Viewpoint: Raising minimum wage helps low-income workers, doesn't result in job loss

Tuesday, November 21, 2006

It has been nearly 10 years since the minimum wage was raised, and since then, the cost of things like gas, health care, and housing have continued to rise, making it harder and harder for low-wage workers to make ends meet.

Since the last federal minimum wage increase in 1996-97, 22 states (and the District of Columbia) have elected to increase their state minimum wage above the federal level. Historical data from the 1996-97 increase and subsequent state-based minimum wage increases provide an enormous amount of data that demonstrates that raising the minimum wage has its desired impact: It raises the earnings and incomes of low-wage workers and their families, without generating job or small business losses.

Minimum wage opponents could release a thousand studies predicting job loss if Missouri raises the minimum wage. It doesn't change the facts -- states that have raised the minimum wage have seen no job loss, even in the low-wage industries directly impacted by a raise in the minimum wage.

Here are the facts:

* Following that 1996-97 federal minimum wage increase, the low-wage labor market performed better than it had in decades. Unemployment went down, and the percentage of people living in poverty declined:

* The percentage of Americans living below the federal poverty line consistently went down each year, from 13.7 percent in 1996, to a low of 11.3% in 2000. In the 2 years following the last minimum wage increase, Missouri added 90,400 jobs to its rolls and saw its unemployment rate drop from 4.3 percent to 3.1 percent. (U.S. Bureau of Labor Statistics)

* States that have raised the minimum wage above the federal level have had a faster rate of job growth than states that have not.

* States with a higher minimum wage rate than the federal rate experienced a 9.7 percent increase in employment from January 1998 to January 2006. That's 30 percent greater than the job growth of 7.5 percent for the other states who remained at the federal minimum wage.

* Small businesses in higher minimum wage states also saw a faster rate of job growth, with increases of 6.7 percent vs. 5.3 percent in states at the federal rate

* Even in the retail industry, which is the most likely to employ low-wage workers and thus be directly impacted by a minimum wage increase, saw job growth and small business growth in states with a higher minimum wage.

* States with a higher minimum wage saw retail job growth at a rate 3 times that in states that had not raised the minimum wage. (Fiscal Policy Institute, 3/06)

The number of small businesses in the retail industry grew by 0.6 percent, even as it decreased (by 0.3 percent) in states at the federal minimum wage. (Fiscal Policy Institute, 3/06)

* Raising Missouri's minimum wage would result in a raise for approximately 256,000 low wage workers. (Economic Policy Institute, 9/7/06)

* 120,000 Missourians currently earn less than $6.50 per hour and would directly receive a raise; 136,000 additional low-wage workers making just above $6.50 per hour would receive a bump in pay due to a "spillover" effect.

* The vast majority -- 72 percent -- are adults aged 20 or over. In addition, about 43,000, or 17 percent, are 50 and over.

* Nearly half (46 percent) of all families with an affected worker rely solely on the earnings from affected workers.

No one can survive on $5.15 an hour. Raising the minimum wage is a long-overdue step that is going to help thousands of Missouri families who are struggling to get by.

Sara Howard is the communications director for the Give Missourians a Raise coalition.

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