Groceries get more expensive every year. So do heat, rent, gas and almost everything we buy.
But for most Americans, what families bring home, adjusted for inflation, has stayed flat or declined every year since 1999.
Holding the line on wages has helped businesses weather the Great Recession, but it has also contributed to the slow economic growth in the recovery. Workers with less money in their pockets can’t spend, which puts a lid on demand. It stands to reason that wage increases, especially for the lowest-income workers, would be put back into the economy, driving faster growth.
That’s why the federal minimum wage was created in the 1930s, and it has been a successful economic stimulus program ever since. It rose regularly to keep up with inflation until it reached $1.60 in 1968. If it had continued to keep pace with inflation, the minimum wage today would be $10.56 an hour, instead of $7.20 nationally ($7.50 in Maine). That’s like a $3-an-hour pay cut for the people who are least able to afford it.
That’s why we support both a federal and state minimum wage hike. A bill that passed the Maine House of Representatives would increase it by 50 cents a year until it reached $9 an hour in 2016. That would still be far short of the 1968 minimum wage buying power, but much closer to a living wage.
The arguments against an increase have been the same since the federal minimum wage was created in 1938. Critics charge that raising the minimum wage would result in job loss, but that was not the conclusion of a review of the multiple studies conducted on the issue by the Center for Economic Policy.
It found that employers benefited from less turnover, more efficient operations, reductions in higher wages and some price increases.
Studies have also compared counties on the borders between states with different minimum wages and found no difference in job growth.
What the critics don’t account for is that when every business pays its employees a little more, there is more activity in the market. Businesses that pay more than minimum wage to keep and attract talent would likely boost those wages, too. That would mean not only a better life for those families, but also more money spent in the economy.
Business can’t say “no” to higher prices for raw materials, but they can say “no” to employees. If stagnant wages are holding the economy back, the government should do what it can to help it along.
Congress and the Maine Legislature should move ahead with this pro-family economic growth plan and raise the federal and state minimum wage.