Tag Archives: raising the minimum wage

Wages Up but How High is Fair?

Chicago-Raise-the-Min-Wage-Rally-300x189New Orleans       Walmart has announced that over a half-million of its workers will get a raise to $9 now and up to $10 sometime in 2016 at the cost of one-billion dollars.  This is good news, so I won’t remind people of the Pinocchio stories the company has told for years about its so-called average wages.  The company is joining Gap, Target and others that have already said they are raising wages.  Aetna Insurance several weeks ago raised all of its workers to $16 per hour to lead the way.  Economists speculate that the labor market is finally beginning to tighten and that Walmart is recognizing the inevitability of wage increases, so wanted to jump ahead of the pack, embrace reality, and try to change its reputation as one of the country’s worst employers.

All of this is happening as President Obama tries to breathe some new life into his proposal to raise the minimum wage in various steps to $10.10 per hour which has been dead-on-arrival in Congress since it moved from his mind to his mouth.  Not to rain on the parade, but Congress will no doubt use the announcement by Walmart as the nation’s largest private sector employer as evidence that there is no need for new federal minimum wage legislation.

All of this is happening as many of us have been in lengthy conversations in recent months about how to move forward on a different “living wage” strategy.  The “fight for fifteen” has won huge publicity, but aside from Aetna, very little take-up, and, practically speaking, the notion that minimum wage fast food workers might suddenly find their wages doubling from the $7.25 they are earning now ranks somewhere next to Santa Claus and the Easter Bunny on the reality scale.

What is fair and practicable?  Our brothers and sisters in Canada have tried to navigate their campaigns around figures produced by respected nonprofits that include day care cost and other facts that live for many of us only in our dreams.  A recently released poll in the States though found that there is 75% support among Americans for a $12.50 minimum wage achieved by the year 2020.  The same poll found that even in the South that number was supported by 74% including over 50% of Republicans.

We tried to reverse engineer the math using statistics based on the average housing cost in our cities for a single person to rent an apartment and assuming that would represent one-third of their income.  The results were interesting and would seem to resonate with people.  Using this formula a “living wage” now would look like the following:

Little Rock      $11.53

Baton Rouge   $11.59

Houston          $13.00

New Orleans   $13.24

Dallas              $13.56

The wage train is starting to rumble forward finally.  These numbers seem fair and make sense.  It’s campaign time!


Please enjoy Green Day singing Working Class Hero


$10.10 Executive Order May Have More Impact Than You Think

RaiseTheMinimumWageALittle Rock  The President in his fifth State of the Union address said that he would issue an executive order raising the minimum hourly wage for workers employed under federal subcontracts to $10.10 per hour, the same number that he and many others have been advocating on the stair step proposal for the federal minimum wage.  Some observers dismissed the impact as relatively unimportant, only affecting a couple of hundred thousand workers over coming years, since the measure only goes into effect for new contracts or as existing contracts come up for renewals.   Is this just a symbolic gesture?  I don’t think so.

            Demos, the research organization, has indicated that there are 560,000 workers making less than $12.00 per hour, and, yes, that’s more than $10.10 per hour, but all of them, and likely many more federally contracted workers will be impacted because of the impact of both wage “compression” and the attending multiplier impacts that could bring higher wages to millions of workers. 

Compression is straightforward.  If the minimum wage is $7.25 as it is now, and you are making $12 per hour or more, then employers can say, “What’s the beef,” and workers can look down and around, and reckon the unlikelihood of doing better.  If the minimum is $10.10, then $12 is bumping right into it, and is no longer as respectable a wage.  The President’s number sets the minimum standard for any wage determination set by the Department of Labor and will require the DOL to similarly adjust the minimum rates on all other contracts upward.  Furthermore under section 4c of the Service Contract Act it also makes much more elastic what are inarguably reasonable settlements on wages for collective bargaining contracts.   The impact on local economies in Washington, D.C. and wherever there are federal installations from military facilities to regional governmental offices is potentially huge.

            The other nice touch on this executive order is the fact that for the first time it is automatically linked to inflation so there’s a built in escalator, similar to what we have all advocated for decades now for the federal minimum wage to get around the Congressional stalls that have reduced the minimum wage’s purchasing power so dramatically over the last 30 years.  This is an executive order then that will keep on giving as it moves the floor higher annually, and once again will create a cost of living adjustment in effect for all federally contracted workers.  Sweet!  And, the impact is huge and will also keep touching millions of workers.

            Finally, there’s the economic impact of the moral suasion of such an order.  President Kennedy’s executive order allowing collective bargaining for federal employees unleased the dam blocking public sector bargaining across the country and unleashing the pent up organizing demands of millions of workers who are now represented by unions.  I’m sure the President is hoping his big step on minimum wages for federally contracted workers will have the same impact on raising wages for private sector, largely unorganized workers across the country. 

            And, you know what, it just might!