Dick Meister: A sure path to economic health

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By Dick Meister 

Guardian columnist Dick Meister is former labor editor of the SF Chronicle and KQED-TV Newsroom. He has covered labor and politics for more than a half-century. Contact him through his website, www.dickmeister.com, which includes more than 350 of his columns.

It's way past time to raise the pitifully low federal minimum wage. That would provide badly needed help to the millions who are living in poverty or near-poverty at the current rate of $7.25 an hour, and would help all Americans by stimulating the sagging economy.

Democratic Sen. Tom Harkin of Iowa and Democratic Rep. Jesse Jackson Jr. of Illinois are carrying bills that would set a new minimum of $10 an hour. They're pressing hard – as they very well should – to get the general public and their allies in Congress to fully appreciate the widespread good that would come from helping some of the country's neediest workers.

"We've bailed out banks, we've bailed out corporations, we've bailed out Wall Street, we've tried to create sound fundamentals in the economy," Jackson noted. "Now it's time to bail out working people who work hard every day and still make only $7.25. The only way to do that is to raise the minimum wage."

It's been five years since the minimum was last raised, from $5.15 an hour to the current level. States, cities and counties are allowed to set their own minimums, as long as they at least equal the federal rate, and 18 states and several cities and counties have enacted minimums greater than the federal rate. But even their rates are below what's needed for a decent living.

About four million workers are now paid at or below the federal minimum and obviously need help if they are to escape poverty. Even those paid at the full minimum earn a mere $15,000 a year before taxes and other deductions.  They are among some 28 million workers whose earnings – and spending  – would immediately increase under the proposed bills.

Legislation to raise the minimum has been called for repeatedly in the years since the last raise in 2007, but has gained only relatively minimal support in Congress and the White House. President Obama pledged during his election campaign to get the rate increased to $9.50 an hour by 2011, but has taken no public action. Mitt Romney, Obama's Republican opponent in his re-election campaign this year, has wavered. He once voiced support for a raise, but later said he opposed an increase.

Polls have clearly shown strong public support for a raise. That support is likely to grow significantly if the economic benefits that a raise would undoubtedly bring to all Americans can be clearly shown – and it can.

It's simple: Raise the pay of working people, and as the workers buy more goods and services with their new earnings, the businesses that sell them will hire more people to provide what they want to buy with the extra money they've earned at a higher minimum wage.

The National Employment Law Project estimates that the increased consumer spending generated by the proposed raise would create the equivalent of more than 100,000 full-time jobs. Other estimates indicate that every dollar increase in wages for workers at the minimum creates more than $3,000 in new spending after a year.

And so the cycle goes, round and round:  More pay, more spending on goods and services, more hiring of people to provide them, more important government services and the taxes to support them, a healthier and wealthier economy.

Guardian columnist Dick Meister is former labor editor of the SF Chronicle and KQED-TV Newsroom. He has covered labor and politics for more than a half-century. Contact him through his website, www.dickmeister.com, which includes more than 350 of his columns.