Nobel Economists: Republicans Wrong on Minimum Wage

[Bob Geiger]

With the buying power of the Federal minimum wage at its lowest point in 55 years, five Nobel Prize-winning economists have been joined by 650 of their peers, in calling on the Republican-led Congress to increase the minimum wage. Describing the last increase almost 10 years ago as now "fully eroded," the economists said that they agree with a report written in 1999 by the Council of Economic Advisors declaring that "modest increases in the minimum wage have had very little or no effect on employment."

"We believe that a modest increase in the minimum wage would improve the well-being of low-wage workers and would not have the adverse effects that critics have claimed," the economists wrote in a paper delivered this week on a conference call hosted by the Economic Policy Institute, an economic research group based in Washington, D.C.

In addition to asserting that the real value of the minimum wage is at its lowest point since 1951, the economists also noted that the ratio of what a minimum-wage earner makes and the average pay rates of other hourly workers is at a significant low.

"The ratio of the minimum wage to the average hourly wage of non-supervisory workers is 31%, its lowest level since World War II," they said. " This decline is causing hardship for low-wage workers and their families."

The Federal minimum wage has been at $5.15 an hour since 1997, which puts a working American earning that wage, even laboring 50 hours a week, at below the national poverty line.

Senator Ted Kennedy (D-MA) has been ferociously pursuing the issue for years and with particular fervor in the current Congress, which ends this year.

“These esteemed economists understand what everyone except the Republican leadership and the White House understand: an increase in the minimum wage is long overdue and would strengthen our economy," said Kennedy, in a statement Thursday. "Millions of American families are living in poverty while working hard for the American dream, while the Republicans block every effort to give them the raise they deserve --- despite skyrocketing increases in health care, gas prices, and education."

Nobel Prize winners calling on Republicans to raise the minimum wage are Kenneth Arrow of Stanford University, Lawrence Klein of the University of Pennsylvania, Robert Solow of the Massachusetts Institute of Technology, Joseph Stiglitz at Columbia University and Clive Granger of the University of California, San Diego.

The Republican leadership and the Bush administration have stubbornly held to the view that a higher minimum wage would lead to fewer jobs and more employers moving jobs offshore -- the latter, a ludicrous assumption, given that most minimum wage jobs are local, service-oriented positions that cannot be moved to another country.

The group of 650 economists shot down that notion, saying in their report that a Democratic plan to phase in a minimum wage increase to $7.25 "falls well within the range of options where the benefits to the labor market, workers, and the overall economy would be positive."

They also contradicted Republican claims that most people earning minimum wage are teenagers who don’t use the money for living essentials and bare subsistence.

"While controversy about the precise employment effects of the minimum wage continues, research has shown that most of the beneficiaries are adults, most are female, and the vast majority are members of low-income working families," the report says.

Republicans put forth a bogus plan to raise the minimum wage over the summer, when they attached it to a whopping Estate Tax cut for America's super rich, knowing that the legislation would fail, but providing them with a cynical way to tell voters that they had voted to improve the lot of working families.

Meanwhile, the GOP Congress has killed three attempts by Kennedy to raise the minimum wage in just the last two years on almost straight party-line votes and will undoubtedly keep doing that if allowed to remain in power after November 7.

Said Kennedy: "It is clear as day that despite what the economists advise, the only way these hard working people will get a new raise is if this Congress gets new management in November."

You can read more from Bob at BobGeiger.com.

[Warpy]

1. The Great Depression may have been ushered in by the

collapse of the stock market, but what that did was collapse the consumer economy. People who had been feeling secure suddenly found themselves wiped out on Wall Street and that caused them to stop purchasing anything beyond the bare essentials to sustain life.

The collapse of the consumer market caused the massive unemployment as first retail outlets closed and then the manufacturing that supplied them closed. The consumer economy was central to the collapse and, as the New Deal recognized, central to its recovery. Putting people back to work is what started the recovery.

The farm economy was already in collapse when debt finally toppled the Dow. With the loss of the financial cushion working and middle class families had relied on, the rest of the economy quickly followed suit.

Cutting taxes at the top has done nothing but increase numbers at the top. It's caused runaway inflation in luxuries but no real jobs. No rich man ever gave a poor man a job unless another poor man was waiting with money in his hand for the goods or services that job was to provide.

That's what the GOP has always forgotten, will always forget. That's why they need to be kept out of power at all costs. Their best function is to act as a balance so that liberal excess doesn't occur.

Anything else will keep us in a boom and bust cycle, with the working public getting more impoverished with each bust and the rich garnering more of the nation's wealth.

[madrchsod]

4. the depression drove my grandfather off his farm

and he had to sell just a fews year before Roosevelt was elected. the farmers started going under in the early to mid 20`s and most of the urban centers didn`t have a clue on what was going to happen

[Warpy]

5. Right, the Depression started a decade earlier for farmers

which was just peachy for the emerging agribusiness companies. Getting "tractored off" a family homestead happened with astonishing speed once a farmer fell one payment behind on his seed debt. Mechanization increased the size of an operation, and every farmer who lost his land meant just that much more money for the corporation. There was no way a horse and plow could compete with a tractor, combine, reaper.

That's probably what happened to your grandfather.

