[Vision2020] $20 Hamburgers if Minimum Wage is Raised? See answer below

Nicholas Gier ngier006 at gmail.com
Thu Jan 30 11:52:36 PST 2014

*See attached PDF file to see the figures.*

*Support Idaho Minimum Wage Hike*

An organization called RaiseIdaho is collecting signatures for a petition
to raise Idaho's MW to $10.10 on January 1, 2018.  Please add yours at
76280198.pdf <http://www.raiseidaho.org/files/%2076280198.pdf>. *Print more
copies and get your friends and colleagues to sign as well.*

Idaho has the dubious distinction of having the highest percentage of
minimum wage workers in the entire country. Idaho has also experienced the
largest increase in the number of people using food stamps. The two are
obviously related. *Idahoans are not lazy; they are simply not paid enough
to put food on their tables.* If Idaho raised its minimum wage, 25% of
Idaho workers would get a much needed pay hike, and they would be less
reliant on government assistance.

*Bill Sali and the Law of Gravity*

In January 2007, during the debate on raising the federal minimum wage to
$7.25, former Idaho Congressman Bill Sali embarrassed himself by proposing
legislation to repeal the law of gravity. Market ideologues are so blinded
by their "pure" economic theory that they routinely ignore overwhelming
evidence that government intervention in the economy is not always bad. *As
the evidence below shows, insisting on a completely free labor market and
keeping workers at the lowest possible wages do not always grow the
economy.** Nor is it healthy for society as a whole*.

*Facts about the Minimum Wage (MW) *

*It's not just young fast food workers who earn it. *According to the National
Employment Law Project, 40 percent are now 25 years or older, with the
average being 29, and 36 percent have children. Nearly two out of three MW
wage earners are women and of those, more than half are older than 24. A
great majority of tipped workers are women; and the federal MW for them has
been frozen at $2.13 for 20 years.

*Raising the MW does not hurt economic growth*. In the states that have
raised their MW, there has been, according to the National Employment Law
Project, a total increase in Gross State Product (GSP) of $619 million. Idaho
Governor "Butch" Otter boasts about Idaho's economic growth, but our
Washington neighbors, with the nation's highest MW, have produced a much
higher GSP per capita. In fact, six states with the highest MW have the
highest GSP per capita. Most of the states with no MW, or just the federal
rate, have the lowest GSP per capita. The ideologues are disproved.

*A Higher MW stimulates the economy. *In July 2007 the MW went to
$5.85/hour, and consumer spending rose $1.7 billion. In July 2008 the new
MW of $6.55 added $3.1 billion to the economy. The current $7.25 went into
effect in July 2009, and consumers spent $5.6 billion over the next year.

In 2011 Congress failed to act on President Obama's plea to boost the MW to
$9.50; and, according to a study by the Federal Reserve Bank of Chicago, at
least $60 billion over two years was lost to the economy at a critical time
for its recovery.

According to the Economic Policy Institute, a MW of $10.10, which President
Obama has now mandated for federal contract workers, would add $22 billion
to the economy and produce about 85,000 new jobs. According to a study done
by the Restaurant Opportunities Centers United, 58 percent of America's
working poor would have been lifted out of poverty if a $10.10 MW had been
enacted in 2011.

*A higher MW moves people out of poverty and off government assistance. *Kai
Filion of the Economic Policy Institute sates: "One of the biggest problems
during a recession is the decrease in consumer demand. When consumers cut
back on spending, employers respond by cutting back on jobs. Reducing the
wages of already low-wage workers will only make this problem worse, and
will hurt those who are least well off." Why should businesses risk the
loss of customers so poor that they cannot buy their goods?

Kurt A. Gardiner at the *Huffington Post* explains that increased consumer
spending "will have a ripple effect throughout the economy (this is known
by economists as the multiplier effect), unlike, say, tax cuts for the
nation's wealthiest." Gardiner continues: "Raising the minimum wage by just
$2.85 an hour to $10.10 would push nearly 5 million of the working poor out
of poverty and would push many of them off government assistance programs,
which they still qualify for despite working full-time jobs."
Businesses will not fail if they raise wages. Since the Reagan
administration, real wages have been flat, and the federal MW would be
$10.71 if it had been pegged to inflation. In stark contrast, corporate
profits and the stock market are at an all-time high.  If the MW had grown
at the same rate as wages for the top
, it would now be $28.34 per hour.

