Photo credit Flickr
By Colleen Mertes
On April 15, there will be demonstrations for fight for $15, to support raising the Federal minimum wage in the United States to $15 per hour, from a measly $7.25. But I will not be for $15 on the 15th.
I fully support raising the minimum wage above $7.25 to $9.00, $10.00, or even $11.00. Currently the federal minimum wage, when you account for inflation, is near levels of the 1960s. It has been falling behind inflation when the cost of living is rising as well as worker productivity. So yes, we should raise it. As many states already have.
Comparing globally is a tricky path. Overall, the US is lacking in comparison to most other developed nations, but a slight raise could boost the country significantly. Australia has a minimum wage of about $15.00. But when evaluating the purchasing power parity, it works out to $9.54. We must take into account that the cost of living is higher in Australia. Melbourne, one of the most populous cities, is about 36 percent more expensive than New York City. Same as in Paris, which is 28 percent more expensive than NYC, and has a minimum wage that works out to be $10.02.
Whereas in Australia and Canada (where the wage is $8.04) they have nationalized healthcare, the people working in the US have to pay for their own medical care. This is a valid reason for raising the minimum wage, but to more than double the wage is not the answer.
Let’s look at an example of the $15.00 wage: Seattle, on April 1st, made it mandatory that businesses had to begin to phase in wage increases. Small businesses have 7 years to work up to the $15.00 wage and large businesses of 500 or more employees have only 3 years. In the previous year, 2013-14, Seattle had a decrease in unemployment, from 6.3 percent to 5.2 percent. However, the nation also experienced this with a drop from 6.6 percent to 5.6 percent.
More significant is the increasing restaurant closure Seattle is experiencing, which started in the lead up to April 1st. Owners are concerned on how they make up the extra funds required now for labor. They will have to get it from somewhere, money for wages doesn’t just fall from the sky. This means higher prices on menus, using cheaper and lesser quality of ingredients, having to reduce open hours as well as reducing the labor. Restaurants closing as well as reduction of hours and labor means that instead of leaping from $7.25 an hour to $15.00, some of the people we were trying to help fell to $0.00 per hour.
Washington Restaurant Association’s Anthony Anton said “It’s not a political problem; it’s a math problem.” In Seattle Magazine, he estimated a budget breakdown among sustaining Seattle restaurants as this: 36 percent of funds go towards labor, 30 percent to food costs and 30 percent to operational cost, leaving a 4 percent profit. By that budget, a $700,000 restaurant would make the Restaurateur $28,000 a year.
Paul Krugman, American economist and Op-Ed columnist at The New York Times, advocated back in 2013 for an increase to $9.00. He said that it is Economics 101 to be weary of attempts to legislate market outcomes and that nearly every economist, even liberal ones, would agree that $20.00 is too high. A modest increase, he proposed, would help and not hurt.
Instead of Fight for $15 on the 15th, how about $10 on the 10th?