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Minimum Wage Laws

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When Why
Oct-12-18 The unforeseen problem with $15 an hour
Oct-12-18 Why It’s the Perfect Time to Raise the Federal Minimum Wage
Nov-02-18 20 years of government data says raising the minimum wage could be good for workers, businesses, and the economy

Amazon’s announcement of a $15 starting wage continues a trend of major companies, including Target and WalMart, voluntarily raising their minimum wage. Unfortunately, this positive development was soured by news that it would lobby for an increase of the federal minimum wage, which would cause business closures, job losses, and slashed hours across the country.

Amazon has no excuse to be ignorant of these negative impacts. In their hometown, Seattle’s $15 mandate has caused employees to lose $125 a month, on average, from lost work hours, in addition to thousands of fewer entry-level jobs. The story is similar in San Francisco, the first major city to mandate a $15 minimum wage hike. Home to a once vibrant restaurant community, economists from Harvard Business School, using data from Yelp, identified a 14 percent increase in Bay Area restaurant closures associated with each one dollar increase in the minimum wage.

Activists interested in securing wage increases should know that employees are already earning them. A study by economists from Miami and Florida State Universities disputes the claim that minimum wage employees need government intervention for wage increases. Almost two out of every three minimum wage employees will receive a raise within a year of starting, and the share of employees earning the minimum wage tends to decrease in the years following minimum wage hikes (only 2.3 percent of workers earn the minimum wage – this number has been decreasing since 2010).

Amazon’s senior vice president for global corporate affairs, who happens to be the former Press Secretary for President Obama Jay Carney, said Amazon would push for a minimum wage increase that will have a “profound impact” on people and families from coast to coast. Hopefully Congress will see that what doesn’t work in Seattle and San Francisco is unwanted in Shreveport and Sioux Falls.

DMU Timestamp: September 17, 2018 17:21

Added October 12, 2018 at 2:04pm by William Anderson
Title: The unforeseen problem with $15 an hour

A $15 per hour minimum wage has become a national U.S. rallying cry from workers seeking middle-class security. But while double the current minimum, $15 has its own limitations — and risks uncontemplated social consequences.

Why it matters: A $15 wage may be enough to buy a small home in some parts of the U.S., and will increase the living standards of millions of Americans. But what's apparent on the map above is that it is barely sufficient for a studio apartment in the big cities, and it could upset workers already earning $15 and more.

Driving the news: Over the last year, major cities like New York, Seattle and San Francisco have declared $15 an hour minimums, and major corporations like Amazon and Disney have followed suit. These moves have made $15 the target across the country. but they also create new expectations that employers must consider.

Take El Centro, a city close to the Mexican border in California, where the median wage is $14.76, per the Bureau of Labor Statistics. Because of El Centro's lower prices, the purchasing power of $15 there actually comes to about $16.80, according to a government formula that reconciles the geographic value of wages from city to city.

  • But nursing assistants in El Centro already are paid a median wage of $15.07 an hour.
  • Now, they will be earning the same as fast-food cooks.
  • So unless the wages of nurses and professionals like them go up as well, they could start their own outcry, says Michael Saltsman, managing director of the Employment Policies Institute, a fiscally conservative DC think tank.

This scenario is playing out right now at Amazon. On Oct. 2, the company put in place a $15 an hour base wage for all employees. Senior warehouse workers who were already making $15 an hour were given a $1 an hour raise. But many protested that they would actually see a drop in total compensation because Amazon stopped issuing bonuses and stock awards, the Seattle Times reports.

  • Now, Amazon says it may resurrect some of the bonuses and stock awards.

The other side: Silicon Valley, only about 550 miles north of El Centro, is the most expensive part of the country. That same $15 is worth only around $11.80 there — and since the median hourly wage is already $27.66, the subject of the pay raise for most is moot, Saltsman says.

DMU Timestamp: September 17, 2018 17:21

Added October 12, 2018 at 2:06pm by William Anderson
Title: Why It’s the Perfect Time to Raise the Federal Minimum Wage

It’s been eight years since the federal minimum wage was last raised on July 24, 2009. At the time, the United States was in the depths of the Great Recession, and the major concern for policymakers wasn’t wages but an unemployment rate heading towards 10%.

Over the past eight years, the economy has rebounded with the longest streak of job growth in history. Yet millions of people continue to work for the federal minimum of $7.25 an hour — without a pay raise in sight.

Leadership on the minimum wage won’t come from the White House, given Donald Trump’s conflicting statements on the issue, and Congress is more focused on health care and tax reform. Yet, there is no better time than now to raise the federal minimum wage. Three out of four Americans support an increase; the economy is healthy; and many employers are already raising wages.

When I served as the Deputy Secretary of Labor under President Obama, my office wall displayed a poster issued by the Truman Administration when the minimum wage was increased to 75 cents an hour. As meager as that amount might seem, an employee earning this salary in 1950 had more buying power than someone making $7.25 an hour today.

A full-time job shouldn’t mean a life in poverty. The federal minimum wage amounts to just $15,080 a year for full-time work. That translates into declining living standards, reduced economic mobility and a shrinking middle class. It mires workers and our economy in an impoverishing cycle created by inadequate pay. Far too many workers earning minimum wage turn to government assistance and food pantries to make ends meet.

As the Deputy Secretary of Labor, I saw not only how higher wages lifted up the lives of working-class Americans but also how employers thrived when they paid higher wages.

