Minimum-wage workers in the U.S. today have less buying power than counterparts did 50 years ago
By Tim Harper
Toronto Star, 2/5/07
ASHLAND, Va.–The last time the minimum wage was raised in Virginia, Khalil Shareef was a 12-year-old kid, perhaps heading down a path chosen by too many in his family.
His father shot and disabled his mother when he was 3 years old. His brother and sister are behind bars.
But Shareef, a star wide receiver on the Randolph-Macon College Yellow Jackets football team, has left a self-described "negative attitude" behind and is taking another route, trying to make it with good old-fashioned hard work.
It's the same path he has admiringly watched his grandmother take.
Sadie McNeill, who will be 86 next month, rises after midnight, beginning work anytime between 1 and 3 a.m. picking crabs in Hampton, Va., trying to keep the lights and heat on in her three-bedroom house.
Shareef and his grandmother are trapped in a $5.15 (all figures U.S.) per hour world, a world of the working poor inhabited by some 13 million Americans, according to some estimates.
Although the U.S. Department of Labor can identify only 1.9 million Americans working full time at or below the federal minimum wage, the ripple effect of a hike would benefit many times that number, many economists say.
Shareef is taking work where he finds it. He stuffs envelopes in the college football office, referees intramural basketball games.
Some nights he doesn't eat and whenever he can scrape a few bucks together, he buys diapers for his newborn daughter Amayah.
It's a question of survival for Shareef and his family, but it is also a question of dignity. "If we could get one more dollar per hour, I know it won't change the world. But it gives you hope. It shows you your hard work is not going for nothing.''
After a decade with no rise in the minimum wage in this country, the question is being asked with more frequency – why have successive U.S. governments made it so difficult for the lowest-paid Americans to make any economic progress?
In the decade since the federal minimum wage was pegged at $5.15, the government's own statistics show inflation has eaten away at the paltry level, making it worth $4.10 in 2007 dollars.
The new Democratic-controlled House of Representatives made it a priority to bump the federal rate to $7.25 per hour by May 2009, to rectify what many had branded a "national shame.''
Twenty-nine states couldn't wait for Washington and have moved to raise their respective state minimums, while a number of others, including Virginia, are debating their moves.
The U.S. Senate last week passed the same bill as the House, but with Republican amendments that provide an $8.3 billion package of small-business tax breaks.
That sets up a showdown with the Democratic-led House, where Speaker Nancy Pelosi says she wants to hold out for the so-called "clean bill,'' backed by 82 Republicans, which included no small-business breaks.
The House and Senate must agree on a final bill before it can be sent to President George W. Bush and signed into law.
The measure would provide immediate wage hikes to many American minorities but it would cost small business in this country about $17 billion through 2012, according to government figures.
With the Republicans piling amendments on the bill in the Senate, a war of words broke out, led by Massachusetts Democrat Edward Kennedy who has previously said he wants to raise the minimum wage to $9 an hour with his party in power.
"It's always baffling to me – what do Republicans have against hard-working Americans?" Kennedy thundered during debate last week.
According to the U.S. Congressional Budget Office, almost one in every five workers earning between $5.15 and the new minimum passed by the House of Representatives was living below the poverty line in this country in 2005.
Someone working 40 hours a week at the lowest rate earns $10,712 per year but, after deductions, they would fall below the U.S. Census Bureau poverty threshold of $10,160 and far below the threshold for a family of three, set at $15,577.
"At the richest moment in our nation's history, the American Dream is fading for a majority of American workers,'' Richard Trumka, of the AFL-CIO, told a House committee.
Many Republicans and conservative think tanks argue that without tax cuts for small business, the rise in the minimum wage will ultimately cost jobs.
They believe the only result will be more self-serve gas pumps, automated tellers, and cash register scanners.
A study for the Employment Policies Institute found minimum-wage hikes in states have disproportionately hurt minorities, according to author David Neumark of the University of California-Irvine, who concludes that, for every 10 per cent increase in the minimum wage, minority unemployment increased by 3.9 per cent.
The most damage was done to minority teens, particularly African American teens, where unemployment jumped 8.4 per cent for every 10 per cent jump in the minimum wage, according to his study.
Males were hurt the most, he said, whereas minority women between age 20 and 24 came out ahead.
But the Joint Center for Political and Economic Studies, a non-profit agency that studies the economic well-being of African Americans says by 2009, 2 million black Americans could potentially benefit from pay hikes when the federal rate would be set at $7.25 per hour.
This year under the new federal law, it says 189,000 African-American workers are likely to get wage increases to $5.85 an hour under the law.
It noted African Americans disproportionately live in states that peg their minimum wage to the federal level.
The U.S. Department of Labor says West Virginia and Oklahoma have the most hourly workers earning the federal minimum.
The initial rate hike is stalled in the Virginia General Assembly, although a state senate committee voted unanimously in favour of a hike this week after hearing briefly from Khalil Shareef.
The bill has to go back to the House of Delegates, which killed the raise earlier this year.
The Virginia Chamber of Commerce worries about competition from other states in the southeast, said Amy Hewett, its director of government relations and public affairs.
She cites studies indicating that 90 per cent of minimum-wage earners are second-income earners or students, "not the working poor.''
Shareef, now 22, has become an unlikely advocate for an increase in the minimum wage and he doesn't believe it is only the uneducated and unskilled stuck in those jobs.
He points to his grandmother.
"She never complains,'' he said. "I've never heard her say she couldn't do it any more.''
As the U.S. Congress grappled with the issue this week, an alliance of at least 67 business owners, ranging from Jim Sinegal, chief executive officer of Costco, to small café owners, released a petition calling for a hike for the country's most poorly paid workers.
"After the last federal minimum-wage increases in 1996 and 1997, the nation experienced lower unemployment, low inflation, robust growth and declining poverty rates,'' the petition states.
"At $5.15 an hour, today's minimum-wage workers have less buying power than minimum-wage workers had half a century ago. We cannot build a strong 21st century economy on a 1950s wage floor.''
Even Wal-Mart says it backs the hike because those on minimum wage don't earn enough at $5.15 an hour to buy products it sells.
Copyright Toronto Star 2007
http://www.thestar.com/News/article/178211