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Letter: Minimum wage hike nothing but positive

By Andy Garfunkel

CT House candidate

To the Editor,

I’m proud to live in a state that has raised the minimum wage to help hard-working people make ends meet and not be a burden on the taxpayers. It is the right thing, the moral thing, the decent thing to do. And it can be a selfish thing to do. It is also a solid way to stimulate the economy. When I get to Hartford, I will make sure to peg the minimum wage to productivity. Let me tell you why and how this needs to be done.

When instituted in 1938, the federal minimum wage was 25 cents an hour, at a time when you could buy a loaf of bread for a nickel. Since then, inflation has pushed up wages and prices, but up to the mid- ’70’s, wages stayed ahead of inflation, and worker productivity soared. It was the heyday of the great American Middle Class. However, during the last 30 years, real wages sagged below inflation, until last year they fell below 1968 levels! Today, minimum wage workers would starve, if not for food stamps.

During the last 40 years, American workers’ productivity had doubled, yet their average real wages consistently fell behind the levels they had once enjoyed. Today, America is far richer, but the inflation-adjusted wages of non-supervisory workers in retail trade have fallen by almost 30 percent since 1973. They are not treading water, they are drowning!

At the same time, top management increasingly rewarded itself with enormous salaries. By 2007, the top one percent accounted for almost 25 percent and the top ten percent about 50 percent of all income. Huge income advances for the people at the top, loss of income for those on the bottom. The rewards for increasing productivity is taken by those on top and seized from the rest of the working population. To give you an idea of the disconnect between those on the top and those on the bottom, in 2012, a “bad” year for hedge funds, the 40 top fund managers and traders made more money combined than the combined wages of 400,000 ordinary workers.

The opposition has stated that raising the minimum wage by 75 cents over two years will hurt small businesses and will cost jobs. I disagree.

There is overwhelming evidence from controlled studies that increases in minimum wages have no negative effects on low-wage jobs and put money in the pockets of workers. The higher minimum wages reduce worker turnover, benefiting both workers and employers. And it doesn’t cost taxpayers a dime. We’re talking about 70,000 to 90,000 hard-working Nutmeggers getting $18 more a week to spend on groceries and other necessities. Compare this to the hedge fund managers “earning” $100,000 a day.

Minimum-wage workers spend what they earn. That leads to increased economic growth – the kind that benefits all wage-earning employees. I’m talking trickle up, not trickle down.

The impact of this additional spending will stimulate the economy, not by a huge amount, but significantly. Connecticut’s target wage is $9 by 2015. Also, the hike in wages will help workers avoid having to use our tax dollars to make ends meet. That’s a selfish reason for supporting a minimum wage.

We would be recovering lost tax revenue rather paying taxes for welfare.

I am not suggesting that we peg the minimum wage in Connecticut (or the nation, for that matter) to productivity on a 1-to-1 basis, but I propose a graduated, weighted formulation so that in ten years that goal can be achieved. This would amount to a huge stimulus of our economy, meaning more profits for businesses, less churning in our work force, and fewer taxes spent on welfare. It is a win-win situation, that all of us, regardless of party, can be proud of.

Andy Garfunkel

Norwalk, CT

 

Comments

14 responses to “Letter: Minimum wage hike nothing but positive”

  1. John Hamlin

    The CBO has stated that increasing the minimum wage would cost the U.S. 500,0000 jobs but of course benefit those whose jobs remain. Are you really willing to put another 500,000 people nationally out of work? Maybe the trade off is to raise the minimum wage, but at the same time lower tax rates, reduce unnecessary regulation on small business, make CT a right to work state, and eliminate collective bargaining for public employees (who are the truly unaccountable). That could help the economy and reduce the number of jobs lost as a result of an increase in the minimum wage.

  2. EveT

    @John Hamlin, The phrase “right to work” is a prime example of what was called “Newspeak” in Orwell’s novel “Nineteen Eighty-Four.”

  3. Don’t Panic

    500,000 nationally works out to about 1,000 per state. The CBO also says 16.5 million workers would get an increase. That is about 330,000 people per state who could spend a little more money at their local businesses. 90,000 of those (per state) would technically be lifted out of poverty. Dollars spent at that level have 2.5 dollars worth of stimulative effect on the economy.
    .
    State estimates of $18 week more just for a conservative 70,000 means $65million more a year direct spending and $163million in stimulative effect.
    .
    Is that worth trading 500,000 jobs that are currently being subsidized by social spending? That is the question.

