THE BLOG
06/11/2013 07:32 am ET Updated Aug 11, 2013

Why the Coming Battle to Increase the Minimum Wage is High Political Ground for Democrats

Here is the bottom line: if the minimum wage in 1968 had been adjusted for inflation, right now instead of $7.25 per hour, it would be $10.55 per hour -- 45 percent higher. Instead of making $15,080 per year for 52 weeks of full-time work, a minimum wage worker would make almost $22,000.

The federal minimum wage has been increased 22 times since it was passed in 1938, but it has never been indexed to inflation. As a result, the incomes of a larger and larger number of working Americans have eroded over the last three decades to the point where many Americans work hard, for 40 hours a week, and still live in poverty.

To put it another way, the growing profits of some of the nation's largest corporations and wealthiest people in America result from the labor of people whose work is rewarded with poverty level wages.

That makes no economic sense. And it's just plan wrong.

Senator Tom Harkin and Congressman George Miller have introduced legislation in Congress to increase the minimum wage to $10.10 per hour and index it to inflation. The passage of these measures would be a major step in stopping the continued growth of the widening chasm between the incomes of ordinary Americans and the top 2% of the population.

And the President, Democrats in Congress and major progressive organizations -- like the National Employment Law Project and the nation's labor movement -- are preparing a major national campaign to pass minimum wage legislation.

There are six reasons why the coming battle to increase the minimum wage is very high political ground for Democrats:

1). The polling is clear. Overwhelming majorities of Americans believe that it is simply wrong for people to work 40 hours a week and earn poverty level wages. And there is not much anyone can say to persuade them otherwise.

For years, many Republicans, corporate lobbyists and -- especially -- advocates for the restaurant industry, which is the worst offender when it comes to exploiting low wage workers - have promoted the conventional wisdom that raising the minimum wage somehow has political costs.

They try to make it appear that raising the "minimum wage" is a "low income" issue -- that is unpopular with the middle class.

But the fact is that increasing the minimum wage can't be exploited politically the way the right wing exploits increases in so-called "entitlements" of "takers" that are paid out of taxpayer dollars.

First, the minimum wage, by definition, is paid to people who work for a living. And, when you think about it, it is often paid to people who work harder than anyone else in America - doing some of the dirtiest jobs in America.

The guys who are chauffeured to work in black SUV's aren't the ones on the road at 4:30 a.m. It's the maids and janitors and cooks and dishwashers who do hard, repetitive physical work -- maybe at two or three jobs, and still barely make ends meet -- that make the minimum wage.

Politically, it's hard for a CEO who makes $10 million a year to argue that wages should not be increased for one of their workers when he makes as much before lunch on the first day of the work year as his minimum wage worker makes all year long.

Right now a CEO who makes $10 million a year makes $4,807 an hour. That's 633 times the rate of a minimum wage worker.

2). Increasing the minimum wage -- and tying it to inflation -- helps stimulate the economy without relying on more public sector spending.

Most economists agree that the federal government should be spending more money on public sector activities like building infrastructure, investing in education and providing economic support to those who have been devastated by the economic crisis that began at the end of the Bush Administration. They believe more spending is necessary to get the slowly recovering economy to really take off.

Unfortunately, Republicans in Congress continue to do everything in their power to obstruct economic policies that most economists agree would turbocharge growth. Instead, Republicans insist on the kinds of cuts that serve as a massive albatross around the neck of the economic recovery.

Increasing the minimum wage would put more money in consumers' pockets without tapping the federal treasury. And it would put that money into the pockets of people who will actually go out and spend it, rather than sinking it into yet another vacation home or a Cayman Islands account.

Virtually every dollar of increase in the minimum wage will be used to purchase goods and services. That is the kind of virtuous economic cycle that increases overall economic production and generates new jobs -- and ultimately more federal tax dollars that actually shrink the deficit.

3). Increasing the minimum wage would directly address the gravest problem facing our society and economy -- growing income inequality.

Long-term economic growth is simply not sustainable so long as productivity goes up faster than wages. The reason is simple: if workers produce more and more per hour (increased productivity), but their incomes don't increase proportionately, then there are no consumers to buy the increasing volume of goods and services they produce.

Henry Ford was dead-on when he said he needed to pay his workers enough that they could afford to buy the cars they produce.

