide essential healthcare?
Yes. We can preserve and expand food stamps, not slash the programme the way Republicans want. We can make health reform work, despite right-wing efforts to undermine the programme.
And we can raise the minimum wage.
First, a few facts. Although the US national minimum wage was raised a few years ago, it’s still very low by historical standards, having consistently lagged behind both inflation and average wage levels. Who gets paid this low minimum? By and large, it’s the man or woman behind the cash register: almost 60 per cent of US minimum-wage workers are in either food service or sales.
This means, by the way, that one argument often invoked against any attempt to raise wages – the threat of foreign competition – won’t wash here: Americans won’t drive to China to pick up their burgers and fries.
Still, even if international competition isn’t an issue, can we really help workers simply by legislating a higher wage? Doesn’t that violate the law of supply and demand? Won’t the market gods smite us with their invisible hand?
The answer is that we have a lot of evidence on what happens when you raise the minimum wage. And the evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings.
It’s important to understand how good this evidence is. Normally, economic analysis is handicapped by the absence of controlled experiments. For example, we can look at what happened to the US economy after the Obama stimulus went into effect, but we can’t observe an alternative universe in which there was no stimulus, and compare the results.