As it’s become impossible to pass laws in Congress due to Republican obstructionism, the fight for the minimum wage has moved aggressively to the states… Here’s what’s happening

    Last night, Zingerman’s co-founder Paul Saginaw and I met up for a late dinner at Dalat to discuss the various campaigns being waged across the country right now to raise the minimum wage, and how it came to pass that he’s become a spokesman for the movement. My hope is to share my notes later in the week, once I’ve had a chance to transcribe everything. In the meantime, though, I wanted to share a little background on the minimum wage, in hopes that it might better inform our conversations between now and November, when it’s likely to be on the Michigan ballot.

    HERE ARE THE PRESENT FACTS AS I UNDERSTAND THEM:

    $7.25: The present hourly minimum wage as set by federal law.

    $10.74: How much the federal minimum wage would be if it had kept up with inflation over the past 40 years. [note: This does not take into account the significant gains in productivity made by American workers over the last several decades.]

    $15,080: The annual income for a full-time employee working the entire year at the federal minimum wage.

    $7.40: The Michigan minimum wage.

    • 50%: Percentage of workers making minimum wage, or less, who are over 25 years of age. [note: There are instances where workers can be paid below the minimum wage. The federal minimum for tipped labor, for instance, is $2.13 per hour, as long as the hourly wage and tip income, when taken together, equal at least minimum wage. Also, employers are allowed to pay workers below the age of 20 $4.25 an hour for their first 90 days of employment.]

    34%: Minimum wage workers with an associates degree or some college experience.

    3.3 million: The number of people working for wages at, or below minimum wage in the United States. [note: In 2013, 1.5 million were reported as earning exactly minimum wage. During that same time, approximately 1.8 million were reported as earning wages below the minimum wage. Together, this 3.3 million represents 1.0% of the population, 1.6% of the labor force, 2.5% of all workers, and 4.3% of hourly workers respectively.]

    CURRENT INITIATIVES UNDERWAY TO RAISE THE MINIMUM WAGE:

    RaiseTheMinimumWageWhile organized labor has been working on the issue for some time – most recently helping fast food workers in several U.S. cities to launch campaigns – the issue of raising the minimum wage really began to gain national traction in January of last year, when Barack Obama noted in his annual State of the Union address his desire to see the federal rate raised from $7.25 to $10.10. “To every mayor, governor, and state legislator in America, I say, you don’t have to wait for Congress to act; Americans will support you if you take this on,” said the President. “And as a chief executive, I intend to lead by example. Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover. We should too. In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour – because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.” [The White House press release on the President's statement can be found here.]

    As Obama mentioned elsewhere in the speech, there is presently a bill in the Senate that would, if enacted, raise the federal minimum wage to $10.10 for all workers, and not just the employees of federal contractors. Most folks who watch Congress seem to agree that, given the current state of affairs in Washington, it doesn’t have a chance of passing, but the legislation – Tom Harkin’s Fair Minimum Wage Act of 2013 – is scheduled to come up for a vote this week. As the President noted, though, no one is holding their breath, waiting for Congress to do the right thing. No, the battle is shifting to the states, where the odds of making a positive change are significantly better. The following summary of the current situation comes by way of the New York Times.

    …But the (federal) stalemate matters less and less. In the last 14 months, since Mr. Obama first called for the wage increase in his 2013 State of the Union address, seven states and the District of Columbia have raised their own minimum wages, and 34 states have begun legislative debates on the matter. Activists in an additional eight states are pursuing ballot referendums this year to demand an increase in wages for their lowest-paid workers.