One big reason why the share of our Gross Domestic Product going to profits is the highest in half a century -- and the share going to wage is at an all-time low -- is erosion of the minimum wage. The other is the systematic campaign by big corporations and the American Right to prevent workers from organizing to collectively bargain for higher wages.

4). Increasing the minimum wage is the best anti-poverty program there is.

You often hear people say that the most important anti-poverty program is investment in education. And there is no doubt that increasing the education and skills of children who grow up poor does wonders for their future economic prospects, and the economic success of our entire society.

But as long as we have an economy where someone has to clean hotel rooms, mop floors, empty bedpans, or flip burgers -- education isn't the only answer. As long as these jobs exist, the people who do them have to be paid a living wage.

If they aren't, they will continue to live in poverty - it's that simple.

5). The business/GOP argument that if the minimum wage were increased it will mean fewer jobs is demonstrably wrong. We have empirical evidence, after all. The minimum wage has been increased 22 times since 1938 and there is absolutely no evidence whatsoever that those increases cost jobs. If anything, just the opposite, since increasing the minimum wage put money in the pockets of consumers who turn around and buy products that have to be produced by more workers -- not fewer.

The restaurant industry has been especially vocal arguing that increasing the minimum wage would make them "uncompetitive" and "cost jobs." Of course, they ignore that all restaurants would be subject to the same increase in the minimum wage, so no restaurant would be at a relative competitive disadvantage when compared with any other.

And they also ignore that all of the increase in the minimum wage would not be borne by consumers in the form of higher prices. Some of it will come out of their bottom line -- which is a good thing in an economy with record amounts of GDP going to profits. It is also the real reason why corporations oppose a minimum wage increase. Their problem is not that it will "cost the economy jobs." Their problem is that they will have to stop stuffing their bank accounts with money earned from the labor of workers paid poverty wages.

Note, by the way, that profits not only constitute a higher percentage of the GDP. Companies' profit margins are also at record highs as a percentage of revenue. In other words, a higher proportion of each dollar of sales now goes to profits than at any other time in our economic history.

I remember hearing an interview with a restaurant owner during the short period in the Clinton Administration when employment was skyrocketing and wages were going up. The restaurant owner was asked if it was a problem that he had to raise his wages to get good workers. He said that he would far rather have a full restaurant of people with money in their pockets, even if he had to pay his workers more. He was right. When inequality declines and we have a higher wage economy, everyone ultimately does better.

6). Finally, some in the American corporate elite and leaders in the GOP argue that raising our wages in America will make the U.S. uncompetitive in the world.

In fact there is no evidence whatsoever that low wage economies - or countries with higher levels of income inequality -- are more competitive than high wage economies with less income inequality. In fact, very much to the contrary.

Seventeen of the 20 countries that the World Economic Forum lists as most competitive have median wages higher than the average for the countries in the Organization for Economic Co-operation and Development (OECD), which includes the most developed, highest wage economies in the world.

Ten of the most competitive countries find themselves among the 25 countries with the lowest levels of income inequality as listed by the CIA fact book.

In fact, Sweden, with the least income inequality of any country in the world, is fourth most competitive according to the World Economic Forum. On the other hand, the United States, which is at seventh place in competitiveness, is less competitive than Sweden, and has a higher level of income inequality than 95 other countries -- including countries like Uganda, Yemen and Egypt.

That is shameful since the United States produces more goods and services per capita than any other country -- which should give the U.S. a head start both on competitiveness and the ability to pay better wages to all of its people.

Of course the low minimum wage directly contributes to America's high levels of income inequality and brings down median income that measures the point where half of the population makes more and half makes less. And far from making America more competitive, low wages actually appear to have the opposite effect because they depress the level of education and workforce skill, overall health of the population and, of course, the buying power of its consumers.

The drive to increase the minimum wage is a huge winner economically and politically for Democrats. And once they realize its potent power, it would not be surprising to see many Republicans decide that obstructing higher wages for working people in order to defend the profits of big corporations is not exactly the rebranding they had in mind.

Robert Creamer is a long-time political organizer and strategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on Amazon.com. He is a partner in Democracy Partners and a Senior Strategist for Americans United for Change. Follow him on Twitter @rbcreamer.

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