Business for Shared Prosperity

Centre Daily Times (PA), July 29, 2009
Our View

Workers on the lowest rung of the pay scale got a slight boost last week when the federal minimum wage was raised to $7.25 an hour. The third and final installment in the federal minimum wage is a good effort to put more money into the economy but a long way from giving the lowest-paid workers a living wage.

Pennsylvania is one of 23 states where some full-time workers will enjoy a raise. The raise in Pennsylvania amounts to 10 cents, or an extra $4 a week before taxes. Even for the thriftiest consumers, that’s not enough to purchase an additional loaf of bread and gallon of milk.

While the increase won’t help very much, it will boost the buying power of those who need it most. Minorities, teens and young adults have traditionally represented the largest segment of low-skilled employees.

Citing that it is long overdue, proponents of the boost predict it will increase the reliability of low-income workers by helping to lessen their stress about working extra jobs, juggling day care and working when sick.

Critics of the raise think the increase should have been postponed because of its negative impact to the economy. Kristen Lopez Eastlick, senior analyst at the Employment Policies Institute, said the higher wage will cause employers to reduce hours for workers and cancel plans for new hires.

Proponents for the increase look to history for context. The first federal minimum wage was legislated during the Great Depression to increase consumer purchasing power and stimulate economic recovery. With the economy in the worst crisis since the Depression, the minimum wage increase could play the same role today as it did more then seven decades ago.

The minimum wage increase is a welcome boost that’s been a long time coming. Minimum wage was not increased for 10 years, from 1997 to 2007. Even with a raise to $7.25, minimum wage workers will still make less than the $7.86 workers made in 1956, when adjusted for inflation, according to the Business for Shared Prosperity organization.

Copyright 2009 Centre Daily Times