    The result is an outside-the-Beltway variation on Mr. Obama’s pledge to use his executive powers to bypass an obstructionist Republican Party in Congress. In this case, White House aides said they believed that Mr. Obama’s feverish rhetorical push for a higher minimum federal wage, to $10.10 per hour from $7.25, has helped generate political pressure on states to act…

    The state minimum-wage actions, which have created a patchwork of minimum wages across the country, are not the uniform step that Mr. Obama and his allies would prefer. Some states have minimum wages on the books that are below the current federal level of $7.25 an hour, meaning that the federal level automatically applies to them. Other states already require wages to start at $8, $8.25 or higher. The District of Columbia, which already has an $8.25 per hour minimum wage, could have the highest in the nation on July 1, 2016, when it rises to $11.25.

    But Mr. Obama’s advisers have embraced the legislative flurry across the country as a second-best alternative that can work politically and substantively. Local increases in the minimum wage will help workers and pump money into those economies, they say…

    THE MICHIGAN INITIATIVES:

    Here in Michigan, there are two such efforts underway. In the Michigan House of Representatives, Adam Zemke and Jeff Irwin have co-sponsored Michigan House Bill 4386, which would increase the state minimum wage from $7.40 to $9 this year. And, at the same time, a coalition of various civil rights, faith, labor and community organizations is trying to get the issue on the November ballot, so that the voters of Michigan can weigh in. The group, called Raise Michigan, needs to collect 258,088 valid signatures from registered voters by May 28. If passed, the Raise Michigan legislation would 1) raise the minimum wage from $7.40 to $10.10 an hour by January of 2017, 2) Ensure the minimum wage keeps up with the cost of living, based on the Consumer Price Index, and 3) Guarantee that eventually tipped workers, like waiters and waitresses, earn the full minimum wage. (Tipped workers in Michigan, who are currently paid $2.65 an hour, would receive an $.85 an hour increase each year until they’re paid the full minimum wage.)

    While I expect that Republicans in Lansing will kill the legislation being put forward by Irwin and Zemke, I suspect that the Raise Michigan ballot initiative has a better than 50% chance of passing… I’d like to say that it would be a slam dunk, given that the idea seems to have widespread support from voters right now, but you can be sure, if it does make it on the ballot, that the Koch brothers and their fellow Plutocrats will be pouring an ungodly amount of money into the state, in hopes of convincing Michiganders to once again vote against their own best interests. And, as we know from experience, they’re damn good at what they do.

    ENERGIZING THE BASE IN A NON-PRESIDENTIAL ELECTION YEAR:

    It’s also worth noting that this isn’t just about the minimum wage. This is also about motivating the Democratic base to get out and vote in a non-Presidential election. And that, to a large extent, explains why we’re seeing so many progressives across the country looking to get the minimum wage on the November ballot in their states. It’s just like, a few years back, when a lot of conservative groups were coming together to get anti-gay marriage ballot initiatives in place… This isn’t to say that Obama and the Republicans don’t care about the minimum wage. I think they recognize that it’s an important thing to do, if for no other reason that to temporarily stabilize our society, which is in danger of losing the middle class altogether, as the gap between the rich and the poor continues to grow. I do think, however, that this is a godsend for the likes of Mark Schauer, who hasn’t exactly been lighting a fire under Michigan Democrats. And we’re not alone in that regard. All over the country, there are state-wide races where the minimum wage could really make a difference by bringing people to the polls, where they might also vote out Republican governors and legislators.

    As I mentioned above, everyone knows that, at least for the time being, nothing is going to happen in Washington. No, if we want to make progress on issues like education, the environment, and civil rights, it’s going to have to be at the state level. And, in order to do that, we need to start winning races closer to home… Hopefully, the minimum wage will help us do that.

    $10.10 AN HOUR WILL RAISE FAMILIES OUT OF POVERTY AND PUT MORE MONEY INTO THE ECONOMY:

    Raising the minimum wage to $10.10 would give more than 27 million workers a raise, which, in turn, will put more money into the economy. Here, with more on those 27 million people, are a few facts from Senator Tom Harkin.

    • 88% are adults over the age of twenty, 55% are women, and nearly half are workers of color.

    • More than 14 million children have a parent who would get a raise.

    • The average affected worker brings home approximately 50% of her household’s income.

