The media hasn't mentioned it much, but 79.000 low wage workers getting a New Year's raise is a big deal, both for the workers and for the Missouri economy. Thanks to Jobs with Justice for working with labor to get it passed by a vote of the people in 2004. Lara is right, congress should index the federal minimum wage.
New year will bring higher minimum wages in 10 states
January 01, 2013 12:00 am • by Lara Granich
St. Louis Post Dispatch
WASHINGTON — Nearly 1 million U.S. workers will be getting a New Year’s Day gift: a small raise after 10 states boost their minimum wages.
While stagnant wages and sluggish job growth continue to cloud the post-recession recovery, a bright spot exists on the horizon in Missouri: 79,000 of the state’s lowest-paid workers will be getting a raise today, as the state’s minimum wage increases by 10 cents to $7.35.
Thanks to a ballot initiative passed by Missouri voters in 2006, the state’s minimum wage automatically adjusts every year to keep pace with the rising cost of living. This key policy reform, known as “indexing,” has already been adopted by nine other states. As a result, the wages paid to those Missourians who wake up each morning to do the hard work of cleaning office buildings, serving food and providing care for the elderly will not gradually erode each year as the cost of basic expenses like food, gasoline and utilities continues to rise.
As the country continues to debate how best to create jobs and accelerate the economic recovery, our elected officials in Washington could learn from the example that Missouri has set in addressing the urgent problems of America’s low-wage economy. After more than three years since the official end of the Great Recession, average wages are still declining in real terms, even as workers throughout the U.S. put in longer hours to help make ends meet. As a result, workers with less disposable income are holding back on spending, depriving local businesses of the sales revenue they need to expand their operations. In a country where consumer spending makes up 70 percent of the total economy, stagnant wages spell limited growth and a continued weak recovery.
By contrast, the modestly higher wages received by low-paid workers in Missouri this year will go right back into the economy, generating economic growth as these workers put food on their tables and raise their families. According to an analysis from the nonpartisan Economy Policy Institute, Missouri’s minimum wage increase this year will boost the average directly affected worker’s pay by $190 per year, generating over $8 million in new consumer spending.
While the value of higher wages for Missouri’s low-paid workers remains clear, those who oppose any increase in the minimum wage still claim that higher wages will only slow job growth or burden local businesses. These concerns find no support from the facts: Indeed, businesses that pay fair wages to their employees ultimately benefit from reduced turnover and higher worker productivity, as their employees are spared from the struggle of balancing two jobs in order to make ends meet.
In fact, the real strain on economic growth in today’s economy stems from the decision made by many national fast food chains and big box retailers to inflate their profits by paying rock-bottom wages, siphoning money out of local communities and impoverishing the customer base needed to sustain economic growth.
And yet, while this year’s 10-cent minimum wage increase will mean a lot to workers that are struggling just to get by, the truth is that Missouri’s minimum wage remains well below the level needed to ensure that full-time work provides a path out of poverty. Contrary to myth, over 60 percent of workers benefiting from Missouri’s minimum wage increase on Jan. 1 are adults older than 20. Seventy percent of these workers are employed more than 20 hours per week, and over 44 percent have at least some college education. When large numbers of skilled adult workers find themselves relying on the minimum wage to make ends meet, then a national response is required in order to preserve the American dream of upward economic mobility.
Congress has only acted three times in the last 30 years to raise the federal minimum wage. It’s time for a new level of leadership. It’s time for Congress to learn from Missouri’s example by raising and indexing the minimum wage.
Lara Granich is director of Missouri Jobs with Justice.
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