When I entered Congress in 2007, the year the recession began, the second vote I took was to raise the minimum wage $1.40 to $7.25 an hour. I did so recognizing an important fact: This first increase of the minimum wage in 10 years was still less than the minimum wage in 1968 when adjusted for inflation ($10.74).
The reduction in the real value of the minimum wage from half a century ago is particularly tough today because the majority of those working for minimum or low wages are no longer young teenagers. For instance, 68 percent of fast-food workers are adults, of whom over a quarter have children. And 65 percent are woman, all working longer for less.
Nevertheless, arguments are raised that again hiking the wage will cause people to lose their jobs since the cost to business will increase. Others argue that a minimum-wage increase will boost the economy and decrease poverty, thereby reducing reliance on taxpayer-funded assistance such as Medicaid and food stamps.
What we're missing today is pragmatic leadership where leaders are willing to say, "Here's where we are, here's what I think we have to do based on the facts, here's measurable benchmarks that we need to hit, and if we don't, hold me accountable." So what are the facts?
Fact one, conclusive studies show that if a minimum wage does not exceed 50 percent of the average hourly wage, people will not lose their jobs. This is primarily because the cost of the wage increase is less to a business owner than having to keep training new people because lower wages mean higher turnover.
Fact two, the current federal minimum wage of $7.25 an hour is about one third of the average hourly wage in America ($20.24). Therefore, we could raise the minimum wage to $10.12 (50 percent of the average hourly wage) and people would not lose their jobs.
Fact three -- and proof of the 50 percent rule -- there are a number of studies that show no job loss when the minimum wage was raised, as long as it was not above 50 percent of the average hourly wage. One local study was on fast-food restaurants in New Jersey that raised the minimum wage to 47 percent of the average hourly wage; there was no evidence of any job loss when compared to fast-food restaurants across the border in southeastern Pennsylvania whose minimum wage was 16 percent less.
Fact four, by not raising the minimum wage, taxpayers will continue to subsidize the salaries of minimum/low-wage workers at large corporations like Walmart and fast-food franchises like McDonald's. A typical Walmart that employs 300 low-wage workers costs taxpayers up to $1.9 million a year because these workers' wages are low enough to qualify them for Medicaid and food stamps. Even the food assistance portion of these low-wage salaries could get cut if the Senate passes the federal farm bill, which reduces food stamps. Is it now the government's role to subsidize the wages for a large corporation like Walmart, which had $17 billion in U.S. profits last year so it can maximize such profits? It costs taxpayers $1.2 billion each year in public assistance to subsidize McDonald's minimum wage workers.
We should keep in mind that since the mid-1980s, income for the majority of our working families has declined in real terms as families are working harder -- often now with both spouses working -- and still not even staying in place. In fact, the median level of household income has declined about $4,000 in real terms since 1999.
As the former vice chairman of the Small Business Committee in Congress, I know we must remove the excess tax and regulatory burdens we place on small businesses, particularly since small businesses generate 65 percent of all new jobs. But the facts show that as long as the minimum wage is not raised above 50 percent of the average hourly wage, franchises such as McDonald's won't lay off workers as they continue to make a profit.
The facts support why I voted in 2007 to raise the minimum wage, and I would do so again today. And it would also help stop large corporations from having the taxpayer subsidize their employees' wages, even as the corporations maximize their profits.
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