As part of the Obama administration’s push to raise the minimum wage to $9 by the end of 2015, Acting Labor Secretary Seth Harris stopped in Milwaukee last week to hear the stories of low-wage workers who, despite working full time, cannot earn enough to support themselves or their families.
The current minimum wage is $7.25, or about $15,000 annually, just over the federal poverty line for an individual and below the poverty line for those who are the head of a household. Raising the minimum wage to $9 an hour would boost a worker’s salary to roughly $18,000, depending on the number of hours worked annually.
Last Wednesday, Harris heard stories from those who are earning the minimum wage or slightly more and having a hard time getting by.
“I wish I could live paycheck to paycheck,” said Timothy Durley, who makes $8 an hour as a full-time manager and can’t pay all of his bills on his wages.
The working Milwaukeeans told stories of going years without a raise, borrowing from relatives and friends, doing without health insurance, skipping meals, walking to work and not paying every bill each month. Even worse, these struggling workers were putting in so many hours just to pay the bills that they weren’t able to care for their families or further their education.
Jameeca Cohee earns $8.50 an hour as a home health aide who struggles to support her three children in a neighborhood where gunshots are a regular occurrence.
“I clean, I cook, I do everything for these people,” Cohee said of her clients. “I go grocery shopping. And I look at what I do for them that I can’t do for my own. It hurts me because I know I’m worth more. And I know that the job that I love doing, I’m not getting paid enough to do it.”
Another component of Obama’s plan is to tie the minimum wage to increases in the cost of living so that workers can keep up with the rising cost of necessities. It’s an idea supported by the workers who spoke to Harris last week.
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“I just feel like when prices go up outside of your home then your wages should go up to compensate,” Durley said.
Harris said it’s as if the low-wage workers he’s spoken to had earned Ph.D.s in math, since they are able to calculate their wages and expenses so precisely.
A good example of a math whiz is Marvin Jones, a married father who earns $7.25 an hour—the minimum wage—at McDonalds. He said he takes home $800 a month and receives $200 in FoodShare benefits. But Jones said he pays $500 in rent, $200 on bills and $40 on bus tickets. The $60 he has left at the end of the month goes toward food, since FoodShare isn’t enough to cover four weeks of groceries. He said he walks to work and eats at McDonalds in the final week of the month because he can’t afford food or transportation until the next pay period.
“Where do I get ahead in this situation?” Jones said. “You won’t find anyone more dedicated [at work], cleaning the toilet like I do because I need the hours.”
After the listening session, Jones laughed when the Shepherd asked him if he had health insurance.
“Are you kidding?” he said.
Boosting Productivity and Profits
Milwaukee is just one stop on Harris’ listening tour to drum up support for Obama’s minimum wage proposal and refute arguments against it.
Marc Levine, senior fellow at the Center for Economic Development at the University of Wisconsin-Milwaukee, argued that the overall effects of a higher minimum wage would help to raise the living standards of low-wage workers without hindering job creation.
“Research shows that the minimum wage will have a modest positive impact on incomes at the bottom of the distribution, particularly in conjunction with the Earned Income Tax Credit,” Levine told the Shepherd. “The prime argument used against the minimum wage—that it will discourage small businesses from hiring—has been refuted by decades of research.”
The White House has released a fact sheet showing that 60% of minimum wage workers are women, while 20% are teens. Minimum wage workers earn about half of their family income, so their paychecks are crucial to supporting a household and paying the bills. The Obama administration argues that its proposal would boost wages for about 15 million workers nationally and would restore the actual purchasing power of the minimum wage to the level it was at when Ronald Reagan took office in 1981.
Harris stressed the need for a higher minimum wage to strengthen the economy, since low-income workers are more likely to spend all of their wages each month in local businesses. In contrast, those earning higher wages are more likely to save their extra earnings, which does little to stimulate the local economy.
After his talk, Harris told the Shepherd that the vast majority of low-wage workers are employed by large, multinational corporations whose profits wouldn’t take a hit if they paid their workers a little bit more.
And he said some of those major retail and fast-food companies—such as Costco and Starbucks—have endorsed the president’s proposal because the company benefits when workers are paid a living wage.
“You get more productivity, you get lower turnover, you get higher morale, and all of those things add up to more productivity,” Harris told the Shepherd. “And more productive workers means a higher profit margin. [These employers] take a high-road strategy and the result is better for them than a low-road strategy of exploiting your workers, paying them too little and making them rely on family and rely on the community and rely on the taxpayers to get by.”
Job Creation Lags and Wages Shrink Under Walker
Harris told the Shepherd that it’s important to raise the minimum wage at the federal level so that states don’t compete against each other for low-wage workers and undercut their job growth. He encouraged Shepherd readers to contact their representatives in Washington to ask them to support legislation raising the minimum wage.
That said, Wisconsin Democrats have introduced a bill to raise the state’s minimum wage 35 cents to $7.60 per hour—still less than Illinois’ $8.25 hourly minimum wage and far less than Obama’s proposed $9—and then index it to inflation. The bill’s supporters argue it would raise the wages of an estimated 300,000 Wisconsin workers.
“You have to try to make sure that people can earn a decent wage for their efforts,” said state Sen. Bob Wirch (D-Kenosha), one of the bill’s authors. “I always say the best social program is a job, and we have to make sure that the jobs pay. The stock market is at record levels right now, corporate profits are way up, and the one group that’s lagging behind is workers. I think it’s an equity issue and we have to make sure that people get paid.”
According to 2011 data compiled by the Center on Wisconsin Strategy (COWS), more than 20% of Wisconsin workers held a poverty-wage job, making under $10.97 an hour.
Wirch said raising the minimum wage would boost the state’s economy, which is flat-lining under Gov. Scott Walker’s leadership. Last Thursday, the latest job figures revealed that Walker’s Wisconsin fell to 44th in job growth among the 50 states and the lowest rate of job growth in the Midwest.
Making matters worse, wages are falling in Wisconsin, according to new data released by the U.S. Bureau of Labor. Statewide, wages fell 2.65% to an average of $770 weekly in the third quarter of 2012. Wisconsin is now 35th in the nation in terms of wages, when it had been 33rd a year prior.
“We’ve tried trickle-down economics and it hasn’t worked,” Wirch said. “So let’s help low-wage people who will boost the economy. Our problem in this economy is slow growth because there’s not enough demand simply because people don’t have enough money. If you put more money in their pockets through the minimum wage, they’re going to spend more. And that’s going to help the economy.”
