Working for Change

8-25-06, 11:00 am

Five dollars and fifteen cents, the federal minimum wage (FMW), doesn’t buy much these days. With $5.15 you can almost buy two gallons of gas, almost go to the movies, or almost buy two burgers and a soda – at McDonald’s. Yet, millions of Americans live off of $5.15 an hour.

In real dollars, $5.15 an hour translates into a little over $200 a week, around $10,700 a year. Forget about health care, vacation time, sick leave, retirement, or job security; minimum wage jobs rarely offer these kinds of benefits. And to make matters worse, according to a 2002 Economic Policy Institute (EPI) report, the federal minimum wage has “lost 10 percent of its buying power” since 1997, the last time it was raised. Undoubtedly, the federal minimum’s buying power has decreased even more since 2002.

With the mid-term elections just around the corner, it is more important than ever that working- class families understand the role that the federal minimum wage can play in shifting the political balance of forces away from the ultra-right and their big business partners. Clearly, they still hope to frame the ideological debate, divide the working class and win big this fall. But trade unions, community groups, religious organizations and others are fighting back. They are pre empting the ideological debate, forging working-class unity, especially with communities of color, and using the minimum wage as a spring board to mobilize progressive voters this fall.

The Minimum Wage Debate

The federal minimum wage, established in 1938 during the Roosevelt administration, created what economists call a “wage floor,” a minimum which wages are not allowed to fall below, and ever since then the FMW has been under attack.

Right-wing organizations, like the Heritage Foundation, claim that increasing the minimum wage will increase unemployment, drive business out of communities and raise prices on service sector goods while decreasing quality. They say minimum wage increases do nothing to eliminate poverty and actually add to, rather than help fix, the historic wage gaps between people of color, women and white men.

While the Heritage Foundation day-dreams about the free market and its invisible hand basking in the ideological light of supply and demand, others offer a more objective analysis and lay often repeated claims to rest. Does increasing the minimum wage increase unemployment, drive business out of communities, or raise prices on service sector goods? Does it address the issues of poverty and race/gender equality?

Increase Unemployment?

According to a 1998 EPI study, “following the most recent increase in the minimum wage 1996-97, the low-wage labor market performed better than it had in decades...” Employers absorbed the increased labor costs through higher productivity, lower recruitment and training costs, decreased absenteeism, and increased morale. According to the report, no “systematic, significant job loss” was found. And in states where the minimum wage has been raised above the federal minimum (17 states and the District of Columbia have higher minimum wages) no significant job loss has been recorded.

Drive Business Out?

Most low-wage jobs are in the service sector: retail, restaurant and custodial, among others. Though many of us secretly (or not-so-secretly) wish that the Gap, McDonald’s and others would be driven out, higher wages aren’t a silver bullet. Oregon’s $7.50 minimum wage hasn’t driven the Gap or McDonald’s away. There are still fast food chains in Vermont, where the minimum is $7.25. An increase in the minimum wage won’t drive service sector business away simply because consumers don’t shop for service sector goods in other states. A resident of Illinois (where the minimum wage is $6.50) isn’t going to drive to Missouri (where the minimum wage is $5.15) for their movies, burgers and clothes. They are not going to save any money. Service sector price differences between Illinois and Missouri have more to do with taxes, geographic location and general education level of the workforce than with minimum wage differences. The same holds true throughout the country.

Increase Poverty?

An estimated 7.3 million workers (5.8 percent of the workforce) would receive an increase in their hourly wages if the federal minimum wage was increased to $7.25 an hour, which was Senator Ted Kennedy’s proposal (these numbers do not reflect those states where the minimum wage is at or above $7.25). Due to the “spillover effects,” 8.2 million workers (6.5 percent of the workforce) that earn around a dollar more than the minimum would also likely benefit from an increase.

According to the Heritage Foundation “only 2 percent of American workers make the minimum wage, but 5 percent of the workforce is unemployed.” “Which group needs the most help,” they ask? According to this logic – the logic of supply and demand – demand for low-wage workers would increase in proportion to a decrease in the minimum wage i.e., employers are willing to employ more people at lower wages and the unemployment rate would shrink.

However, the Heritage Foundation conveniently ignores a central component of business management. Most service sector jobs, and many others for that matter, only need a specific number of people to do specific types of jobs – and they know what that number is. McDonald’s only needs so many people to flip burgers, cook fries or work the counter during the lunch rush. The Gap only needs so many people to sale and stock clothes during Christmas. Businesses have made this into a science. Starting with Henry Ford and Taylorism, businesses have learned to break job functions down to the lowest denominator and mathematically equate the desired person-power + time for completion. Once a hiring threshold has been met, no more workers no matter how poorly paid are needed.

