Moral and political leaders debate minimum wage increase
Some states will circumvent the debate in Congress by enacting their own minimum wage hikes.
Debate over the nation's minimum wage, extended unemployment benefits, and job creation is heating up as the political season also warms up. Not only political leaders, but also moral leaders, have entered the fray as both Democrats and Republicans debate over how to address a generally flagging economy. Last week, the federal Labor Department reported that the number of Americans in the workforce has reached its lowest point since 1978. The statistic is tied to a greying population and the number of unemployed Americans who have ceased to look for jobs.
By some reports, the drop in the number in the work force could accelerate as more Americans who have been out of work for more than six months lose their unemployment benefits. In December 2013, federal extended unemployment benefits expired. Approximately 1.3 million people immediately lost benefits and more will lose benefits this year. In Washington, Republicans and Democrats are debating whether to renew the extended benefits, which paid an average $256 a week. In January 2013, President Barack Obama during his State of the Union address demanded a national minimum wage increase.
In a letter addressed to the Senate, the U.S. Conference of Catholic Bishops joined Catholic Charities USA called on senators to raise the minimum wage. The letter was signed by Archbishop Thomas G. Wenski, who chairs the bishops’ Committee on Domestic Justice and Human Development and Rev. Larry Snyder, who presides over Catholic Charities USA. The latter of these operates various charitable efforts in the name of the bishops, including adoption services, soup kitchens, and low-cost counseling services. Coming on the 50th anniversary of the so-called "war on poverty" engaged by President Lyndon B. Johnson during the midst of the Civil Rights era, the level of the minimum wage has risen ever since. Speaking at his first inaugural address, Johnson intoned “We shall not rest until that war is won," and "The richest nation on Earth can afford to win it. We cannot afford to lose it."
(Archbishop Thomas Wenski)
The current federal minimum wage of $7.25 an hour, argued the bishops’ letter, is not enough to provide the sustenance to form and keep families together. "A full-year, full-time worker making the minimum wage does not make enough money to raise a child free from poverty," said the letter. "Because the minimum wage is a static number and does not change, each year it becomes more difficult for workers making the minimum wage to survive."
The letter said, "We urge you to consider closely any legislation that begins to heal our broken economy by promoting decent work and ensuring fair and just compensation for all workers.”
Bishop Wenski and Father Snyder continued, "We write not as economists or labor market experts, but rather as pastors and teachers who every day, in our ministries and churches, see the pain and struggles caused by an economy that simply does not produce enough jobs with just wages."
The clerics said that bishops have observed that Americans struggle to fulfill basic needs, even while saying that Pope John Paul II in the 1980s human work as "probably the essential key, to the whole social question." His recent successor, Francis has made statements to the same effect.
The war on poverty, said President Barack Obama last week in marking the anniversary, is "far from over." Even so, he praised programs such as Medicare and Medicaid. Said Obama, "In the richest nation on Earth, far too many children are still born into poverty, far too few have a fair shot to escape it, and Americans of all races and backgrounds experience wages and incomes that aren't rising, making it harder to share in the opportunities a growing economy provides." The current chief executive promises that that economic recovery in the U.S. will leave no American behind.
For his part, Republican congressman Paul Ryan said on January 9 that the so-called war has failed, while suggesting that community involvement might do the trick. "We've got to get our communities engaged," Ryan said on NBC. Speaking as Catholic, he suggested that fellow Catholics in richer areas of the country should help those in need elsewhere. “People think it's being handled by government. 'I pay my taxes …' People need to get involved in their own communities," said the former GOP vice-presidential candidate. He added that the federal government should "remove the barriers that allow that to happen."
Comments about the letter to January 8 letter from the Catholic bishops to the Senate were varied. Writing at the National Catholic Register, Pat Archbold considered the call by the bishops for a minimum wage hike. Wrote Archbold, “Archbishop Wenski advocates this position on behalf of the entire US Conference of Catholic Bishops. Can a Catholic legitimately and morally oppose this prudential policy decision while remaining a Catholic in good standing and if so, should the USCCB advocate for such policies?” Archbold’s answer: “yes” and “no.”
