The Hollow Argument Against Higher Wages

[eridani]

http://www.nationofchange.org/hollow-argument-against-higher-wages-1393171769

According to University of Massachusetts economist Arindrajit Dube, who has studied the effects of minimum-wage increases in recent decades, the impact on poverty is much more powerful than the CBO suggests. He quotes a study by The Hamilton Project, a centrist economic think tank based at the Brookings Institution, which suggests that as many as 35 million families will benefit from an increase to $10.10 an hour due to "spillover effects" raising income among workers who already make slightly more than the minimum.

Dube's studies of the historical effect of past minimum-wage increases indicate that raising the federal minimum to $10.10 would lift somewhere between 4.6 and 6 million households above the poverty line.

Raising the minimum wage will also reduce profiteering by large, highly profitable employers, like Wal-Mart and McDonalds, whose workers rely on government benefits — such as the Earned Income Tax Credit and food stamps — to supplement inadequate paychecks. Survey after survey reflects the strong public appetite for higher wages at the low end. But popular approval is not the only way companies can actually benefit from improving workers' earnings and livelihoods.

The Gap clothing chain just announced that its workers will soon receive better pay to bring them above the current federal minimum. Announcing that his company will voluntarily raise its lowest-paid workers to $9 this year and $10 next year, Gap CEO Glenn Murphy said he regards the expense as a "strategic investment" that would pay for itself many times over in better productivity and morale (as well as lower job turnover and training costs)

[RC]

1. This has been known since forever.

It is just common sense. If people have more money to spend, they will spend it. If more people are spending more money, there will be more money in circulation and the economy will do well. The slow "recovery" if you want it call it that, is because way too many of our Living-Wage-Jobs were shipped overseas. The over supply of workers looking for jobs, drove down wages. Profits sky-rocketed. Wages still went down. No wonder Main street is still struggling.

[Coyotl]

2. "Murphy.. regards the expense as a "strategic investment" that would pay for itself many times over

Indeed, a higher minimum wage benefits the employer too, paying for itself "many times over"!