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Retirement Planning > Spending in Retirement > Required Minimum Distributions

Bump up the minimum wage

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It’s been four years since the official start of the recovery. Most states still have yet to reach their pre-recession employment levels, and though the pace of hiring has picked up considerably, high unemployment continues to haunt much of the country.

Put another way, we are still only one-fifth of the way out of the jobs hole left by the Great Recession, and there are still more than three job-seekers for every opening.

Despite all of that, the arguments against raising the minimum wage, at a time when the economy remains very much in recovery mode, nonetheless strike me as wrong, miserly and even immoral.

Those opposed to higher minimum wages worry that companies might stop hiring and could decide to cut jobs if they’re forced to pay their workers more.

There might be more truth to that than some would like to acknowledge; it’s a legitimate argument even when the economy is humming along. But it’s an overblown concern, especially if we’re talking about a modest rise in the minimum wage rather than sharp and sudden increases.

The problem in part with the argument against paying people more is that it is often made by the same individuals who defend obscene CEO pay levels.

According to the latest figures, the pay gap between the average S&P 500 CEO and the average U.S. worker was 42 times in 1980, grew to 325 times in 2010 and jumped to 380 times in 2011.

And, again, those are just the averages.

Of course, that’s not objectionable if you believe CEOs deliver all of that shareholder value in a vacuum and the contributions of the man or woman sweating to make sure they really make that Whopper your way don’t count for much.

The fast-food industry is where the majority of our minimum-wage earners can be found. Everyone knows this, of course. What I think fewer of us know is that fast-food restaurants have added positions more than twice as fast as the U.S. average during the recovery.

These chains, McDonald’s among them, have been part of an effort to freeze the minimum wage, which hasn’t been raised since 2009 and whose purchasing power today is 20 percent less than in 1968.

The good news is that there’s hardly any doubt that most Americans want to see the minimum wage bumped up.

A poll commissioned by the National Employment Law Project Action Fund, a group that supports increasing the minimum wage, found that even among Republicans, 62 percent support the wage increase.

The workers who went on strike nationwide last week are asking for $15 an hour, more than double the minimum wage.

That sounds like an unreasonable demand to me, but an adjustment is definitely warranted, for a number of reasons:

Economists of all stripes agree that when low-wage workers have more money in their pockets, they tend to spend it immediately. Heightened consumer demand gives businesses a reason to create jobs.

The Economic Policy Institute says if the value of the minimum wage had kept pace with average wages since 1968, it would be $10.50 today.

If it had increased alongside productivity, it would be $18.75 today.

And if it had increased at the same rate as the wages of the top 1 percent, it would be over $28 per hour.

If those numbers don’t move you, it’s impossible to ignore the fact that a full-time worker earning the minimum wage would make $15,080 a year, nearly 20 percent below the official poverty line for a family of three.

So clearly, it’s time for an increase in the minimum wage. Big, sudden jumps don’t make a lot of sense, but incremental bumps of, say, 50 cents every six to eight months for the next few years aren’t likely to cause truly damaging shock waves to the economy.

There’s a lot at stake in this debate. It’s a question I hope will be a top priority for lawmakers. Congress returns from its summer break in September. It should take up this issue as soon as it can.

For more from Allen Greenberg, see:

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