Why is a Fair Minimum Wage Good for Business and Essential for Real Prosperity?

Why is a Fair Minimum Wage Good for Business and Essential for Real Prosperity?

Guest blog by Holly Sklar & Alissa Barron-Menza
from Business for a Fair Minimum Wage.

Holly Sklar is CEO and Alissa Barron-Menza is Vice President of Business for a Fair Minimum Wage, a national network of business alliances, owners and executives who believe a fair minimum wage makes good business sense. Holly serves on the board of the American Sustainable Business Council and Alissa is the former managing director of BALLE, the Business Alliance for Local Living Economies.

Re>Think Local works through locally owned independent businesses, artists, farmers and nonprofits to transition the Hudson Valley to a new economy rooted in real prosperity and equal concern for people, planet and prosperity. The Re>Think website further states, “We’re all better off when we’re all better off. With inequality, we miss out on good ideas and relationships, unhappiness increases, and eventually systems collapse.”

In Business for a Fair Minimum Wage’s view, we cannot achieve this vision – that is, we can’t address inequality and build a just, sustainable economy – on a failing wage floor.

Current proposals to raise the minimum wage

The current federal minimum wage has been set at $7.25 since 2009. The Raise the Wage Act in Congress proposes increasing the federal minimum wage to at least $12 by 2020 and then adjusting it annually to increase at the same rate as the median hourly wage. The federal rate sets the wage floor nationally and it applies to workers in New York whenever the federal minimum wage is higher than the New York State minimum wage.

The current New York State minimum wage is $8.75, and will increase to $9 on December 31, 2015. Governor Cuomo has proposed applying the minimum wage increases enacted this year for fast food workers to all workers. That would mean a gradual increase in the New York State minimum wage to $15 by July 1, 2021, except in New York City, where it would be $15 by December 31, 2018.

Putting a raise in context

The federal minimum wage has been stuck since 2009 at $7.25 an hour – just $15,080 a year for full-time work. Today’s federal minimum wage has less buying power than it had in 1950, and a third less than in 1968 (in 2015 dollars). The federal minimum wage would be nearly $11 if it had kept up with the rising cost of living since 1968, and over $18 if it had kept pace with worker productivity.

Today’s federal minimum wage impoverishes workers, weakens the consumer spending businesses depend on, depresses local communities, strains the social safety net and hurts the economy. We need to raise the federal minimum wage to assure a more adequate wage floor, wherever people live or do business.

Gradually raising the federal minimum wage to $12 by 2020 would benefit more than 35 million workers (over 1 in 4). Their average age is 36, 89% are adults 20 and older, and 45% have at least some college. This would provide a stronger wage floor nationally, and a stronger base for higher-cost states to improve on.

According to the National Employment Law Project, the proposed statewide $15 minimum wage for New York would raise pay for up to 3 million working New Yorkers, or 37% of the state’s non-self-employed workforce. More than half of New York State’s low-paid workers are women, and half of all workers earning less than $15 an hour are 35 or older.

What’s the business case for raising the minimum wage?

Raising the minimum wage is good for business and our economy:

  • Workers are also customers. Minimum wage increases boost sales at local businesses as workers buy needed goods and services they could not afford before. And nothing drives job creation more than consumer spending.
  • Cost savings and other benefits. Businesses see significant cost savings from lower employee turnover. Businesses benefit from increased employee retention, productivity, product quality and customer satisfaction.
  • Increasing the minimum wage will also reduce the strain on our social safety net caused by inadequate wages.
  • The most rigorous research on actual minimum wage increases shows they do NOT cause job loss.

Strong business support

Business support for raising wages has been critical to passing increases. Contrary to what minimum wage raise opponents contend, there is strong business support for increasing the minimum wage nationally. A 2015 poll by Small Business Majority shows 60% of small businesses nationwide support gradually raising the federal minimum wage to $12 per hour by 2020 and adjusting it annually to keep pace with the cost of living. And a scientific national poll of small business owners with employees released last year by Business for a Fair Minimum Wage and the American Sustainable Business Council showed similarly strong support – 61% – for the then-current proposal to raise the federal minimum wage to $10.10 and adjust it annually for the cost of living. (See reference links below.)

The role of Re>Think Local

Re>Think Local has already played an important leadership role in voicing business support for past minimum wage increases. Re>Think Local members are among the hundreds of business people who have already signed a national Business for a Fair Minimum Wage statement calling for at least $12 by 2020. As a network, Re>Think Local previously supported the successful 2013 effort to raise the New York State minimum wage to $9 by December 31, 2015 and the more recent unsuccessful effort to increase the federal minimum wage to $10.10 by 2016.

Inspired to consider taking action but seeking input from members, Re>Think Local recently surveyed its members for their take. Survey results here.

References and Further Resources

 

About Matt Jones

Community Outreach & Programs Director, Re>Think Local. Matt moved to the Hudson Valley in 2014, after being drawn to the unique sense of community and place, and has since put down roots in Kingston. Prior, Matt worked in New York City at the Jazz Foundation of America, The Cooper Union, and Brooklyn Community Housing and Services, in events and development. These positions gave Matt experience in fundraising, donor management and analysis, program management, website management, event management, volunteer coordination, and community building. Matt is also a songwriter, science-fiction short story writer, daily meditator, and a movie lover.
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