One of those employers is &pizza, which opened in 2012 and now has 22 locations spread across four states and D.C. The company’s rapid growth is built on much more than great tasting food (although the pizza is delicious). Michael Lastoria, the CEO of &pizza, understands that the company’s most valuable asset is its employees, so he pays a starting wage higher than the minimum wage. At the company’s Virginia locations, for example, new employees earn $10.50 an hour, instead of the state minimum of $7.25.

Lastoria explained his rationale to me last year: “It’s a simple, but critical, concept: take care of your people and they will take care of your customers.” For &pizza, higher wages reduce employee turnover, increase productivity and improve customer service.

All of this has been confirmed by U.S. employers, both large and small. In a 2016 survey conducted by a Republican polling firm, 80% of business executives across the country supported raising their state’s minimum wage.

That’s why businesses — from small and medium-sized operations to major corporations like Ikea, Costco, Facebook and Amalgamated Bank — have taken steps to raise their wages well above the required minimum level. And business owners like Michael Lastoria have joined with groups like Business for a Fair Minimum Wage to advocate for higher federal and state wage floors.

In addition to a more productive workforce, savvy business owners know that their employees, as well as the employees of other businesses, are also potential customers. When low-wage workers get a pay raise, they don’t invest the extra money with financial advisors. They spend it, and that leads to greater consumer demand for goods and services — like pizza.

Democrats have proposed increasing the federal level to $15 an hour as part of their newly released economic platform; it will go nowhere in a Republican-controlled Congress. In the absence of action, 29 states and D.C. have adopted a higher state minimum wage than the federal floor. Plenty of cities have also stepped up. And these increases have occurred even in red states like Alaska, Arizona, Arkansas, Nebraska and South Dakota.

But receiving higher wages shouldn’t depend on the generosity or geography of one’s employer. The national wage floor should be raised to allow working Americans everywhere to make ends meet and, as importantly, to level the playing field for those companies that have stepped up to pay more to their employees.

To be sure, increasing the minimum wage alone won’t solve the broader problems of wage stagnation and income inequality. We need to make greater investments in job training and strengthen labor protections, among other policies. But a higher minimum wage can provide an important lift to the 2.2 million Americans currently earning minimum wage and help tens of millionsof other workers who earn a few dollars more than $7.25.

Employers like &pizza are doing their part in creating shared prosperity, as are the many states that have passed higher wage laws in recent years. But they can’t do it alone. There’s no excuse for congressional inaction on the minimum wage. After eight long years of waiting, American workers deserve a raise.

Chris Lu was the Deputy Secretary of Labor and White House Cabinet Secretary during the Obama Administration. He is a senior fellow at the University of Virginia Miller Center and a board member of the American Sustainable Business Council.

DMU Timestamp: September 17, 2018 17:21

Added November 02, 2018 at 1:50pm by William Anderson
Title: 20 years of government data says raising the minimum wage could be good for workers, businesses, and the economy

  • Raises in minimum wage benefit the majority of low-income workers in both the short and long term, argue economists for the US Census Bureau in a working paper from earlier this year, which analyzes 20 years of non-public government data.
  • Previous studies have contended that raises in minimum wage can lower earnings potential because employers often respond to the raises by reducing hours.
  • The findingsprovide compelling evidence that raising the minimum wage benefits a large majority of low-income workers by putting them on a path to higher earnings in the long term, and that in turn decreases inequality and leads to a healthier economy.
  • This article is part of Business Insider's ongoing series on Better Capitalism.

The effects of raising the minimum wage have been debated for decades, but a study published in March by the US Census Bureaufound that a raise in the minimum wage increases earnings growth, and increasingly does so over the long-term, all without declines in employment.

In their working paper "The Distributional Effects of Minimum Wages," economists Kevin Rinz and John Voorheis argue that a minimum wage increase of 37% (same as the one Seattle recently enacted) in the years leading up to the Great Recession would have slowed down the increasing degree of income inequality in the United States that has been occurring for the last 45 years.

Rinz and Voorheis had access to non-public data from the Social Security Administration and linked it with data from the Current Population Survey, giving them a rich source of otherwise inaccessible information to work with. They studied data from people aged 16-64, in the years 1991, 1994, and 1996 through 2013. They built off work by Arindrajit Dube, an economist at the University of Massachusetts Amherst.

Previous research has suggested that employers respond to raised minimum wages by reducing hours, leading to lower earnings over time, but Rinz and Voorheis found the opposite when considering the broad span of data. They indicate that higher wages for lower earners could decrease employee turnover, benefitting employers as well as workers.

As Rinz wrote in a helpful Twitter thread breaking down key findings, "we find that individuals who start at low percentiles see their earnings grow faster when the minimum wage increases. Again, larger magnitude over longer horizon."

The reason why there's a debate around the minimum wage is because data has to be interpreted in a subjective way. But basically, the study from the US Census Bureau economists provides compelling evidence that raising the minimum wage benefits a large majority of low-income workers by putting them on a path to higher earnings in the long term, and that in turn decreases inequality and leads to a healthier economy.

The national minimum wage in the US is $7.25 per hour, but 25 states and Washington, DC pay more. California, New York, Massachusetts, and DC have committed to raising theirs to $15.00 per hour at different points over the next five years.

DMU Timestamp: November 02, 2018 17:13

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