Archbold admits that the bishops’ intentions may be good: “Moreover, while the goal is desirable, the outcome of such a policy may be counter-productive.” Even while opposing a minimum wage hike may put Catholics in opposition to their bishops, nonetheless, says Archbold, they may remain Catholics in good standing since there a number of other issues to consider such as furthering the centralization of government or doing undue harm to small businesses. “Whether you suspect that hiking the minimum wage helps or hurts, I think any reasonable man must acknowledge that a Catholic can legitimately and morally oppose this prudential policy decision even if he supports the goal.”
Since by their own admission, wrote Archbold, the bishops are not economists and are advocating policy that is beyond their competency in which Catholics (clerics and laity), they are thus detracting “from their own God-given authority in which principles and policy are clear.”
Congressional proposals are focused on raising the federal minimum wage level to $9.80 an hour. However, state government are already prepared to adjust minimum wage standards upwards within their own jurisdictions. Most of these hikes are part of legal or state constitutional provisions that adjust minimum standards upwards according to the Consumer Price Index (CPI).
The editor of Michigan Capitol Confidential, which is published by the Mackinac Center – a think-tank in Michigan – analyst Manny Lopez also took a look at wage hike proposals in an interview with Spero News. “The minimum wage increase proposals bring a lot of people to the polls and that’s a primary driver for making them an issue during a big election year. Raising the issue now, months ahead of the election, also moves the news away from the failure of Obamacare, among other issues.”
Lopez worked for years at the Detroit News and has watched how the Motor City steadily lost good-paying industrial jobs to other states, and foreign countries. “Studies from economists on both sides of the political aisle show that increasing the minimum wage hurts the people it is most designed to help – entry level workers and young people.”
In Michigan, which has suffered continuous out-migration and a soft economy, a debate has begun over a possible state-wide minimum wage increase. Democrat Mark Schauer – a likely opponent to incumbent Republican Gov. Rick Snyder – proposed in November 2013 to raise the state’s minimum wage to $9.25 per hour in stages over three years. He also called for automatic wage increases pegged to inflation. Currently, Michigan’s minimum wage is $7.40 per hour. In response, Governor Snyder said that such an increase “would be a challenge.”
Added Snyder, "We are better than having people work full time and live in poverty, especially when they're raising kids." It was in 2008 that Michigan’s minimum wage last went up.
Analyst Lopez, referring to entry-level and young people in the work force, said “Most of those workers earn more than the minimum wage. According to the Pew Research center, less than 3 percent of the nation’s workforce even makes minimum wage. The push for $15 an hour is nothing more than a union drive for membership and news headlines about so-called evil corporations.”
“Entry level jobs aren’t meant to be careers, they teach you skills to move up to jobs with more responsibility and better pay. Those workers who are marching alongside union-paid protesters won’t see $15 an hour. Their jobs will be replaced with computers that allow people to punch in their own orders and pay with a credit or debit card. That technology is likely coming anyway, but forcing business owners to pay an inflated, non-market rate for labor will push them to bring it to the counter faster.”
Speaking rhetorically, Lopez added, “And, if $15 is good, why not $50 an hour? Or $100? Sounds crazy, right? But $15 is as arbitrary as $50. The higher the forced, arbitrary wage, the fewer workers will be employed.”
The Obama administration is pleading with House Republicans to further extend emergency unemployment benefits that have been in place since the last year of the administration of President George W. Bush. Since that time, 960,000 people in Michigan have received emergency unemployment benefits, for example, and are among the 69 million nationally that have participated.
Michigan, as were other states with the highest unemployment rates, were eligible at first to grant recipients up to 99 weeks of benefits that were from state and federal programs. However, the program has been reduced, while Michigan pared back the benefits it offers.
Detroit, as with other industrial cities in the Midwest such as nearby Flint, is high in the rankings for job losses. According to the Bureau of Labor Statistics, the Detroit-Livonia-Dearborn metro area was one of the two largest 32 metro areas to lose jobs in October 2013 over 2012: a loss of 1,800 jobs, or 0.2 percent. Gary, Indiana was the only other area to lose jobs. Nearby suburban Warren-Troy-Farmington Hills in Michigan, by contrast, added 21,100 jobs, up 1.9 percent.
