Green Party Wants "A Fair Day's Pay For A Fair Day's Work"

The following article was originally published in the Providence Journal. It was written by Liam Malloy (Assistant Professor of Economics at the University of Rhode Island) and Green Party Shadow Cabinet member Richard McIntyre -- and it represents the position of the Green Party on the proposed raising of the minimum wage to $10.10 an hour in the United States.

The latest and best research indicates that raising the federal minimum wage to $10.10 an hour would modestly reduce poverty and inequality in the United States with few if any negative effects in the labor market. Within limits, there is little evidence that labor demand decreases as the minimum rises and there are positive effects on incomes. Why then is the proposal controversial?

Controversy over wages and hours standards is not new. When the newly elected President Roosevelt asked Frances Perkins to become secretary of Labor in 1933, she said she would accept if she could advocate for a law putting a floor under wages, a ceiling over hours of work, and eliminating abuses of child labor. Roosevelt agreed but noted that such a law would be unconstitutional. The Supreme Court had generally rejected laws establishing minimum labor standards on the grounds that they interfered with freedom of contract.

In March 1937, with “the switch in time that saved nine,” Justice Owen Roberts voted with the four progressive justices to uphold a Washington state minimum wage law. Seeing his chance, the president asked Secretary Perkins, “What happened to that nice unconstitutional bill you tucked away?” His advisers added child labor provisions to Perkins’s minimum wage and maximum hours clauses.

Agricultural and domestic workers were excluded from the law, as was typical in New Deal legislation. Even this was not enough for some Southerners who feared that the New Deal was undermining planters’ control of African-American labor. The law eventually passed, but not before what one observer called “one of the most desperately fought battles ever on the floor of Congress.”

When labor is oversupplied, as is currently the case in the U.S. and world economies, even high-road employers feel pressure to lower wages and eliminate safety and other labor standards in order to survive. It is in everyone’s interest to raise standards, because this leads to a healthy working class ready and able to nurture the next generation, but it is not in any individual employer’s interest to do so. Only government is able to correct this market failure. Still, minimum-wage laws limit employer freedom and may transfer income from employers to workers, thus the opposition.

The Harkin-Miller bill currently before Congress would gradually raise the minimum wage to $10.10 by July 2016. This will raise incomes for those currently making the minimum wage and will have positive spillover effects on those making just over or under the minimum. And workers are not the only ones who benefit from higher wages. As Henry Ford found a century ago, higher wages can significantly reduce turnover, lowering hiring and training costs for firms.

We can estimate the effect locally with data from the Current Population Survey. The groups who would receive a raise do not fit the stereotypes of low-wage workers. Eighty percent of the Rhode Islanders affected are over 20 years old, roughly a quarter have children, and well over half have family incomes under $60,000. The average affected worker earns better than 40 percent of her family’s income. We say her because 57 percent of those affected are women.

An increase in the national minimum wage is long overdue. According to the International Labor Organization, only Japan and Spain among the wealthy countries trail the United States in how much the lowest-rung workers make compared with all employees. The real value of the minimum wage peaked in 1968 and has fallen by roughly a third since then, even though workers are much more productive today. Low-wage workers in Rhode Island have seen their real hourly wages decline by nearly 80 cents per hour since 2009 and this was after real annual incomes fell over 3 percent from the late 1990s to the mid-2000s.

Of course, the minimum wage is not a sufficient tool to combat inequality, but acting together with the earned income tax credit it does reduce poverty in the most socially acceptable manner, by making work pay. It also increases the bargaining power of low-wage workers, something President Roosevelt saw as critical during the Great Depression and which we see as important today because of the lingering effects of the recent Great Recession and the near collapse of private-sector unionism. Raising the minimum wage will also limit government spending on food stamps and other social safety nets that low-wage workers rely on to survive.

A fair day’s pay for a fair day’s work is the least we can do.