    • 71% of tipped workers getting raises would be women – a key step for women’s pay equity.

    If you still want more, I’d encourage you to check out this report from the Economic Policy Institute, which lays out the benefits to the economy which would be realized with a minimum wage of $10.10. Here’s a clip.

    …(R)aising the minimum wage would provide immediate benefits not only to affected workers (whose incomes would rise), but to the broader economy as well. Research over the past two decades has shown that, despite skeptics’ claims, modest increases in the minimum wage have little to no negative impact on jobs (Schmitt 2013). In fact, under current labor market conditions, where tepid consumer demand is a major factor holding businesses back from expanding their payrolls, raising the minimum wage can provide a catalyst for new hiring.

    Economists generally agree that low-wage workers are more likely than any other income group to spend any additional earnings they receive, largely because they must in order to meet their basic needs. Higher-income individuals, corporations, and beneficiaries of corporate profits are more likely to save at least a portion of any additional income. Thus, in a period of depressed consumer demand, raising the minimum wage can provide a modest boost to overall economic activity because it shifts income to workers who are very likely to spend it immediately. Indeed, recent research from the Federal Reserve Bank of Chicago finds that raising the federal minimum wage to $10 could increase U.S. GDP by up to 0.3 percentage points in the near term (Aaronson and French 2013).

    Our research shows that raising the federal minimum wage to $10.10 by 2016 would provide an additional $35 billion in wages over the phase-in period to directly and indirectly affected workers, who are likely to then spend that additional income. This projected rise in consumer spending would provide a modest boost to U.S. GDP, even after accounting for the increased labor cost to businesses and the potential for small price increases for consumers. Using standard fiscal multipliers, we would expect that increasing the federal minimum wage from $7.25 to $10.10 would generate a net increase in economic activity of $22.1 billion over the phase-in period. This additional GDP would support roughly 85,000 new jobs…

    Also, to those who would say that prices would rise as a result, I’d encourage you to read this recent report by a Bloomberg analyst which showed that raising the minimum wage at Walmart to $10.10 would translate to the addition of just one cent to the price of a $16 item, assuming all additional costs were passed on to consumers.

    OK, that’s everything that I know… What do you know?

    [And stay tuned for that interview with Paul Saginaw. I think you'll like it.]

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      22 Comments

      1. The Other Side
        Posted April 8, 2014 at 8:22 am | Permalink

        The Congressional Budget Office says 500,000 jobs could be lost.

        http://www.csmonitor.com/USA/DC-Decoder/2014/0218/Would-a-10.10-minimum-wage-really-cost-500-000-jobs-Obama-and-CBO-at-odds.-video

      2. Meta
        Posted April 8, 2014 at 8:36 am | Permalink

        Governor Peter Shumlin of Vermont on CNN:

        New Jersey Gov. Chris Christie and New Mexico Gov. Susana Martinez went so far as to veto minimum wage hikes in their states. Wisconsin Gov. Scott Walker mocked the idea, while Florida Gov. Rick Scott described how the proposal makes him “cringe.” Michigan Gov. Rick Snyder, Pennsylvania Gov. Tom Corbett and Maine Gov. Paul LePage all oppose this common-sense change. And of course there is billionaire Bruce Rauner, running in Illinois, who went so far as to suggest slashing minimum wage workers’ salaries by a dollar an hour in order to keep the state “competitive.”

        They just don’t get it.

        Just look at Bobby Jindal, former Republican Governors Association chair and current governor of Louisiana, who recently said — in a widely-criticized partisan outburst outside the White House — that raising the minimum wage was equivalent to “waving the white flag of surrender” on the economy. That’s patently absurd. But it’s what the tea party wants to hear.

        A fair minimum wage was once an issue upon which Republican and Democratic leaders could agree. But now, the Republican Congress and Republican governors have embraced partisanship and right-wing ideology rather than economic growth.

