Report: Raising minimum wage will create jobs

2012-08-13T21:43:00Z Report: Raising minimum wage will create jobsDoug Schorpp The Quad-City Times
August 13, 2012 9:43 pm  • 

Nicole Thompson of Rock Island is doing her best to support herself and her two boys while working as a cashier at a McDonald’s restaurant in Rock Island.

But it is not easy.

“I have a boy, 4, one 10 and one son, 20, who just got out on his own. And he has to work two jobs because he cannot support his self either,” said Thompson, 34. “It has been a real struggle for my family. But we are making it.

“I like my job and the people I work with. But I work 40 hours per week, and I live check to check. It is really hard and really frustrating. Some days, I don’t even know how we are going to eat.”

She, of course, favors a minimum wage increase. Thompson said that would help her situation, although “it seems like everyone is struggling these days,” she said.

The Economic Policy Institute, a Washington, D.C., economic think tank, has released findings of its national minimum wage analysis, including how proposed increases in the federal minimum wage law would affect various demographics.

Key findings include that if the proposed increase to $9.80 occurred by July 1, 2014, for example, it would raise the wages of 28 million workers nationally. Also, it would result in a net increase of about 100,000 new jobs nationally, 4,500 in Illinois and 1,000 in Iowa over the the phased-in period.

Doug Hall is author of the report. He is director of EARN, or Economic Analysis and Research Network, a project of EPI. “EARN is a partner with 57 state groups in 43 states,” he said of other nonprofits.

He said misconceptions also surfaced in his findings.

“There are some perceptions of minimum wage that is not always accurate,” Hall said. “There is a misconception that it is mostly teenagers who are working part-time jobs to finance their social lives. But there are more often bread winners in families who make minimum wage. They are married. They have children.”

Hall said nationally, about 88 percent of workers who would benefit from the increase are at least 20 years old. Although workers of all races and ethnicities would benefit from the increase, non-Hispanic, white workers are the largest share (about 56 percent) of those who would be affected nationally.

On March 29, Sen. Tom Harkin, D-Iowa, introduced the Rebuild America Act, which includes an increase in the federal minimum wage from the current $7.25 to $9.80 via three incremental increases of 85 cents after which it would be indexed to inflation.

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(10) Comments

  1. The Scarlet Pimpernel
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    The Scarlet Pimpernel - December 01, 2012 2:46 pm
    The entire idea underlying this concept is the "velocity of the Dollar" theorem, a theorem accepted by both the Chicago School traditionalists and the Keynesians. The velocity theorem rests on the concept that when an item is purchased there is a return that is greater than every each dollar spent. In other words for every dollar spent the return might be an additional 10, 20, or 30 cents. The more stable and reliable our economy is the higher this return will be. More cash inflows and capital investments help facilitate this. This lowers market risk and uncertainty, thus improving viability for new market entrants and existing businesses alike.

    This means that job growth is often even stronger because the measure of this velocity or rotation in our dollar is not perfect. Therefore the benefits of a higher wage are magnified and are more prevalent than what can most concretely be calculated. Enhanced purchasing power is tantamount to improving the health of our economy. This lessens reliance on government programs through less paperwork and administrative costs that the obvious wingnut Republican and Tea Party types writing on this page continue erroneously label "entitlements", as if it were a bad thing.

    As an aside only and not to get distracted from the subject at hand, entitlements are something you are entitled to because you paid into them your entire life, much as you would a 401K or a Keogh plan. Furthermore, Medicare, in addition to being funded from your taxes throughout your working life, continues to be funded by premiums that the recipient pays after eligibility is established and received. Amazing how few of the dyed-in-the-wool, hard-core Republican businessmen and politicians ever bother to mention these facts when discussing these two programs: Social Security and Medicare.

    If the minimum wage is raised enough then that will be too costly for both small and large business alike to hire more workers. However, $9.80 amounts to only less than $20,000/ year for a 40hour workweek, and is a more than an acceptable balance for growing the private sector while giving families and households more purchasing power. This also gives a 2 earner household the benefit of being able to free themselves of the shackles of a dependency on the inadequate social safety net by having a combined income of nearly $40,000.00/yr. This further reduces the cost of governance in money-saving, all as a result of a nearly "living" wage.

