Why The New Minimum Wage is a Good Thing

Klamath Online
October 1, 2011By Kirk Oakes

The Oregon minimum wage will increase to $8.80 per hour in January of 2012. When adjusted for inflation, the new minimum is still less than the minimum wage through most of the period from 1961 to 1981.

Download a copy of Why the Minimum Wage is a Good Thing (PDF)

That means a minimum-¬wage worker with two dependents will earn $18,304 next year, still below the 2011 federal poverty guideline of $18,530 for a family of three. The Oregon minimum wage, however, does lift one- and two-person families out of poverty.

“Safeguarding the wages of low-income workers is especially critical in a tough economy," Brad Avakian, Oregon’s State Labor Commissioner said. "Oregon’s economy will not rebound if we allow 144,538 minimum wage earners to fall behind inflation.”

During the 2010 governor's race Chris Dudley took a stand against Oregon's minimum wage being raised.Dudley, who earlier in the campaign avoided taking a stand on legislation allowing restaurants to apply a portion of a waiter's tips toward the minimum wage, expressed concern that "having the highest minimum wage in the country negatively impacts the state."

Here is what gets lost in the shuffle of partisan arguments. Let’s say, hypothetically, that a restaurant says they must lay off a percentage of their employees because $12 a week per employee will negatively impact their business. Shortly thereafter, when customers not receiving full service, as they are accustomed to stop returning, shortsighted business practices will indeed have a toll. It will have been the reactionary and shallow response, not the minimal wage increase that pulls the business down.

In regards to that brand of ‘the sky is falling’ rhetoric, states with higher minimum wages show about the same unemployment rate as states with low minimum wage. Furthermore, high minimum wage states saw a greater decrease in the unemployment rate than low minimum wage states.

Greater productivity and worker stability seems to be a direct result of a higher wage state. If your business were goods and/or services, why would anyone run or build a factory or hire workers to make products that nobody has the money to buy? Families need to earn beyond the subsistence level so that they can buy the stuff they need (or want), and we should strive to see them make more to spend more so that we can get the economy rolling again.

Demand comes first, then supply. It doesn’t work the other way around. From the Oregon Center for Public Policy:

“Even though by one important measure Oregon’s economy improved a bit last year, poverty and extreme poverty in the state worsened and the earnings of the typical household continued to shrink, newly-released government data shows.

In 2010, 15.8 percent of Oregonians lived in poverty, significantly higher than the 14.3 percent rate in 2009 and 12.9 percent in 2007, according to the U.S. Census Bureau’s American Community Survey (ACS) released today. Oregon’s 2010 poverty rate was higher than the national average. According to the survey, last year 596,408 Oregonians lived in poverty — an increase of more than 120,000 from 2007, the year before the recession began.

I have used this story before but this seems like a good time to use it again.

A young man sees an old man walking down the beach. Every once in a while the old man would stop, pick something up and toss it back into the sea. The first man hurried to catch up with the second purely out of curiosity, for he had to see what the man was doing.

It turned out he was throwing starfish back into the ocean after they had been beached by an abnormally high tide. He asked the man "What are you doing? You're not going to be able to throw enough starfish back to make a huge difference."

The man picked up a starfish, threw it back into the ocean and said, "It made a huge difference to that one!"

Oregon Center for Public Policy calculated that the increase means an extra $624 a year for a family with one full-time minimum wage worker. "Oregonians were smart to raise the minimum wage and keep it from being eroded by inflation," Executive Director Chuck Sheketoff said. "Oregon's minimum wage system helps fight poverty and income inequality and is a model for the nation."

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