        And that’s why we are standing with President Obama today to make clear we won’t wait for Republicans to come around — we’re going to give hard-working Americans a raise and we are going to start today.

        Read more:
        http://www.cnn.com/2014/03/05/opinion/shumlin-governors-minimum-wage/

      3. Dan
        Posted April 8, 2014 at 8:36 am | Permalink

        I don’t think we are very far away from having robotics handle virtually all aspects of fast food joints. How many jobs will be lost when it becomes economically beneficial for McDonalds, et al. to invest in touch screen order menus and conveyor belt “sandwich” production? It’s not really much different than how they work now.

        Not that I’m against raising the minimum wage, but I think there are consequences that people need to consider, rather than assuming everything will be better in all aspects.

      4. Pete Murdock
        Posted April 8, 2014 at 8:37 am | Permalink

        On April 15, the Ypsilanti City Council will have the first reading of a minimum wage ordinance that will establish a minimum wage of $10.10 an hour for all City employees and employees of contractors doing business with the City. This mirrors the executive action President Obama took earlier this year as to Federal contractors and employees.

      5. Meta
        Posted April 8, 2014 at 8:40 am | Permalink

        As for that CBO report, they also found that nearly 1 million people would be raised out of poverty.

        A $10.10 minimum wage would result in 900,000 more people rising above the poverty threshold. The CBO projected that in 2016, the poverty threshold, in 2013 dollars, will be about $24,100 for a family of four.

        Read more:
        http://www.latimes.com/business/la-fi-minimum-wage-20140219,0,872599.story#ixzz2yImAfihh

      6. Mr. Y
        Posted April 8, 2014 at 8:48 am | Permalink

        You might find this of interest, Dan.

        It’s from FiveThitryEight.com.

        “President Obama’s proposal to increase the federal minimum wage from $7.25 to $10.10 per hour could make it worthwhile for employers to adopt emerging technologies to do the work of their low-wage workers. But can a robot really do a janitor’s job? Can software fully replace a fast-food worker? Economists have long considered these low-skilled, non-routine jobs as less vulnerable to technological replacement, but until now, quantitative estimates of a job’s vulnerability have been missing from the debate.

        Based on a 2013 paper by Carl Benedikt Frey and Michael A. Osborne of Oxford, occupations in the U.S. that pay at or near the minimum wage — that’s about one of every six workers in the U.S. — are much more susceptible to “computerization,” or as defined by the authors, “job automation by means of computer-controlled equipment.” The researchers considered a time frame of 20 years, and they measured whether such jobs could be computerized, not whether these jobs will be computerized. The latter involves assumptions about economic feasibility and social acceptance that go beyond mere technology.

        The minimum-wage occupations that Frey and Osborne think are most vulnerable include, not surprisingly, telemarketers, sales clerks and cashiers. But also included are occupations that employ a large share of the low-wage workforce, such as waiters and waitresses, food-preparation workers and cooks. If the computerization of these low-wage jobs becomes feasible, and if employers find it economical to invest in such labor-saving technology, there will be huge implications for the U.S. labor force.”

        http://fivethirtyeight.com/features/your-new-fast-food-worker-a-robot/

      7. Aruna
        Posted April 8, 2014 at 9:02 am | Permalink

        In response to The Other Side.

        A quote from the article you are linking to:

        “The overall evidence in the new report by the CBO still implies that the benefits of boosting the minimum wage – higher income and reduced poverty – may outweigh the costs.”

        Assuming the CBO’s worst case scenario of one million jobs lost and taking the stated number of 27 million people making minimum wage.

        1 million jobs would be lost at $7.25 an hour, 26 million more would go from $7.25 to $10.10 an increase of $2.85. There would be $74.1 million in new hourly wages vs. $7.25 million lost.

        A net gain for minimum wage workers of $66.85 million dollars.

