Marketing. That is what a lot of the discussion concerning the minimum wage really is. This week, New York Governor Cuomo has come out in support of a $15 per hour minimum wage. This has come after years of campaigning by unions and other groups who argue that an individual earning the minimum wage, who is lucky enough to work 40 hours per week, would not make enough money to cover their basic life expenses.
For many, the situation is even more desperate, as part-time employment has swamped full-time work, and many of these workers must cobble together two or three part-time jobs in an attempt to earn enough to pay their rent and buy food for their table. Add to that the potential for time theft by employers who shortchange workers and fail to pay overtime, the situation for much of the entry-level workforce is deplorable.
So agreeing that the minimum wage needs to be raised to $15, especially for workers in expensive areas like New York City, is hardly a revolutionary proposal. Yet, business lobbying interests and public relations entities immediately begin the marketing of a sad tale, complete with crocodile-tears, noting how such a raise would burden "small, family-owned establishments." What about the billion dollar restaurants?
But let's look at it from another perspective. During the last 45 or so years, wage growth has been essentially flat. And in many areas, it has been negative, meaning a worker earning the federal minimum wage today of $7.25 per hour, has less purchasing power than he or she would have had in 1980.
In 1980, the minimum wage was $3.10 per hour. Adjusted for inflation, that would need to be $8.83 in 2015 simply to be the equivalent of the 1980 wage. And yet in 1980, according to the Federal Reserve Bank of St. Louis, the Gross Domestic Product of the U.S. was $6.5 trillion. In 2015, it was 16.3 trillion. Comparing this growth with the lack of wage growth suggests there is nearly $10 trillion in the economy today that is not being shared with workers.
Source: nytimes.com, "Cuomo Pivots Again as He Seeks a $15 Minimum Wage," PATRICK Mcgeehan, September 10, 2015