650 Economists Can't Be Wrong. Here's Why
Source SolidarityInfoServices
Date 06/10/12/10:58

Nobel Winning Economists: Minimum Wage Boost Will Help Economy

by James Parks, Oct 11, 2006

TO HEAR EMPLOYERS AND congressional Republicans tell it, raising the federal minimum wage from a paltry $5.15 an hour to $7.25 will cost jobs and drive the economy down. But 650 economists, including several Nobel Laureates, today said that’s just not true. In fact, raising the minimum wage will have little effect on jobs and will help lift some low-wage workers out of poverty.

Republican leaders in Congress succeeded in preventing an increase in the nation’s minimum wage this year, but the AFL-CIO and working families plan to keep pushing for a new law in the next Congress and to make it an issue in the Nov. 7 elections. Ten years after Congress approved the last raise, the federal minimum buys less than it did in 1951—fewer groceries, far fewer gallons of gasoline, less medicine and less for rent.

The economists, assembled by the Economic Policy Institute (EPI) and including such heavy-hitters as Nobel winners Kenneth Arrow, Clive Granger, Robert Solow and Joseph Stiglitz, issued a statement that lays out the case for increasing the federal minimum wage:

We believe that a modest increase in the minimum wage would improve the well-being of low-wage workers and would not have the adverse effects that critics have claimed.

While controversy about the precise employment effects of the minimum wage continues, research has shown that most of the beneficiaries are adults, most are female, and the vast majority are members of low-income working families.

As economists who are concerned about the problems facing low-wage workers, we believe the Fair Minimum Wage Act of 2005’s proposed phased-in increase in the federal minimum wage to $7.25 falls well within the range of options where the benefits to the labor market, workers, and the overall economy would be positive.

Frustrated by the congressional refusal to understand that $5.15 is too little to live on, the AFL-CIO union movement has spearheaded America Needs a Raise campaign to raise the minimum wage at the state and federal level. The campaign has provided momentum to put the issue of raising the minimum wage on the ballot in six states—Arizona, Colorado, Missouri, Montana, Nevada and Ohio—Nov. 7.

This year alone, the efforts of union members and their allies resulted in new statutes boosting the minimum wage in 11 states—Arkansas, California, Delaware, Maine, Maryland, Massachusetts, Michigan, North Carolina, Pennsylvania, Rhode Island and West Virginia. Of that number, six for the first time increased wages above the federal rate, bringing to 22 states and the District of Columbia where the lowest-paid workers will make more than the federal minimum.

During a conference call with reporters today, Solow, a professor at the Massachusetts Institute of Technology, said:

The facts are clear. Real wages have stagnated in the United States and fallen well behind productivity growth. The minimum wage has fallen to disgraceful levels. It is a losing battle for the United States to compete with low-wage countries by creating an underclass.

Another economist who signed the statement, Alice Rivlin, former vice chair of the Federal Reserve and former director of the Office of Management and Budget, said raising the minimum wage is a “policy no-brainer.”

It’s unconscionable that we haven’t raised the minimum wage in a decade. We passed welfare reform in 1996 to emphasize work and to get people off welfare and into jobs…but jobs with less pay and less benefits. If we believe in work and personal responsibility, then we must make work more rewarding.

Get more info from the AFL-CIO and ACORN, which are partnering to raise the minimum wage, by going to the AFL-CIO America Needs a Raise website and ACORN’s Taking It to the States site.

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