Thursday, Oct 30, 2014
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Federal minimum wage should be raised


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The trend toward lousy wages began before the Great Recession. According to a new report from the Economic Policy Institute, weak wage growth between 2000 and 2007, combined with wage losses for most workers since then, means that the bottom 60 percent of working Americans are earning less now than thirteen years ago.

This gives some context to the strikes in recent weeks at fast-food chain stores, such as McDonald’s, where workers are demanding a raise to $15 an hour from their current pay of $8 to $10 an hour. And the demonstrations and walkouts at Walmart stores, whose workers are also demanding better pay. The average Walmart employee earns $8.81 an hour. A third work less than 28 hours per week and don’t qualify for benefits.

Few of these workers are teenagers. Most have to support their families. According to the Bureau of Labor Statistics, the median age of fast-food workers is over 28; and women, who comprise two-thirds of the industry, are over 32. The median age of big-box retail workers is over 30. These workers typically bring in half their family’s earnings.

They deserve a raise.

At the very least, the minimum wage should be increased from the current $7.25 an hour to $10.50 — and to $15 in areas of the country with a higher cost of living. Had the federal minimum simply kept up with inflation from the late 1960s, it would already be well over $10 today.

Contrary to the predictable pontifications of conservative pundits, such a raise won’t cause many low-wage workers to lose their jobs.

According to a report by the National Employment Law Project, most low-wage workers are employed by large corporations that have been enjoying healthy profits. Three-quarters of these employers (the fifty biggest employers of low-wage workers) are raking in higher revenues now than they did before the recession.

McDonald’s, bellwether for the fast-food industry, posted strong results during the recession by attracting cash-strapped customers, and its sales have continued to rise. McDonald’s CEO, Don Thompson, was awarded a big-whopper of a compensation package last year, valued at $13.8 million.

Yum!Brands, which operates and licenses Taco Bell, KFC, and Pizza Hut, has also done wonderfully well. Its CEO, David Novak, received $11.3 million in compensation last year. The company enjoyed a 13 percent gain in annual earnings — its 11th straight year of double-digit growth. Shareholders got a return of 15 percent.

Wal-Mart Stores Inc., the nation’s largest employer, also continues to grow despite a sluggish economy, and pays its executives handsomely. The total compensation of Wal-Mart CEO Michael Duke was $20.7 million last year, up from $18.1 million in 2011. Total sales rose 5 percent to $466.1 billion. Earnings per share rose 10.6 percent.

Not incidentally, the wealth of the Walton family, which still owns the lion’s share of Wal-Mart stock, now exceeds the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.

It would not be a tragedy if some of these shareholder returns and compensation packages had to be trimmed in order that low-wage workers at McDonald’s, KFC, and Walmart got a raise.

Indeed, if this nation is to reverse the scourge of widening inequality, such a trimming is necessary.

Former U.S. Labor Secretary Robert Reich is the Chancellor’s Professor of Public Policy at the University of California at Berkeley, founding editor of American Prospect magazine and chairman of Common Cause.

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