Thursday, March 9, 2017

The Case for raising the Minimum Wage (to fix Scott Walker’s failed jobs promises)

Raising the minimum wage would have a direct (and positive) impact on local economies

In response to another dismal jobs report in the Badger State, Gov. Scott Walker did his very best to try and change the subject, to income gains, specifically in the manufacturing industry.

“"If we see wages go up in manufacturing, to me, that's my ultimate goal,” Walker said.

Which seems odd, because that’s the first time I’ve heard that goal said out loud by Walker, or anyone else from his administration for that matter. In 2010 Walker was saying “jobs, jobs, jobs!” was his ultimate goal. I guess being the 13th worst state for jobs growth over the past five years changes your goals a bit. Losing 4,000 manufacturing jobs in the past year might also be cause for Walker’s sudden shift on what his goal should be.

But while most people would change their method of attaining their goal when they fail — perhaps seeing that what they’re doing isn’t working — Walker suggests we change the goal altogether, towards a metric that he’s conveniently spouted out at the last minute.

I might have to try that the next time my diet goes bad. I didn’t “fail” at losing ten pounds, I “succeeded” at enjoying more options at area restaurants over winter. Goal achieved!

Meanwhile, Walker’s assertion isn’t even that grand: manufacturing workers saw an increase of $59 in weekly pay from September of 2015 to September of 2016, and while that sounds great, it’s more of a correction than anything else. It also ignores the past five years of stagnant wages in manufacturing.

In 2016 workers in the manufacturing industry earned $1,071 per week. In 2011 they earned $996 per week. But that doesn’t take into account the rate of inflation. In 2016 dollars, that $996 is equal to about $1,062. So workers basically saw the spending power of their paychecks go up by about $9 over five years.

The tax breaks for manufacturing companies, then, resulted in a weekly wage increase for employees of just a hair above the equivalent price of a Big Mac combo meal. Thanks, Walker!

There is a way, of course, to positively affect wages AND grow jobs across the state: grow demand, and one of the ways to do that is through a carefully adjusted increase of the minimum wage.

Here’s how it works: if workers are given more income for the work they do, they can spend more money on consumer goods and services throughout the state. A minimum wage increase to $12 an hour means a person currently earning minimum wage, working 40 hours per week, would see an annual wage increase of nearly $10,000.

Currently 59,000 workers are at the minimum wage in Wisconsin (this number doesn’t count the additional 32,000 working below the minimum wage). If those 59,000 saw $10,000 yearly raises, that’d an infusion of $590 million in the state alone.

This doesn’t even consider those workers whose wages are above the minimum wage, who would also be likely to see their own incomes go up as a result of a raise at the bottom. One study, for example, demonstrates that a 10 percent raise in the minimum wage (that’s about 73 cents) would result in a two percent raise in income for the bottom 10 percent of all workers. Sounds insignificant, but remember: that’s what happens when only $0.73 is added to the current minimum wage.

What about small businesses? Wouldn't a raise in the minimum wage hurt them? A surprising number of small businesses actually support raising the minimum wage. In fact, 61 percent of small business owners in the Midwest want to see wages raised to at least $10.10 an hour, according to one survey. The reasoning behind this is simple: when more people are earning more money, their businesses reap the benefits. If a worker is getting $100 more in weekly take-home-pay, they’re more likely to spend that in the local community than if they weren’t getting that extra income.

So a modest raise in the minimum wage seems to make a lot of sense. Unfortunately for Wisconsin, Scott Walker doesn’t seem to think so. In 2014 he called proposals to raise the minimum wage a “political stunt.” What does he propose to do instead?

His next budget includes another tax break — one that would benefit the rich and the corporate elite, but that would give you and me pennies a week in wage increases.

Walker is dead-set on using failed policies of the past in the upcoming budget to grow the state's economy. It won't work: the proposed tax cut would give millions to the top earners in the state. Meanwhile, 70 percent of workers in the state would see an average tax break of about $44, or an $0.84 increase in weekly wages. That won't create demand, but it will make a lot of Walker's corporate donors happy.

It’s the same failed strategy that Walker attempted early in his gubernatorial career — the same strategy that didn’t increase jobs growth in the state, and that forced Walker to spin what his “goal” was all along.

We shouldn’t expect a different result: the same handful of individuals who received millions in tax cuts will get even bigger returns, while the rest of the state is left wondering what we get out of it (here’s a hint: nada).

Wisconsin should instead focus on ways of increasing demand, of making sure workers are getting paid reasonable wages and being able to spend those wages in significant ways at local businesses across the state. Sounds simple enough. But for this governor, and his Republican legislative allies, it’s a concept that’s apparently escaped them. Wisconsin has suffered as a result.

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