This is crazy. $15 an hour in some areas, like the New York metro area is
barely enough now. By 2024, it will be totally inadequate.
Miriam
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Subject: [blind-democracy] below the minimum no more
Below the Minimum No More
Ben Spielberg
May 30, 2017
The Democrats' new $15 minimum wage bill also phases out sub-minimum wages
for millions of Americans.
Mike Umbrella/Shutterstock
This week, a majority of the Democrats in both the House and Senate
introduced a long-awaited bill to raise the federal minimum wage to $15 an
hour by 2024.
While most coverage of this bill will likely focus on whether $15 by 2024 is
too ambitious a target (as Jared Bernstein and I
explained
in the Prospect last month, it's not), there's a less-discussed aspect of
the bill that deserves considerable attention as well: its elimination of
"sub-minimum"
wages for various groups of workers. Establishing one minimum wage for
everyone would help those workers whom past minimum wage increases have left
behind.
It would also break with the pattern of reinforcing anti-worker myths about
the economy.
That sub-minimum wages exist isn't all that commonly known, but the one
you're most likely to have heard of is for tipped workers-people who, for
example,
wait your tables when you go out to eat, drive you around in taxis, cut your
hair, and park your car.
Businesses do not need to pay these workers the federal minimum wage of
$7.25 an hour; instead, these workers are only guaranteed $2.13 an hour from
their
employers, a wage floor that hasn't changed since 1991. The idea is that
tips will make up the difference. In theory, employers are required to make
up
that difference themselves if a worker's tips for the week don't add up to
the minimum, but this requirement is notoriously hard to enforce. Worse yet,
employers sometimes confiscate tips. Eighty percent of full-service
restaurants the Department of Labor investigated between 2009 and 2015 were
violating
wage and hour laws, as the department's former Chief Economist Heidi
Shierholz
has noted,
and
wage theft
from tipped workers was one of the most common violations.
This sub-minimum wage has
severe consequences
for workers in tipped industries, whose poverty rates are much higher than
the poverty rates for other workers. In states that apply the federal
sub-minimum
wage of $2.13, the poverty rate for tipped workers is 14.8 percent, compared
to 11.7 percent in states that no longer allow sub-minimums. (Poverty rates
for other workers don't differ so greatly between the two sets of states-6.7
percent versus 6.2 percent.)
Workers with disabilities are also underpaid because of a sub-minimum wage.
Employers of such workers
can apply
for the right to pay them "commensurate wage rates . based on the worker's
individual productivity . in proportion to the wage and productivity of
experienced
workers who do not have disabilities performing essentially the same type,
quality, and quantity of work in the geographic area from which the labor
force
of the community is drawn."
In practice,
that means hundreds of thousands of workers with disabilities earn on
average just over $2 an hour, with many of them receiving much less than
that. This
loophole in labor law also shunts disabled workers into separate, "sheltered
workshops" in which they have little opportunity for advancement and are
often
exploited.
A third sub-minimum wage, the
youth minimum wage,
allows employers to pay teenagers $4.25 an hour "during the first 90
consecutive calendar days after initial employment." Unlike the sub-minimum
wages for
tipped workers and workers with disabilities, this "training wage" is rarely
used. But like the other sub-minimum wages, it would gradually phase out
under the Raise the Wage Act of 2017.
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Confronted with the usual arguments that the minimum wage kills jobs,
lawmakers sometimes see sub-minimum wages as points of compromise. If we let
some
businesses pay newly hired teenagers and workers with disabilities less, the
reasoning seems to go, we'll mitigate concerns that the minimum wage will
lock these workers out of the labor market. Relatedly, the recent spate of
state and local minimum wage increases have often been set to phase in more
slowly for small businesses than for larger ones, seemingly under the
assumption that it is harder for small businesses to absorb labor cost
increases.
Yet this approach is misguided, and not just because it hurts the workers in
sub-minimum wage categories. It also undercuts the general case for minimum
wage increases by lending undue credence to minimum wage opponents'
arguments about job loss-a loss that has thus far failed to materialize (see
page 14
here).
The minimum wage is meant to rebalance power between workers and employers,
who often pay not what workers are worth (as the standard economic model
erroneously
teaches us) but as little as they possibly can.
The minimum wage is meant to rebalance power between workers and employers,
who often pay not what workers are worth (as the standard economic model
erroneously
teaches us) but as little as they possibly can. It is an ethical standard
that defines what workers deserve and the kind of economy we should have.
Allowing
businesses to pay some workers less or carving out exemptions for some
businesses sends the message that paying substandard wages in a
multi-trillion dollar
economy is okay, that we view a business owner's right to make profits as
more important than a worker's right to earn a decent living.
It's hard to imagine that paying workers a fair wage is actually burdensome
for most employers, who may be able to absorb the increased labor costs
through
price increases, productivity enhancements (from the reduced turnover,
efficiency gains, and increased morale that fairer wages can bring), or (my
personal
favorite) reduced profits and lower salaries for their highest-paid
employees and executives. Moreover, by putting money in the pockets of
workers who
are also consumers, raising wages can also help businesses by increasing the
customer base for their goods and services; that's part of the reason so
many businesses
support higher minimum wages.
To the extent that there are a few businesses out there that truly can't
succeed if they have to pay their workers enough to live on, the economy is
better
off without their low-road business model. Similarly, anyone truly worried
about opportunities for youth or for disabled workers wouldn't support
holding
their wages below everyone else's. Instead, they'd support policies, like
direct job creation and training programs, that help ensure these workers
can
realize their potential.
So as we celebrate the push to raise the minimum wage to $15 by 2024, let's
not forget to applaud the phase-outs of sub-minimum wages as well. And let's
make sure, as we engage in upcoming pushes for state and local minimum wage
increases, that we reject the trickle-down fallacy that our economy can't
handle
one fair wage. It can, and workers deserve it.
Source:
http://prospect.org/article/below-minimum-no-more
