Minimum Wage More than Frozen in Place--Part Two

Every time the issue comes up, opponents argue that raising wage requirements for labor at the bottom of the economy would actually cost America jobs and contribute to a damaging new cycle of inflation that would stall the entire economy.

Others argue that raising the floor on wages would simply drive more jobs overseas.

Some are on record as saying that increasing what the lowest paid workers receive an hour would rob even more laborers of health benefits.

It is hard to counter these arguments without hard data.

Instinctively, I have always felt that such notions were basically wrong-headed.

It has always seemed to me that if people were earning more, they would spend more. This increased buying capacity would create more demand for goods and services and thus, more jobs, more profit and more economic well-being for everyone.

We find it easy to argue in this manner when we place more buying power in the hands of the wealthy. Why wouldn't the same principles apply to those at the bottom?

On my more judgmental days, I have written off such anti-labor arguments as thinly veiled defense tactics to cover simple, but deadly, individual greed. Forgive me.

But, now we have data. Hard data.

On May 2, 2005, the State of Florida increased its state minimum wage from $5.15 to $6.15 an hour. Voters also approved tying wage levels to an ongoing, inflationary index. As a result, by January 1, 2006, the lowest wage level had risen to $6.40 per hour (that comes out to annual earnings of $13,312 versus the current $10,712 ).

A year later the Research Institute on Social and Economic Policy (RISEP) at Florida International University (FIU) along with the Florida Chapter of the Association of Community Organizations for Reform Now commissioned a study of the results of the increase in minimum wages after one year.

Written by H. Luke Shaefer, University of Chicago School of Social Service Administration and Bruce Nissen, FIU--RISEP, the report, based on empirical evidence, debunks every objection to raising the minimum wage.

The report answers five clear questions.

1) Since Floridians approved the new minimum wage law, have businesses been forced to cut labor costs by laying off workers?

To the contrary, the Florida unemployment rate has steadily declined since the new minimum wage took effect. In fact, between May 2005 and February 2006, the Florida rate fell more than twice as much as the federal unemployment rate (17.9% versus 5.9%). Private service providing work evidenced the steadiest growth of any employment sector with no dips on the trend line. Further, Florida's job growth rate has been stronger in the year since the new wage level was enacted than during the previous year.

2) Has the service sector, especially the hospitality, retail, accommodations and food service industries, been worse off? Has the agricultural sector been worse off?

No. All of these sectors have done well and each has evidenced growth. In fact, each of these sectors reported strong growth and economic health. While agricultural jobs did report losses, these were of a seasonal nature, as is the case annually. Furthermore, the ag job loss was less severe in the year under consideration than in the year before the change in minimum wage.

3) Since the new minimum wage took effect, have businesses been forced to move out of state at a greater rate than before?

No, not at all. To the contrary, the number of privately owned businesses in Florida grew by over 10,000 in the first full quarter after the new state minimum wage law was passed. Instead of losing businesses that employ people, Florida is gaining such establishments faster than at any time since before 2003.

4) Are low-wage workers better or worse off since the implementation of the new minimum wage?

While Florida remains a low-wage state, it is clear that since the new wage law took effect, wages in the state have grown to an average of just over $700 per week. An interesting additional finding is the fact that raising the minimum wage did not increase wages for those workers earning several dollars an hour above the minimum as many critics had predicted.

5) Has the higher state minimum wage put Florida at a competitive disadvantage in comparison to other states?

Since Florida ranks at the bottom of those states with minimum wage laws, it is clear that there is no competitive disadvantage. Of the four states with the largest Gross State Products, only one--Texas (fanfare just here, please!)--does not have a minimum wage law. Rather than being placed at a disadvantage, Florida led the nation in economic and employment growth.

Conclusion: The critics and naysayers are simply wrong.

Raising the minimum wage is not bad for the economy, its workers or its business climate.

Doing right is never wrong.

Pursuing a more just society is always right.

How labor is treated is a moral matter.

It is past time to raise the national minimum wage.

(For my Christian readers, see James 5:1-6. For my Jewish readers, see Isaiah 58:3. If there are similar passages in the Koran, and I expect there are, please advise me. For ministers who read here, use these texts soon!)