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Minimum Wage Raise Is Good for Business


The minimum wage is headed for a raise — back to the 1950s. That’s right, even after rising from $5.15 now to $7.25 in 2009, the federal minimum wage will still be lower than it was in 1956, when it was $7.41 in today’s dollars.  The minimum wage was enacted in 1938 through the Fair Labor Standards Act, designed to eliminate “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers.”

The minimum wage was never meant to be the minimum the nation’s worst employers want to pay. That would be as absurd as setting environmental policies to accommodate the worst polluters.

Business lobbyists who’d abolish the minimum wage if they could have held it hostage for 10 years — the longest period ever without a raise. Now they want to collect a ransom of tax breaks to let it go.

Since its last raise in 1997, the minimum wage has fallen 20 percent, adjusted for inflation, while domestic corporate profits are up 74 percent, retail profits are up 55 percent, and business has reaped $312 billion in tax breaks.

“I’m sick of all the talk about business needing tax relief as compensation for a higher minimum wage,” says Steve Zorn, managing partner of Castle Village Farm of Florida. “We don’t need relief. Workers are the ones who need relief. We’ve gotten plenty of tax breaks for business and certainly don’t need to pile more onto minimum wage legislation that won’t hurt business to begin with.”

Minimum wage critics predictably forecast dire consequences with every raise, and are just as predictably wrong. After the last federal minimum wage hikes in 1996 and 1997, the nation experienced dramatically stronger job growth, and lower inflation and poverty rates. States that have raised their minimum wages above $5.15 have had better employment and small business trends than states that have not.

Minimum wage raises aren’t put under mattresses — or offshore tax havens. They are recycled back into the economy.

“Overall most low-wage workers pump every dollar of their paychecks directly into the local economy by spending their money in their neighborhood stores, local pharmacies and corner markets,” notes Dan Gardner, commissioner of Labor and Industries for Oregon, which has the nation’s second-highest minimum wage at $7.80.

“Higher wages benefit business by increasing consumer purchasing power, reducing costly employee turnover, raising productivity, and improving product quality, customer satisfaction and company reputation,” says a statement supporting higher minimum wage signed by the CEOs of Costco, the U.S. Women’s Chamber of Commerce, Small Business Majority, Eileen Fisher apparel company and more than 500 business owners across the nation — from the Four Seasons Restaurant in New York and Dixie Rod & Custom in Alabama to the Mercury Cafe in Colorado and Broetje Orchards in Washington. From Candle Enterprises in Minnesota and Vintage Vinyl in Missouri to North Georgia Woodworks and Small Biz Survival in Oklahoma.

“Trying to save money by shortchanging my employees would be like skimping on ingredients,” explains statement signer Kirsten Poole, co-owner of Kirsten’s Cafe and Dish Caterers in Silver Spring, MD. “I’d lose more than I saved because of declining quality, service, reputation and customer base. You can’t build a healthy business or a healthy economy on a miserly minimum wage.”

U.S. Women’s Chamber of Commerce CEO Margot Dorfman says, “When businesses don’t pay a living wage all society pays. We pay through poverty and needless disease, disability and death from inadequate health care. We pay as women struggle to put food on the table. We pay as businesses and communities suffer economic decline.”

Successful businesses like Kirsten’s Cafe and Seventh Generation, the nation’s leading brand of non-toxic household products, know that miserly wages are toxic to our families, communities and economy.

If employers can’t stay in business without keeping their employees in poverty, there’s something wrong with their business models.

Even at $7.25 an hour, the minimum wage would still be two bucks short of the value it had in 1968, four decades ago.

As the business owners’ statement says, “We cannot build a strong 21st century economy when more and more hardworking Americans struggle to make ends meet.”

Holly Sklar is senior policy adviser for Business for Shared Prosperity and co-author of “A Just Minimum Wage: Good for Workers, Business and Our Future.”
 
 
© Copyright 2007 Holly Sklar

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