The local Chamber of Commerce will tell you that the increase in the federal minimum wage that goes into effect today will spell doom for business and industry. Another perspective is that putting more wages in the pockets of working-class families will boost consumer buying power and push the economic recovery that is slowly taking shape into action.
“History has proven time and again that increasing the minimum wage increases purchasing power among people who are living hand to mouth and must therefore spend the additional income on necessities — food, clothing, transportation and so on,” said Arnold Hiatt, chairman of the Stride Rite Foundation and former CEO of the Stride Rite Corporation, and one of the more than 1,000 signatories to a statement of the Business for a Fair Minimum Wage advocacy group supporting the hike in the minimum wage from $6.55 an hour to $7.25 an hour.
“What better way to increase demand for the goods and services that businesses urgently need,” said Hiatt, one of a couple dozen heavy-hitter signatories to the statement, a list that includes Costco CEO Jim Sinegal, ABC Home CEO Paulette Cole and U.S. Women’s Chamber of Commerce CEO Margot Dorfman.
“Now, more than ever, it’s imperative that employees are paid a fair minimum wage. It is an unsustainable and dangerous downward spiral to push American workers into poverty and expect taxpayers to pick up the bill for the consequences. Minimum wage laws guarantee to taxpayers that businesses are playing fair and compensating workers at responsible levels,” Dorfman said.
For perspective on the fair-compensation part of the issue, consider that adjusting for inflation the new $7.25-an-hour rate is still below the effective $7.86-an-hour rate that was in place in 1956. For perspective on the effects of inflation, the actual wage rate in place in 1956 was $1 an hour.
– Column by Chris Graham
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