The Fight for Higher Wages

Let’s face it. Something’s broken here in an economy that serves up low wages to significant numbers of adults whose families depend on their earnings (the typical worker earning between the minimum wage and $10 an hour earns half of his or her family’s income; 88 percent are adults).  And something’s broken when the media and economic pundits seem to devote a lot more energy to explaining why companies can’t pay living wages than considering what to do about it.

About those questions:

■ Moderate increases in the minimum wage have had their intended consequences of lifting the earnings of affected workers.  Yes, the increase is absorbed by small price increases, some redistribution from profits, and other mechanisms, which can include some job or hour losses.  But the research is clear on this point: the benefits to low-wage workers far outweigh these costs. Those protesting workers are not economic illiterates at all. The research supports their actions.

■ Yes, it’s still a tough economy, but research on the 1990-91 minimum-wage increase, introduced in a downturn, found the same effects just noted.  Moreover, the runway to this debate is very long.  Start now and the increase could come when the economy is in better shape.

■ The franchisee point is a strong one. They do operate with narrow profit margins, and one should not conflate their profitability with that of their corporate parents. But minimum wages apply to all companies and industries (though there is an exception for waiters, as the great economist Sylvia Allegretto often notes), so no single company is at a competitive disadvantage. Also, another way part of the wage increase could be offset is through a reduction in the corporate parent’s royalty charge to the franchisee.

Chosen excerpts by Job Market Monitor. Read the whole story at 

via The Audacity of the Fight for Higher Wages – NYTimes.com.

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