Representative Jesse Jackson Jr. (D-IL) is joined by, left to right, Ralph Nader, Representative Dennis Kucinich (D-OH) and Representative John Conyers (D-MI) at a press conference outside the US Capitol on June 6, 2012, to call for an increase in the minimum wage. Photo by George Zornick.
If today’s minimum wage workers earned the same as their counterparts in 1968, they would receive $10 per hour. That, unfortunately, is $2.75 more than the current federal minimum wage.
This would be a serious problem at any time, but it’s particularly relevant now, as the awful economy has forced millions of workers into minimum-wage jobs. (And they’re the lucky ones).
To that end, Representative Jesse Jackson Jr. has introduced the “Catching Up To 1968 Act of 2012.” Within sixty days of being enacted, it would raise the federal minimum wage to $10 per hour, and beginning one year after that, would index it to the Consumer Price Index. For workers that rely on tips, the bill would mandate the cash wage to be 70 percent of the minimum wage and never less than $5.50 per hour.
“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—now it’s time to bail out working people who work hard every day and they still only make $7.25,” Jackson said this morning at a news conference outside the US Capitol. “The only way to do that is to raise the minimum wage.”
Ralph Nader and Representatives Dennis Kucinich and John Conyers also attended the news conference—a roster of liberal stars if there ever was one. But it’s important to note that raising the minimum wage has often found bipartisan support. Rick Santorum, for example, wrote legislation to increase it, and until recently even Mitt Romney supported tying it to the CPI.
The one thing that the opponents to this raise will not get is that however much minimum wage is raised in this country, the poor and middle class will immediately put it back into the economy.
“I got an extra one hundred dollars in my paycheck? Cool, now I can fix my car/buy my wife a dress/take the family out to dinner/pay against a loan/buy a box of…” you get the fucking point. And when that money hits those businesses, it doesn’t sit in a till. They buy more products and hire more employees. Employees who will be making an extra one hundred dollars every pay check.
Will it lead to inflation? If history is any indication, probably. Which is why we shouldn’t do it flippantly. But the majority of Americans are already getting shafted by inflation at the pump and elsewhere. So, would you rather suffer through a slow recovery with high unemployment or an inflation spike and low unemployment?
TL/DR : Higher minimum wage will allow the poor and middle class to jump-start the economy.
The multiplier process
An initial change in aggregate demand can have a much greater final impact on the level of equilibrium national income. This is commonly known as the multiplier effect and it comes about because injections of demand into the circular flow of income stimulate further rounds of spending – in other words “one person’s spending is another’s income” – and this can lead to a much bigger effect on equilibrium output and employment.
Consider a £300 million increase in business capital investment – for example created when an overseas company decides to build a new production plant in the UK. This will set off a chain reaction of increases in expenditures. Firms who produce the capital goods that are purchased will experience an increase in their incomes and profits. If they in turn, collectively spend about 3/5 of that additional income, then £180m will be added to the incomes of others.