The American economy has been growing at less than 2% per year. Productivity, which leads to higher wages, has grown at less than one percent, accounting for the very slim raises the last year or so.

Of the growth that has occurred, most of it has gone to the top 10% of taxpaying families, who now take one-half of all income reported in this country. Bernie Sanders has no practical response. Donald Trump ignores the issue.

So what could reasonably be done? Since some of the inequality comes from the rising premium for technical skills, we need to provide more vocational education for underemployed Americans of all ages. Since much inequality comes from single parent households, we need to strengthen marriage by targeting income support for two-parent households. Since excessive incarceration for non-violent felonies has weakened minority communities, we can strengthen them by offering the unemployed jobs repairing public facilities. Community corrections should replace prison terms. Since discrimination against women contributes to poverty too, stronger unions should demand equal pay for equal work. That work should earn a new minimum wage of $10-12 an hour. Studies show that this modest increase in the current minimum wage would not raise prices or unemployment unreasonably relative to the benefits for those who need it.

A program like that would attract my vote.

Two reasons against a raise are common. The first is that only a few would benefit from a higher minimum wage. The second is that higher wages lead employers to cut jobs. Both reasons are faulty.

The first argument is based on there being only 1.6 million people working in minimum wage jobs – many in fast food, restaurants, and hotels – making up only 2.1 percent of all hourly jobs. Is benefiting so small a group worth a battle?

The response is that raising the minimum wage would affect all those making between $7.25 and $10.10 an hour plus many others already making more than $10.10 an hour who would get raises by demanding equal treatment with those making less.

Taken together, some 30 million workers could benefit.

The second argument against raising the minimum wage is that workers will lose jobs. The University of Chicago hosted 38 economists in 2013 to speak on whether it will be hard for low-skill workers to find jobs if the minimum rose to $9.00. 34% said it would be harder; 24% said they were uncertain; and 32% said it would not be any harder. Clearly this was not a verdict for job loss!

Even with some job loss, the overall gain in wages would be a victory for working people. There are no genuine gains without trade-offs.

Sources:

“Consumer Price Index Calculator,” Bureau of Labor Statistics.

“BLS Reports,” Bureau of Labor Statistics (Report 1048, March 2014).

David Cooper, “Raising the Minimum Wage Will Lift Wages for Millions,” Economic Policy Institute Report (12-19-2013).
www. igmchicago.org/igm-economic-experts-panel.