In reality, the Heritage Foundation’s argument is nothing more than a clever divide and conquer strategy. Pit unemployed workers against low-wage workers and watch both groups fight for the scraps. Minimum wage increases don’t increase poverty, they lift millions of people up and enable them to pay rent, buy groceries, and maybe even save a little.

Race/Gender Equality?

Contrary to right-wing myth, people of color and women are the largest group of beneficiaries from a minimum wage increase. Over 60 percent of workers who would benefit from an increase to $7.25 are women. An estimated 7.3 percent of all working women would benefit directly. African Americans represent over 11 percent of the total workforce, but over 15 percent of African Americans would be affected by an increase. Over 13 percent of the workforce is Hispanic, but over 19 percent of workers affected by an increase would be Hispanic.

Working families in the bottom 20 percent income bracket receive around 5 percent of the national income. Over 38 percent of the benefits of a minimum wage increase would go to these workers. A minimum wage increase would help break down institutionalized racism and help level the playing field for all working-class families.

Today’s Fight

In 1938 the FMW was $.25 per hour, or $3.55 in 2005 dollars. The FMW had its highest purchasing value in 1968 when it was $1.60 per hour, or $9.12 in 2005 dollars. If the FMW had kept pace with inflation it would be $8.70 today, instead of $5.15.

Though no one expects the FMW to be increased any time soon (at least not until after the 2008 presidential elections), trade unions, community groups, religious organizations and businesses are fighting for and winning statewide minimum wage increases. Missouri is a perfect example of how grassroots organizations are building support for increasing the minimum wage while mobilizing voters to turnout for the mid-term elections.

In Missouri, progressive forces like the Service Employees International Union (SEIU), Acorn, MO-Progressive Vote Coalition, and Jobs with Justice, among others formed the Give Missourians a Raise Coalition, which funded and organized a minimum wage ballot initiative. They hoped to increase MO’s minimum wage from $5.15 to $6.50 and index it to inflation.

In order to get the minimum wage increase on the November ballot the coalition had to submit 93,000 valid registered voters signatures to the secretary of state by May 9. Not an easy task! And to make things even more difficult, the coalition didn’t officially start collecting signatures until April 1. In only five weeks the coalition had to organize and sustain a statewide campaign, hire staff to coordinate, lead teams and walk turf, mobilize hundreds of volunteers, and combat right-wing attempts to confuse and distract voters (potential petition signers) from the real issue.

The coalition also had to connect their campaign to the mid-term elections. Prior to the campaign, the Democratic base had only one motivation for turning out this fall: the US Senate race between Claire McCaskill and Jim Talent. Give Missourians a Raise knew that the minimum wage ballot initiative would give Democratic voters another reason to vote this fall, and that, if they voted, they would likely vote down the Democratic Party line and help McCaskill beat Talent.

According to a survey conducted by Garin-Hart-Yang, 79 percent of respondents were in favor of a minimum wage increase. The survey also found that the initiative appealed most to Democratic subgroups: 93 percent of African Americans; 91 percent of Democrats; 90 percent of McCaskill supporters; 89 percent of non-college-educated women; and 89 percent of union households supported the initiative. The survey also found that the initiative was extremely popular with voters not identified as Democratic: 86 percent of the undecided (Senate race); 80 percent of independents; and 79 percent of rural voters supported the initiative.

Coalition partners found that the minimum wage initiative would help McCaskill improve close to 3 percent on Talent. If working-class voters turned-out for the minimum wage increase they could make the difference between a pro-choice, pro-labor, pro-health care Democrat and an anti-choice, anti-labor, anti-health care Republican.

In five weeks the coalition collected over 210,000 signatures and delivered them to the secretary of state on May 9.

It is estimated that over 42,000 Missourians work for the current minimum wage. According to the coalition, the new minimum wage, if voted in this November, will generate between $3.3 million and $4.3 million each year in state revenue and would pump over $21 million in new spending into the economy.


While we won’t know for sure until November, it seems very likely that Missouri’s minimum wage workers will get a much needed $1.35 raise. And, if the minimum wage campaign bumps-up the McCaskill vote 2-3 percent, we will have a center-left Democrat in the Senate instead of an ultra-right Republican.

Statewide minimum wage ballot initiatives are strategically important for another reason as well; besides mobilizing the vote on a statewide level and laying the groundwork for a federal minimum wage increase, minimum wage ballot initiatives also raise the issue of wealth redistribution. The redistribution of wealth is central to the movement for a more egalitarian, more humane, socialist society. And while some may argue that raising the minimum wage is a small victory, most people, especially working-class families making minimum wage, see an increase in the minimum wage as a huge step in the right direction. Besides, if we can’t take small steps together, how are we ever going to take big steps together.

--Tony Pecinovsky lives in St. Louis and is on staff at the Communist Party of Missouri/Kansas.