Wednesday, April 23, 2014
Jim Bouchard ("Another View: Supporters of minimum wage hike don't understand business," March 7) makes the claim: "Any job must provide a return and a margin of profit. Wages are an expense, and expense must be offset by productivity."
What Mr. Bouchard fails to realize is that expenses (wages) are currently being offset by rising productivity; in fact, productivity has far outpaced the growth rate of real wages since the mid-1970s. In other words, people are working harder and getting paid less.
Another point missed by Mr. Bou-chard and many opponents of a fair minimum wage is that expenses can be offset by revenues.
When aggregate wages rise, individuals and households have more money to spend, which increases businesses revenues. Those people who live on minimum wage typically spend a larger portion of their income than anyone else, so an increase in their wages will result in an increase in sales for businesses.
Contrary to many conservative arguments, the majority of minimum-wage earners are not teenagers working their summer jobs. The Economic Policy Institute estimates that a federal minimum wage of $9 per hour would increase the wages of 18 million people, 84.1 percent of whom are at least 20 years old.
An increase in the wages of those who spend the largest portion of their earnings would be a tremendous boost to our economy and help to strengthen businesses, not destroy them.