  4. the donut hole

    according to don’t panic there are 500 states now.
    .
    the job losses are one point. no one mentions the point that if you increase labor costs then prices must go up. this will disproportionately hurt those who make less even more as prices continue to go up faster than wages.
    this is the way it has always happened and this is the way it will always be.
    .
    what Andy really means to say is that he is being advised by special interest groups (unions) who’s wages increase automatically when the minimum wage goes up. this has never been and never will be about those actually making the minimum wage. they already have that vote locked up no matter what they do. this is about padding their wallets at taxpayer expense. always has been and always will be as long as the same people are in charge of educating our population.

  5. spanner

    I’ll pass on this one,while our State reps have eough time to help run the city of Norwalk maybe another subject would be welcomed where Norwalk needs so much at the State level.So much went into this letter I can hardly wait for the next subject I dont want to sound like the 22% and dismiss it as election time nonsense.

  6. Piberman

    Even Gov Malloy recognizes we’ve lost jobs in CT over the past 2 decades as firms exit CT. Will raising the minimum wage boost employment in our welfare cities ? Not likely. But it will please the Governor’s chief supporters – the public unions. Let’s re-elect Gov Malloy. He’s working for the people – ones who have jobs.

  7. Oldtimer

    Henry Ford was strictly opposed to unions, but he raised the pay of his factory employees to $5 a day when that was a lot more than other factories paid. His logic was simple, he wanted his workers to be able to buy a Ford car. His $5 a day was a big raise to the minimum wage and the biggest beneficiary was his company.

  8. LWitherspoon

    @the donut hole
    .
    Interesting comment. Which union contracts are tied to the minimum wage?

  9. the donut hole

    @LW.

    http://online.wsj.com/news/articles/SB10001424127887324048904578318541000422454

    @Oldtimer. Glad you brought up Henry Ford and affordability. You realize of course it would be impossible for Ford to do today what he did then with the environmental, labor, insurance mandates, taxes, etc….. Unless of course he was granted special waivers and given grants by our government. Hopefully people will see how uncompetitive we have become and realize it is because of an overbearing government. Hopefully, before it is too late.

  10. Oldtimer

    Whatever would poor Andy do if he didn’t have Donut Hole to explain to us what he really meant to say ? Donut Hole is a well chosen pen name for somebody who has no content of his own and no understanding of what he is talking about.
    He seems convinced it has become impossible to make good cars at a profit anymore and, if we accept that, there must be some magic only Donut Hole knows about keeping FORD going

  11. Don’t Panic

    Sorry about the typo. Move the decimal point on the first sentence.

  12. Don’t Panic

    With regard to the suggestion that prices go up when wages do:

    Yes, they do, and if your product is subject to real world economics, they can only go up as much as the market will bear.

    Studies indicate that the price effect of this level of increase on a low-end retailer like Wal-Mart would be in the neighborhood of 1.5% and for a fast-food type chain restaurant, perhaps 8%.

    Raises to products that are not market sensitive would not impact these low-earners.

    The most conservative approach is to give these workers the chance to earn this money in a bona fide job that does not need public subsidy to wages, so that the subsidies can be applied on the business stimulus side of the Ledger.

    If that is tax relief to businesses, that is a policy decision to make where the costs are clear.

  13. John Hamlin

    EveT — “right to work” means not having to join a union — and since states who have “right to work” laws are increasing the number of jobs and generally have lower taxes and lower regulation, it’s actually a fairly accurate term — you can’t work if there are no jobs — and it doesn’t mean that you can’t have a union — it just means that employees actually have a choice as to whether they want to join a union and pay union dues. Of course, since unions are making themselves irrelevant (see the recent VW Tennessee union defeat), what Connecticut really needs is a ban on public employee collective bargaining — like Wisconsin’s recent laws which are turning that state’s economy around without significantly disadvantaging its public employees, who are hardly an oppressed group.

  14. Piberman

    Andy might want to line up local business supporters of boosting the minimum wage. Would be a good economics lesson. Of course, the public unions are in the bag on this one. Would any of the legions of business folk leaving the state have a change of heart and return to CT under this proposal.

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