Saturday, January 27, 2007

Deserving of a Minimum of Respect

An adjustment to the Federal Minimum wage is facing tough going in Congress.

But is this really a big increase to the wage rate?

I found this chart on the history of Federal minimum wages in America:

The current proposal is to "raise" this wage to a level of $7.25 from the current $5.15 over the next two years. But is this really a raise at all?

At $5.15, the current minimum wage is the lowest the wage has been since 1938 when adjusted for inflation. At that time, as set in October 24, 1938, the minimum wage was $.25/hour. That works out to $3.57/hour as adjusted for the reduced buying power of actual dollars since that time.

Even with an increase to $7.25, this would only bring the wage back to the level it was in 1981 when the minimum wage was raised to an inflation-adjusted $7.43/hour. And this would only be slightly higher than the adjusted $6.47/hour the minimum wage earner made in 1997, the last time this wage was adjusted.

Nobody is really getting a raise at all. We are just not going to continue to allow the lowest wage earner among us to continue to have his or her earning power erode.

Conservatives have been winning this argument by continuing to convince all of us that this is a question of raising the minimum wage rather than adjusting it for inflation.

George Lakoff in his writing about framing, "Don't Think of an Elephant" explains this best:
"This gives us a basic principle of framing, for when you are arguing against the other side: Do not use their language. Their language picks out a frame — and it won't be the frame you want."
In other words, when we speak of raising the minimum wage, it sounds like we are giving some people more money for nothing. This is opposed to adjusting the minimum wage which is an issue of fairness.

Senator Webb spoke well of the unequal economic prosperity facing this nation in his response to President Bush's State of the Union Address.

Under Republican leadership, and Congressional control, the richest among us have gotten richer while that wealth has in a reverse-Robin Hood manner, been shifted from the poor and the middle class to the top wage earners.

As Congressman Barney Frank has noted:
"CEOs have seen increases in their earnings at a rate far greater than that of the average worker. In 1965, U.S. CEOs at major companies made 24 times a worker's pay-by 2004, CEOs earned 431 times the pay of an average worker.[1] From 1995 to 2005, average CEO pay increased five times faster than that of average workers.[2] While CEO pay continues to increase at rates far exceeding inflation, wages for the vast majority of American workers have failed to keep up with rising prices. In fact, real wages for the 90% of Americans who earn under $92,000 a year have actually fallen since 2001.[3]

When comparing CEOs to minimum-wage earners, the contrast is even starker. In 2005, median pay for CEOs of the 100 largest companies rose 25% from the previous year.[4] Minimum-wage earners this year, on the other hand, made the same amount as last year, and every year before that since the 1996-1997 increase-adjusting for inflation they actually made less than then (in inflation-adjusted dollars, $5.15 today is the equivalent of only $3.95 in 1995). [5] CEOs, on average, take home 821 times as much as a person working for minimum wage.[6] With this extraordinary ratio, an average CEO makes more before lunch on his first day of work than a minimum-wage earner will make all year. "

As this Bloomberg article from December, 2006 notes, the disparity between rich and poor has grown in America. It used to be said that a 'rising tide lifts all boats', but recently only the Yachts of the super-rich have been rising!
" The portion of national income earned by the top 20 percent of households grew to 50.4 percent last year, up from 45.6 percent 20 years ago; the bottom 60 percent of U.S. households received 26.6 percent, down from 29.9 percent in 1985, according to the Census Bureau. Meanwhile, average pay for corporate chief executive officers rose to 369 times that of the average worker last year, according to finance professor Kevin Murphy of the University of Southern California; that compares with 131 times in 1993 and 36 times in 1976."
So as we debate the issue of minimum wage, let us not allow us to fall into the trap of believing we are just giving something to poor people! The issue of fairness in this nation is not a simple one just about morality. If we are to survive as a free nation, we must enact laws that promote the advancement of the disadvantaged, the economic success of the impoverished, and the education of those without the opportunities to learn.



Rob said...

Congratulations on the new blog. It looks terrific and this post about the minimum wage is a great read. And I love the blog title, "Making A Ripple." I'm adding a link my friend.

BobsAdvice said...


Thank you for your kind words. I shall work hard to live up to your expectations. The link will be helpful. It is always slow to start a new blog.