Target stores are raising their employees’ minimum wages to $11 per hour immediately, with a pledge to hit $15 per hour by 2020.
This may seem like a victory for the Democratic platform to raise all workers’ pay to a livable wage, and in many ways it is. But it’s also an important victory for the free market, which is proving that the cyclical depression of workers wages was indeed a temporary, demographically driven problem which will be overcome. It just takes a tremendous amount of time – really a full generation. More importantly, it shows the direction of retail and possibly the service industry as a whole does have a future as an important part of a dynamic economy. Continue reading
The fight for a $15 per hour minimum wage is the hottest issue among progressive Democrats today. There has been a lot of progress as cities including Seattle and Los Angeles have passed this as their minimum wage, as has the entire state of New York (but only for “fast food” workers, strangely). It would be a big hike from today’s $7.25 per hour, a 106% increase that swamps any previous jump. President Obama, and many Democrats, favor a smaller $12 per hour rate as something of a compromise.
But where did these numbers come from? Why are they important? What effects would a minimum wage rise have on the economy? It’s worth spending some time looking at the postwar history of the minimum wage, from 1947 to 2015, to see where we are today and what it means.
Raising the minimum wage has become a progressive rallying cry. While President Obama’s call to raise it to $10.10 per hour throughout the US is a longshot, given the Republican House, many states have either raised their wage or are considering it. Minnesota is contemplating raising our minimum wage to $9.50 per hour by 2016, possibly indexed to inflation afterwards, and it is likely to pass.
What is the net effect on the economy? An analysis of the net effects was prepared in December and with a little more math it boils down to something no worse than 0.5% of the total economy of the state. It’s a way of looking at the proposal that makes the case against raising the wage much more difficult, although the effects are not felt uniformly throughout Minnesota.
There is little doubt that income inequality will become the Democratic Party’s big issue for 2014. While there is a good chance the problem will correct itself once there is upward pressure on wages again, it is still an important policy that the Federal Government can and should pursue. It’s very popular, too, with 58% of identified independents supporting some action.
Barataria has outlined a few ideas that will have a longer-term effect, but what can be done in the short term? The answer is something equally popular, raising the minimum wage to $10.10 an hour – a 39% increase. It seems like a longshot, given the Republican House, but if the recent budget deal forged by Sen Murray and Rep Ryan is an indication of the future there may be room for a grand deal. But there is little doubt that the Democratic position will include the minimum wage increase. It’s worth getting to know well.
“Let’s tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.”
– President Obama, State of the Union Address
With these words a new policy direction was announced. It’s not a small move, especially since it’s both the biggest effort to combat the Depression since the Stimulus Act and the biggest challenge to Republicans outside of the budget negotiations (which largely go nowhere). But for many progressives a higher minimum wage is long overdue. Even more important, linking it to a “living wage” sets a precedent that has not been a part of policy in most of my advancing lifetime.
How does this go down? It’s a fight we haven’t seen for a while, so it’s hard to tell. But it’s very popular and backed by solid research as a sound public policy. If only it went even further …