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GUEST OPINION: Minimum-wage workers fall behind


Two years ago this week, 4.5 million of America’s workers enjoyed a modest pay increase, as the federal minimum wage rose from $6.55 to $7.25 an hour. That increase was the final of a three-step boost enacted in 2007. Of those getting a bump in pay, more than three-quarters were adults, nearly two-thirds were women, and nearly a half million were single parents with children under 18.

During the past two years, these working families have seen the real value of their wages fall. Minimum-wage earners working full time make roughly $15,000 a year. Had the minimum wage rate kept up with inflation, their paychecks would have increased by $800 this year. Instead, our nation’s lowest-paid workers have had an even harder time providing for their families’ basic needs. This is one more reason Main Street is having a tough time recovering from the recession.

CEO compensation grew 23 percent in 2010, while pay for the average American worker grew only a half percent. Minimum-wage workers have fared even worse: Since the 2009 increase, the real value of the minimum wage has fallen 5 percent.

If the minimum wage had kept up with inflation since the late 1960s, it would be $10.38 today. Yet, roughly a quarter of the nation’s work force is now earning less than that.

Congress has acted just three times in the last three decades to increase the minimum wage. The deterioration of the wage floor has helped fuel a level of economic inequality not seen in this nation since the early 1900s – the era of sweatshops and robber barons – as wealth is transferred from working families to the super-rich.

Some will say this is not the moment to be concerned with the minimum wage. But businesses and economists agree that lack of demand is the primary cause of the stalled recovery and high unemployment. Without customers lining up for goods and services, employers will not expand their production or their payrolls. Raising the minimum wage would put more money into the pockets of the lowest earners, who have little choice but to spend their wages immediately. The Economic Policy Institute estimates that raising the minimum wage to $9.50, as President Obama proposed during the 2008 presidential campaign, would generate more than $60 billion in new consumer spending.

Since the end of the recession, corporate profits have recovered, and CEO compensation has skyrocketed. Corporations are sitting on nearly $2 trillion in assets that they refuse to use to expand production or rehire because the rest of America has little cash to spend on goods and services. Raising the minimum wage would help Main Street share in – and power – a robust economic recovery. It’s the least we can do for those with the least means to stay afloat and get ahead in a brutal economy.

Christine Owens is executive director of the National Employment Law Project.

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