[madrchsod]

6. ya pretty much plus he was stubborn

sold 160 of 10ft deep black dirt in ashton illinois then moved to western iowa and bought sand that all his brothers told him not to...

[madrchsod]

2. ya right....what do these guys know?

i`ll put my faith in the crack team bush has in place to drive our country down the road of prosperity!
look- if we raise the min wage then everyone will want a raise then we will be forced-yes forced-to move jobs out of this country. come on now, wouldn`t it just be better if we all worked for chinese or indian labor rates? just think of all the jobs we would create if we all just made less than a 50cents an hour,why we would have full employment with in the year! no, i for one, see the day coming when the american worker will be rejoice when they realize that working for the lowest amount of wages in the world will grant them a lifetime of rewards...yes, a new day is coming america!

[civildisoBDence]

3. Too many Republicans are just too damn mean

They feel a little bit richer as long as they know a few million people are a little bit poorer.

Neal Boortz is the poster boy for this kind of purely selfish, mean-spirited thinking.

Newsprism

[Divine Discontent]

11. yep

they don't know what compassion is. we're only here so long. I'm tired of hearing, "if you expect to live well you need to be at the top of your game, go to college, and excel at your job!"

Those are nice goals, but most people are regular good & decent folks, and they deserve to live decently (food on the table, no huge worries of bills & medical) and to read this one Cincy guy on CBS today in the blog area going off about "if you all who are complaining would just stop spending so much or not have such nice homes you wouldn't be hurting" GGGGGRRRRRR!!!!

Yes, that applies to some. Like my Mom, she could get by in a tiny place, but has worked hard to have a 3 br house, and struggles, but that is the result of bush's screwing over of the middle class on taxes (giving the big breaks to corp. & millionaires) and the cost of things (elec bill was 250 for her), but most people have a tiny crappy apt, and can barely put solid food on the table for every meal even if they work - I told him he was smug and one day he'll see the error of his ways, and no surprise he was from Cincy and saying this...

sad more people aren't posting about this thread.... I'm poor that's why I'm reading this and posting, I care take for my brother with a horrible illness and times are horrible. Thanks to all who post in here and are able to live decently! You have HEART unlike "Cincy guy".

bless you



www.cafepress.com/warisprofitable <<-- antibush prodem stickers/shirts

[EmperorHasNoClothes]

7. They support the trickle down theory even though it has never worked

yet they oppose a minimum wage.

The idea with trickle down is that wealthy persons, given more money, will invest that money, creating more jobs. Nice in theory except it doesn't work.

If you give low wage earners another dollar per hour, they will SPEND that money, producing earnings for businesses. Every dollar a business pays out in increased minimum wages will likely come back in via increased sales.

[Hosnon]

8. I want a government that LISTENS to the EXPERTS. nt

[twaddler01]

10. No kidding! n/t

[jwirr]

9. I have lived low income all my life. Raising the Minimum Wage

is very good BUT it alone will not do it. The working poor need a single payer universal health care program. And so do the small businesses that employ us.

[Divine Discontent]

12. DING DING DING!!!

medical costs are IMPOSSIBLE to handle for low income workers. There's no way to handle those costs and pay the rent, phone, gas, insurance, car, food, clothes, repairs, taxes/tolls, etc.

[mkb]

13. Mainstream Economic Thinking Is Wrong And Biased

     The arguments about the minimum wage costing jobs don't
really stand up to reasonable thought, as doesn't most
economic thought that comes from the mainstream.
     If employers gave up some of the gains they have been
taking over the years, then they wouldn't have to raise prices
to compensate for higher wages.  They raise prices because
they will never accept taking a smaller share of the economic
pie.  Of course, they have no trouble giving middle class and
lower wage earners a smaller share, as they have been doing
for many years now.
     I have done some basic research that I published on Stan
Goff's website (stangoff.com, "Economics as
Pseudoscience" June of last year) which demonstrates I
believe the decreasing purchasing power that average wage
earners, as well as low income people, have been experiencing
over the last few decades.  I always suggest caution when
using the internet, because they monitor your activity and
keep track of you.
     Mainstream economic thinking is not telling you these
facts, which I believe to be accurate, that explain why there
are no longer one person head of households, at least in most
cases.  It takes more hours of work to pay for most items than
it used to.  This is possibly a structural problem of
capitalism, as the left-wing theorists can tell you.  It seems
also a function of the higher earners taking a bigger and
bigger share of the pie, as I mentioned.  So if they gave back
some of what they've taken, then it seems they wouldn't have
to raise prices if wages are increased.
     The primary problem is how to reverse this trend, which
involves first understanding it, and then figuring out how to
change this without ruining your life or others' lives as
well.  It's only the beginning to know this is happening,
because as I pointed out on Goff's website, there are many
people who are not honest and will get you in trouble if
you're not careful.  This is best understood by the phrase
"Men Are Really Scurrilous" and the meanings you get
out of it.
     It's good to know that most people in power are not
giving you straight answers or the full story.  But that is
only the start of the struggle to live in world that is fair
and reasonable.  If you discover that things are more
difficult when you discover truths, then you're not alone, and
must be prepared for problems, hopefully to be solved with the
help of your efforts.  Good Luck.