      8. Elliott
        Posted April 8, 2014 at 9:07 am | Permalink

        It’s not just people working at the minimum wage. As was mentioned at the beginning of the post, 3.3 million Americans presently make at or below $7.25 an hour. As Harkin notes, however, 27 million would receive a raise if we pushed the minimum wage to $10.10. The difference between 3.3 million an 27 million is considerable. That’s 23.7 million people presently making between $7.25 and $10.10 an hour.

      9. Dan
        Posted April 8, 2014 at 9:17 am | Permalink

        Thanks Mr. Y. Interesting article. A lot more than just fast food workers at risk, apparently.

      10. anonymous
        Posted April 8, 2014 at 9:21 am | Permalink

        Does anyone know where I could go to sign the Raise Michigan petition?

      11. EOS
        Posted April 8, 2014 at 9:38 am | Permalink

        That’s amazing Pete. City not going under fast enough for you?

      12. Posted April 8, 2014 at 9:48 am | Permalink

        Obviously, the solution is to install more surveillance cameras.

        Next, create laws which require a minimum income before moving to Ypsilanti. Poor people can live elsewhere.

      13. Dan
        Posted April 8, 2014 at 9:52 am | Permalink

        I think raising Ypsi City’s minimum wage (for city employees) is mostly a publicity thing. The mlive article that discusses it says that no city employees make less than $9/hr now, and the only ones that make $9/hr “typically work at the Senior Center, Rutherford Pool or the Parkridge Center”

      14. Meta
        Posted April 8, 2014 at 9:54 am | Permalink

        Crain’s Detroit Business just interviewed Moo Cluck Moo co-founder Brian Parker as his Dearborn Heights restaurant and asked whey he pays his people $15 an hour.

        I was skeptical about the long-term viability of a $15 an hour wage. The razor-thin margins of the restaurant industry have claimed many operators.

        So how does this work?

        Parker says an average shift requires four employees and the restaurant is open 10 hours a day, seven days a week. That means the restaurant is spending $60 an hour on labor, or about $600 a day. That’s $18,000 a month in labor costs alone. Parker says labor makes up about 40 percent of the restaurant’s total expenditures. Food costs are 30 percent.

        He doesn’t flinch at the percentages.

        “I’m taking less money personally,” he said. “My question is, how much do we have to make? How big of a pile of money do CEOs have to sit on?”

        Parker’s belief is that if he takes care of his employees, they will return the favor through hard work, loyalty and improved customer service.

        There is a method to the madness, sort of.

        Parker said he spent about $150,000 to open the 1,200-square-foot restaurant. He said he offsets the high labor cost through negotiating cheaper rents, increasing buying power and strategic staffing.

        Make no mistake, this isn’t a hobby.

        Parker said the restaurant is on track to turn a profit this September, prompting him to open a second location in Waterford, a third location in Ypsilanti and maybe even a food truck.

        “I’m not altruistic,” Parker said. “But I’m also not trying to extract as much money as possible out of the restaurant.”

        Read more:
        http://www.crainsdetroit.com/article/20130911/BLOG006/130919957/moo-cluck-moos-15-an-hour-story-starts-with-a-lesson-in-minimum-wage#

      15. Scott T.
        Posted April 8, 2014 at 12:13 pm | Permalink

        It is true that raising the minimum wage also lowers the threshold where employers may choose to replace low wage workers with productivity-improving technology. This has been happening at a steady pace in manufacturing in the US–a sector that has been growing in economic terms but adding few jobs. It will increasingly happen across the service industry (and not just at low skill levels). One response to this situation is to try to prevent the creep of technology by either holding wages low (by preventing raises in the minimum wage) to keep human labor cheaper than machine labor. Another is to embrace the productivity enhancements of this technology and realize we’d all be better off if we spread the dividends of the increase in productivity more widely, either via fewer working hours (20 hour work week anyone?), more vacation time or, my hobby horse, a guaranteed basic income.