The economy in Michigan, for example, has not improved enough to bring back the 857,700 jobs lost from 2000 to the beginning of 2010. The state has recovered approximately 261,000 jobs since 2010, and may regain another 197,700 by the end of 2016. Fully recovery is still a long way off for Michgan, according to analysts.
George Fulton, an economist at the University of Michigan, told local media that some people are either not benefiting or not benefiting fully from macroeconomic growth in Michigan. He noted that the unemployment rate is too high and that poverty actually increased in the state and across the country from 2010 and 2012.
The University of Michigan believes that the unemployment rate in Michigan will improve from 2013's 8.7 percent to 8.2 percent in 2014, 7.3 percent in 2015 and 6.4 percent in 2016.
That the economy is still laggard has encouraged calls for further extensions to unemployment benefits, just as there are calls for job creation and training. Regarding the extensions, Lopez said in an interview with Spero News, “On extended unemployment benefits, some of the same issues arise as with the minimum wage. The issue diverts the media from Obamacare failures and it provides Democrats with a chance to paint Republicans as uncaring about the unemployed. The issue deserves more in-depth analysis than simply looking at the number of unemployed and making claims that they will starve if benefits aren’t increased.”
“Unemployment benefits are not designed to be permanent welfare. Of course some people find themselves in a tough spot and need extended unemployment benefits. But the program, which is paid by employers who are reluctant to hire because of an uncertain economy and increased pressure on them from the Obama administration, was not meant to be an entitlement program.”
“People respond to deadlines and incentives. Self-sufficiency is not only admirable but part of the framework of this nation. If unemployment benefits are extended again, those costs should be offset elsewhere in the budget and there needs to be a push to stop this from becoming the permanent.”
States with minimum wage increases
Below are the states that will see a minimum wage hike regardless of the federal standard:
Arizona. Tied to the CPI, the minimum wage there will go from $7.80 to $7.90 per hour. Workers receiving tips, such as waiters, will increase to $4.90 per hour.
California. The minimum wage goes up this year on July 1 to $9.00 per hour. And already on the books is another hike to $10.00 per hour on January 1, 2016. San Francisco and San Jose have local minimum wage standards: $10.75 per hour in San Francisco, and $10.15 in San Jose. California does not permit tipped workers to be paid a lower minimum wage than others.
Colorado. The minimum wage increased from $7.78 per hour statewide to $8.00 on Jan. 1. Wages for tip recipients increased by 22 cents, to $4.98.
Connecticut. New legislation raised the minimum wage from $8.00 per hour to $8.70 per hour on Jan. 1. It will be bumped up again one year later to $9.00 per hour. For those receiving tips, the minimum wage remains the same.
Florida. The minimum wage has gone up by 14 cents, to $7.93 per hour and to $4.91 per hour for those receiving tips.
Missouri. The minimum wage rose from $7.35 to $7.50 per hour on January 1, except for tipped workers. They had an increase from $3.68 to $3.75 per hour.
Montana. The minimum rose by 10 cents to $7.90 per hour.
New Jersey. Republican Gov. Chris Christie signed legislation last year that increased the minimum wage from $7.25 to $8.25 per hour on January 1. Tipped employees will continue at $2.13 per hour.
New York. The statewide minimum wage went from $7.25 to $8.00 per hour on December 1, 2013. This did not affect the lower wages received by tipped employees. The law features another minimum wage hike for non-tipped workers again on December 1 of this year to $8.75 per hour, and then again on December 1, 2015 to $9.00 per hour.
Ohio. Ohio's minimum wage went up from $7.85 to $7.95 per hour on January 1, 2014. The rate for tipped workers went from $3.93 to $3.98 per hour.
Oregon. For tipped and non-tipped workers, the rate increased from $8.95 to $9.10 per hour.
Rhode Island. The rate went up for non-tipped employees from $7.75 per hour to $8.00 per hour. The rate for tipped employees, $2.89 per hour, remains unchanged.
Vermont. The rate went from $8.60 to $8.73 per hour, except for tipped workers, on Jan. 1. Tipped workers’ rate went from $4.17 to $4.23 per hour.
Washington. The minimum wage in the State of Washington's minimum wage for all workers increased from $9.19 to $9.32 per hour.
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