The minimum wage must be a living wage, not one that leaves a large part of the American workforce dependent upon federal benefits like food stamps and rent control just to survive. Raising the minimum wage increases the spending power of workers, which directly fuels economic growth. Today 70% of our GDP is based on the purchasing power of consumers, which has been declining for decades. More money in the hands of the rich does not benefit the economy to even a fraction of the degree than does more money in the hands of ordinary people, who are more apt to spend it on products and services in their communities. Recognizing that workers able to afford his products would buy them, and thus increase his sales and profits, was the most significant innovation of Henry Ford, and the widespread adoption of the principle after World War II helped drive unprecedented growth in the United States – the longest sustained boom in our economic history, in fact.
Since the 1970s, though, wages have been stagnant or declining. Adjusting for inflation to get at real purchasing power, workers today make about $2,000 less than when I was born, which has helped to price people out of home ownership, car purchases, and a whole range of daily purchases that could drive growth. This is especially troubling when you consider that productivity gains of the past four decades. Since 1973 the hourly productivity of American workers has increased by 77%, while pay has increased only 12%. This is a level of exploitation that we can fairly call criminal. The benefits of American labor cannot be allowed to reside only with the 1% – people deserve to make a fair day’s wage for a fair day’s work. If the minimum wage is increased nationally to $15 an hour, wages across the board are likely to rise as well, and the increased spending will fuel a great expansion in job opportunities and commerce.
Again and again when increases are proposed in the minimum wage, or to wages in general, those in the business lobby cry out that jobs will be lost. This is simply not true. The data are clear about the effects of wage rises, and the logic should be obvious given the consumer basis of our economy – more money in the hands of workers means more money to spend, which means businesses can expand because they will sell more. Where small short-term drops in employment have happened, the reason is the uneven application of the policy. If wages rose across the country, employers could not move jobs out of the region. And where the effects have been studied long-term we have always seen major benefits. The same business owners who, before a rise, complained that they would need to cut jobs and close facilities have instead repeatedly expanded their business and hired more workers. There are numerous examples of this process that can be seen in states like Washington and California which have raised wages on a city-by-city basis.
If gains can work even in isolated municipalities, the effects if done nationally would be tremendously positive. A $15 minimum wage, with future rises tied to inflation and the cost of living, would be good for workers and their families, good for business, and good for the economy as a whole.