The letter below will be submitted to policymakers in support of pending legislation that would raise the U.S. minimum wage to $10.50 per hour. The bill, which is titled the “Catching Up to 1968 Act of 2013,” is sponsored by Congressman Alan Grayson.
As noted in the petition itself, we have also prepared a technical appendix and set of references covering all the points raised in the petition.
Economists who would like to be signatories to this letter should please send name and institutional affiliation to firstname.lastname@example.org.
We, the undersigned professional economists, support the “Catching Up to 1968 Act of 2013,” sponsored by Congressman Alan Grayson of Florida. This measure would raise the federal minimum wage from its current level of $7.25, established in 2009, to $10.50 per hour, and with automatic increases indexed to inflation thereafter.
Nearly two decades ago, a blue-ribbon panel of poverty experts selected by the national Academy of Sciences told us that the official U.S. government poverty measure is “demonstrably flawed … it needs to be replaced.” As a corrective step, the Census Bureau began publishing an alternative Supplemental Poverty Measure (SPM) in 2011.
The SPM represents genuine improvements, but it fails to address the most important criticism of the poverty line: it is too damned low. The poverty number betrays the experience of those left out of the official count, but who struggle mightily to put food on the table or keep the lights on. If poverty is the inability to meet one’s basic needs, then one in three Americans is poor—a rate more than twice that based on the SPM.
Decades of research have been devoted to the question of whether minimum wage hikes lead to job loss—the leading argument made against this century-old labor standard. Despite the accumulating evidence pointing to the conclusion that minimum wages do not adversely affect employment (see this nice summary by John Schmitt) this same debate seems to be recycled, nearly verbatim, each time a minimum wage hike is on the table. To put an end to this perennial debate one simple fact has to be pounded into the American psyche:
The dire warnings that the minimum wage hikes impose unbearably high costs on businesses are false. Costs to businesses from an average minimum wage hike are small—so small that the typical business can adjust by means other than closing their doors or laying off workers.
At the start of 2013, ten states raised their minimum wage rates: Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont, and Washington. These ten states did so because each has a law requiring that it maintain the purchasing power of the state wage floor with an annual inflation adjustment, also called a “cost-of-living adjustment (COLA)” or “inflation-indexing.”
This flurry of activity sparked, yet again, a political fight over the merits of this century-old labor standard. One issue that comes up is whether minimum wage hikes will trigger inflation, i.e., cause an overall rise in prices.
Media attention is finally focusing on the fact that low-wage work constitutes a major share of the jobs produced by the U.S. economy (for example, see this NYT article by Catherine Rampell, this NYT Op-Ed by Peter Edelmen, and this Huffington Post article by Dan Froomkin).
Politicians seem to universally prescribe the same remedy for low-wage workers’ economic hardships: to raise their living standards, they need better skills, more education.
Take for example, Obama’s speech at the Democratic National Convention in September 2012. In the same speech that President Obama poked fun at Republicans for having a knee-jerk “tax cut” cure all for what ails the U.S. economy, he offered up an even more ubiquitous bipartisan prescription of “get more skills” for all that ails U.S. workers: “You can choose a future where more Americans have the chance to gain the skills they need to compete, no matter how old they are or how much money they have. Education was the gateway to opportunity for me. It was the gateway for Michelle. And now more than ever, it is the gateway to a middle-class life.”