In his recent state-of-the-union speech, President Obama challenged
America's businesses to give their employees a raise. They can afford it,
and it is only fair to do so. If they would pay their employees a living
wage, then a government mandate would not be necessary. Businesses should
also add paid sick and maternity leave as well, because many states are
starting to require it.

*A higher MW does not kill jobs*. An article published in the *Review of
Economics and Statistics* demonstrated that job growth in states with
higher MW is almost the same as those with the federal MW of $7.25 or
lower.The University of Chicago's Booth School of Business--dominated
freemarketeers--has done a survey of 38 leading economists. The response
was--by a four-to-one margin--that the positives of raising the MW outweigh
the negatives. Right-wingers who say that hamburgers would cost $20 are, as
usual, in La-La-Land. *See below for what a Big Mac costs in Australia,
which has the highest MW in the world*.

*Raising the MW wage does not reduce teen employment*. Three university
economists have done an in-depth study of this claim and have found that it
is not supported by the facts. (See www.irle. berkeley.edu/working papers
/166-08 <http://www.irle.%20berkeley.edu/working%20papers%20/166-08>.pdf.) Igor
Volsky of Think Progress reports that "in 2009 researchers conducted a
review of 64 minimum wage studies published between 1972 and 2007 measuring
the impact of minimum wages on teenage employment and when they graphed
'every employment estimate contained in these studies (over 1,000 in
total), weighting each estimate by its statistical precision, they found
that the most precise estimates were heavily clustered at or near zero
employment effects.'"

*Minimum Wage in Brazil and Australia*

As America's middle class shrinks, it is growing, sometimes, dramatically,
in other countries. Brazil, for example, has reduced its poverty rate from
40 percent 2001 to 25 percent in 2009, and 52 percent of Brazilians can now
call themselves middle class. The socialist government just announced an
unemployment rate of 4.6 percent, an historic low. One of the drivers of
this remarkable success was a dramatic rise in the MW.

At $16.37 per hour Australia now has the highest MW in the world. It was
one of the few countries that sailed through the Great Recession with nary
a hiccup. Its current growth rate is 2.4 percent (compared to the U.S. at
1.8 percent) and its unemployment rate is 5.8 percent. This was all
achieved under a Labor (read Socialist) government. *And according to Rep.
Markwayne Mullin (R-OK), an Australian Big Mac should cost $20, right?
Wrong, it costs $3.75*.

*600 Economists Support $10.10 MV*

In a letter to congressional leaders, 600 Ph.D.-holding economists urge
them to increase the federal MW to $10.10. Here is an excerpt: "The weight
of evidence now show[s] that increases in the minimum wage have had little
or no negative effect on the employment of minimum wage workers. . . .
Research suggests that a minimum wage increase could have a small
stimulative effect on the economy as low-wage workers spend their
additional earnings, raising demand and job growth, and providing some help
on the jobs front."

*Poll shows 71 percent in favor of Higher MW*

A January 8, 2014 Quinnipiac poll showed that 71 percent of those polled
supported raising the MW by 71 percent. Even a majority of Republicans
agreed by a margin of 52-45. The pollster gave the following options and
results: 18 percent wanted a MW higher than $10.10; 33 percent was in favor
of  $10.10; 18 percent desired a rate higher than $7.25, but not $10.10;
and 27 percent opposed a MW increase.

The following figure shows that if the MW was indexed to worker
productivity, it would now be $18.67/hour. Since the Reagan administration
the most productive workers in the world have been cheated of results of
their hard-earned labor.  Many companies have been buying back their own
stock rather than investing their profits in the economy.

[image: MinimumWage_productivity]

The next figure demonstrates that in none of the states are MW workers able
to earn enough in a 40-hour week to afford a 2-bedroom apartment. (*Even
the "best" states require working 70 hours.*) That is the reason why
parents in these families are now working 3-4 jobs.  They have no money to
pay for day-care and preschool possibilities are limited, especially in the
Red States, where most of the MW workers live.

[image: MinimumWage_AffordRent]
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