      16. Mr. Y
        Posted April 8, 2014 at 12:41 pm | Permalink

        Sounds good in theory, Scott, but that’s not really the way that it’s worked in practice. Our gains in productivity over the past several decades have soared, but most of us are still working 40 hours a week or more just to stay afloat.

      17. James E
        Posted April 8, 2014 at 2:31 pm | Permalink

        Great Article Mark.

        “50%: Percentage of workers making minimum wage, or less, who are over 25 years of age.”

        That is linguistically incredibly difficult to understand. I would suggest: “Of all minimum wage earners, or below, 50% are above the age of 25.” (That is what the percent distribution means. I originally read this as “Half of all workers over 25 are paid minimum wage or less.”

        Just a suggestion to get the statistic across. Still a very meaningful statistic!

      18. Scott T.
        Posted April 8, 2014 at 3:05 pm | Permalink

        Mr Y,

        Which is why a raise in the minimum wage is a good place to start, to push up the bottom, but its ability to address the broader issues of increasing productivity and how those gains are shared is extremely limited. I think these minimum wage (and related fast food worker and other low wage worker campaigns) are all helpful in building a broader social movement to rewrite the social contract to create a fairer sharing of the wealth created by technology-driven productivity improvements, instead of having it pile up uselessly into the hands of a small number of elites who use it to keep everyone else desperate.

      19. Posted April 8, 2014 at 6:14 pm | Permalink

        I’m personally not opposed to raising the minimum wage, but am skeptical that any raise will be enough to make a significant difference.

        In general, I would rather favor an expansion of the EITC to raise the income floor to that of the current median income, but I can’t see that happening any time soon. Some conservatives are recommending this (because they aren’t ALL stupid, though you’d never know), including the father of much of the free market economics which is so pervasive throughout the Republican Party, Milton Friedman.

        Still, I have little faith that good ideas will ever pass through this Congress.

      20. Mr. Y
        Posted April 8, 2014 at 8:38 pm | Permalink

        I need to correct what I said before, Scott. Apparently it happens. Just not here.

        “Swedes to give six-hour workday a go: Municipal staff in Gothenburg will act as guinea pigs in a proposed push for six-hour workdays with full pay, with hopes that it will cut down on sick leave, boost efficiency, and ultimately save Sweden money.”

        http://www.thelocal.se/20140408/swedish-workers-to-test-six-hour-work-days

      21. Pete Murdock by proxy
        Posted April 16, 2014 at 8:24 am | Permalink

        MINIMUM WAGE ORDINANCE APPROVED ON FIRST READING
        An ordinance requiring employees of the City or of contractors doing business with the City to receive a minimum wage of $10.10 an hour. This ordinance mirrors the executive action that President Obama exercised for federal workers and contractors. The ordinance would become effective on January 1, 2015.

      22. Meta
        Posted April 16, 2014 at 9:33 am | Permalink

        Oklahoma Governor Mary Fallin signed a bill stopping cities in her state from raising the minimum wage.

        Cities across Oklahoma have been barred from setting mandatory minimum wage, vacation or sick-day requirements under a bill signed into law this week by Gov. Mary Fallin.

        Critics of the bill say it specifically targets Oklahoma City, where an initiative is underway to establish a citywide minimum wage higher than the current federal requirement of $7.25 an hour. Organizers have been gathering signatures on a petition to support raising the city’s minimum $10.10 – a rate currently being advocated by President Barack Obama on the national level.

        David Slain, the lawyer who wrote the petition, said he is disappointed that the state’s legislature “would vote in such a way to take the right of the people to decide minimum wage.” He said the grass-roots effort would continue, with hopes of getting 4,000 signature by the end of April. A total of 80,000 are needed to bring the initiative to a statewide vote.

        Read more:
        http://america.aljazeera.com/articles/2014/4/15/fallin-signs-banonminimumwageincrease.html

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      1. […] with the current initiatives aimed at raising the minimum wage, you might want to begin by reading the background article that I posted a few days […]

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