    Opponents of the minimum wage also say that the cost of living is different in different regions and in different states. The only thing that is accurate about this statement is that these costs are not flat line throughout the entire United States. Still this disparity is not necessarily as wide as some think. For all home owners and renters alike there are many expenses that have to be reflected in each family's budget. Rents and mortgage payments maybe lower in some locales, but food, transportation, and utilities costs are usually higher in locales with lower rent and house prices, due to the lack of urban transportation systems, less competition in food transportation delivery systems, less competition in food delivery outlets and higher utility charges due, in part, to higher fixed costs with a less dense population and in part to less oversight from utility boards more amenable to shallow arguments by utility companies for higher rate charges. Conversely the housing costs maybe higher in other places while these other budget items cost less because of how the services are allocated and distributed. Property taxes and sales taxes factor in this equation as well, although not as dissimilar as opponents of the minimum wage would argue. For example, I certain areas of the South, property taxes have created great dissatisfaction and disgruntlement from Northerners who moved South because they had heard of the great reductions in property taxes. Upon arriving in the South, they find that the locale they have chosen, because of the great dissatisfaction of their former Northern dwellers with the lack of public services offered, have had to jack up the tax rates to nearly what they were paying in the states and communities they left in order to provide the services that attracted them to move South. Quite a paradox, no?

    So, if you really want to know what underlies the economic theorem that this article is based upon, it is the theorem of the velocity of the Dollar. Buy a good Macroeconomics 101 textbook and spend 60-70 hours studying it. Or, better yet, enroll in a good extension course from the University of Iowa in Economics 101 where you will have someone who can explain subjects as simple as this to you in great detail with a great deal more patience than I have.
  2. The Scarlet Pimpernel
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    The Scarlet Pimpernel - December 01, 2012 1:55 pm
    Obviously you never took any, did you? Or you would know that this analysis is spot on in both a macro and micro analysis!
  3. Contemptio
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    Contemptio - August 14, 2012 6:26 pm
    Do they even teach Macro Economics anymore?
  4. Over taxed
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    Over taxed - August 14, 2012 2:29 pm
    Is this the same thinktank that said that Obamacare would reduce healthcare costs?
  5. atlasshrugged
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    atlasshrugged - August 14, 2012 6:46 am
    Only the QCT could run an article on how raising the minimum wage would create jobs and NOT have any explanation whatsoever as to HOW this could be accomplished.
  6. Charger
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    Charger - August 14, 2012 6:29 am
    There is no vacuum where only increasing the minimum wage increases jobs. When labor costs go up so do the prices of the goods and services they deliver. Only 5.2% of all employees in the US even earn the minimum wage so increasing it further will have almost no positive impact to our economy and will only keep employers from adding these low scale jobs. And his assertion that the family bread winners are making this wage is a myth, below is the actual BLS characteristics.

    http://www.bls.gov/cps/minwage2011.htm
  7. budnight
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    budnight - August 14, 2012 6:08 am
    Sure, I'd like a raise too but I am not going to knock my neighbors door to get it. Stay out of my pockets Tom Harkin (D). Minimum wage is a joke.
  8. Patriot
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    Patriot - August 14, 2012 6:02 am
    Too bad there was no mention of how this would create jobs. Probably because it is a liberal think tank that believes Government directives are needed for everything. Kind of like Pelosi saying that unemployment gets more people working.
  9. MrGadfly
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    MrGadfly - August 13, 2012 9:51 pm
    Thank you Tom for waiting till an election year to propose this! Any other issues you care to bring up that you could have done when you had a near Super Majority in the Senate a couple of years ago?
  10. MrGadfly
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    MrGadfly - August 13, 2012 9:50 pm
    So let's raise it to $30/hr if raising it at all will create some jobs! What a crazy study...But with the borders both NORTH, SOUTH, EAST, and West not shut, and people coming in from all over the world taking jobs at or below minimum wage, I guess it will create jobs for them.
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