The federal minimum for an hourly wage has risen three times in three decades. It was $3.35 in 1982. It's now $7.25, up 120 percent. Inflation, meanwhile, has climbed by 135 percent. Now Connecticut is considering legislation to boost the wage up to $9.75 by next year, after which it would be pinned to inflation.
Advocates say such a measure is fair and makes good economic sense: putting more money in the hands of workers means more demand, which is good news for small businesses struggling to overcome poor sales. Politically, more than two-thirds of voters favor raising the hourly wage to at least $10. You'd think it would be a win-win for state lawmakers, but it's not.
While truly small businesses, like independent restaurants and retail shops, have said in the past that raising the wage will have little or no effect on labor costs, large corporations that pay minimum wage, like fast-food chains, have an enormous incentive to propagandize against any increase.
One of the most active propagandizers is the Employment Policies Institute, a so-called think-tank in Washington that serves as a front for Richard Berman and Co., a lobbying firm for major corporations in the fast-food, alcohol and tobacco industries. Studies by the Employment Policies Institute essentially say: Raising the wage hurts minimum wage earners. We know, we know. That sounds counter-intuitive, but trust us. We're the experts on this.
Andrew Markowski is the state director of the National Federation of Independent Business (NFIB) and one of the Richard Berman's biggest fans. He decried news that the Connecticut General Assembly hoped to raise the wage, saying doing so would hurt "the working poor — the people whom the advocates want to help." He's wrong. It doesn't, but that's propaganda for you.
Markowski is an inveterate defender of supply-side economics. Whatever is good for business is good for everyone — a statement that has become so uncontroversial in the past 30 years that arguing against it puts one at risk of sounding looney. But I'd wager that anyone making a minimum wage would like to earn more wage, and if they did, they could spend more, which is what truly small businesses want to hear. They may have to spend more on labor but they get more in revenue.
Markowski also stretches the meaning of "small business" to the point of incoherence. Rudy's Bar in New Haven is a small business, but is the guy who owns a franchise of Subway orMcDonald's? I don't think so and neither do most people when they think of small business. I'll believe Markowski's claim to be speaking for small business in Connecticut when I see a detailed list of members published on the NFIB Connecticut's website. Until then, it's all propaganda and not to be taken seriously.
According to Citizens for Responsibility and Ethics in Washington, Richard Berman takes millions from his clients and funnels the money through 15 "nonprofits," one of which is the Employment Policies Institute. They in turn generate reams of jargon-laden misinformation that distracts the public from issues like drunk driving, childhood obesity, second-hand smoke and minimum wage.
The Center for Media and Democracy's PR Watch says that Berman has worked "in the shadows for decades while pocketing millions from unpopular industries for his work thwarting public interest legislation." If the Employment Policies Institute were truly a think-tank, truth would matter. But the truth is never a sure bet. Studies of minimum wage are ambivalent at best.
Heidi Shierholz, an economist at the Economic Policy Institute (the real EPI), says there was once a consensus among economists for decades on the issue. When the cost of something goes up (like labor), they thought, the demand for that thing goes down. But in the 1990s, case studies grew more sophisticated and, as a result, that consensus began to crumble, she says. From the vantage point of 2012, raising the minimum wage does not lead to jobs loss. According to a 2006 report by the Fiscal Policy Institute, states that raised the wage saw higher employment rates among businesses with 50 or fewer workers.
The blindingly obvious fact is that minimum wage earners care about take-home pay and little else. If they lose a minimum wage job, there's always another one somewhere. Minimum wage earners (most over 20 years old) are used to that. Of course, policy is not always based on the blindingly obvious, so consider this final fact. Paying Connecticut workers $9.75 an hour is a steal for businesses, because that's still less in adjusted dollars than what businesses paid minimum wage eaners in 1968.
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