Minimum Wage: Is $9 per Hour Sufficient?

President Obama suggested increasing the minimum wage to $9 an hour. There is no guarantee that the Congress will approve this request once it is officially made by the White House. The US minimum wage was $1.60 in 1968 while it is currently $7.25 , almost five times as much. So why is president Obama and so many others concerned about raising it some more? I am sure that all of you realize that what counts is not the nominal wage but the real one. This simply means that the $1.60 of 1968 is equivalent to $10.53 in 2012 dollars. So as you can see the minimum wage in the US has been declining over the years instead of either increasing or ,at a minimum, maintain its purchasing power. The following is a short article by Ralph Nader that speaks to the issue of minimum wage and where it should be.

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Published on Saturday, February 16, 2013 by 

Nine Bucks an Hour? A Call for a Living Wage at $10.50 or More

by Ralph Nader

How could Barack Obama say, in his State of the Union speech, “let’s declare that in the wealthiest nation on earth no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour”?
Back in 2008, Obama campaigned to have a $9.50 per hour minimum wage by 2011. Now he’s settling for $9.00 by 2015! Going backward into the future is the price that poverty groups and labor unions are paying by giving Mr. Obama a free ride last year on this moral imperative. How can leaders of poverty groups and unions accept this back-of-the-hand response to the plight of thirty million workers who make less today than what workers made 45 years ago in 1968, inflation adjusted?
But, of course, the poverty groups and labor unions chose not to mobilize some of the thirty million workers who grow our food, serve, clean up and fix things for us to push for a meaningful increase in the minimum wage before Election Day.
It gets worse. The Obama White House demanded “message discipline” by all Democratic candidates. That meant if Obama wasn’t talking about raising the minimum wage to catch up with 1968, none of the other federal candidates for Congress should embarrass the President by speaking out, including Elizabeth Warren, of all people, who was running for the U.S. Senate from Massachusetts.
Catching up with a 1968 federal minimum wage of $10.50, inflation adjusted, should be a winnable goal this year. Once the media starts regularly reporting on the human consequences of unlivable wages, and once the entry of more and more of the thirty million workers to marches, rallies and town meetings grows, neither the Republicans nor the Blue Dog Democrats will be able to stop this drive.
It didn’t matter that the U.S. had the lowest minimum wage of any major western country (Australia is over $15, France over $11, and the province of Ontario in Canada is $10.25 – all of these countries also have health insurance for all).
It didn’t matter that several cities and 19 states plus the District of Columbia have higher minimums, though the highest – Washington state – reaches only to $9.19.
It didn’t matter that two-thirds of low-wage workers in our country work for large corporations such as Walmart and McDonald’s, whose top CEOs make an average of $10 million a year plus benefits. Nor did it matter that these corporations that operate in Western Europe, like Walmart, are required to pay workers there much more than they are paying Americans in the United States where these companies got their start.
Haven’t you noticed how few workers there are in the “big box” chain stores compared to years ago? Well, one Walmart worker today does the work of two Walmart workers in 1968. That is called a doubling of worker productivity. Yet, many of today’s Walmart workers, earning less than $10.50 an hour, and are making significantly less than their counterparts made in 1968.
Nobel-Prize-winning economist Joseph Stiglitz, told me that minimum wage policy relates intimately to child poverty. Single moms with children on a shrinking real minimum wage “translates to child poverty” and is “creating another generation” of impoverished people.
The arguments for a higher minimum wage, at least to reach the level of 1968, are moral, political and economic. James Downie writing in The Washington Post provided five reasons to raise the minimum wage: “1) it will help the economy; 2) it reduces poverty and inequality; 3) it reduces the ‘wage gap’ for women and minorities; 4) indexing the minimum wage is, well, common sense; and 5) it’s consistent with American values.”
Downie gives historical perspective on just how far our economic expectations have slid when he quotes Theodore Roosevelt at the 1912 Progressive Party convention:
“We stand for a living wage…enough to secure the elements of a normal standard of living – a standard high enough to make morality possible, to provide for education and recreation, to care for immature members of the family, to maintain the family during periods of sickness, and to permit a reasonable saving for our old age.”
In the ensuing 100 years, worker productivity has increased about twentyfold. Why then are not most workers sharing in the economic benefits of this productivity? With other worker advocates, we chose to demonstrate on Feb. 12, 2013 before the headquarters of the U.S. Chamber of Commerce whose business coalition opposes increases in the minimum wage while its members report record profits and boss pay. And before the headquarters of the large labor federation – the AFL-CIO – we urged well-paid union leaders to devote more of their power and resources on Congress and the White House to lift up the minimum wage for those they like to call their “brothers and sisters,” from the ranks of the working poor.
The last time – 2007 – a higher minimum wage law was passed under the prodding of the late Senator Edward Kennedy, nearly 1,000 business owners and executives, including Costco CEO Jim Sinegal, the U.S. Women’s Chamber of Commerce CEO Margot Dorfman (two thirds of low-income workers are women), and small business owners from all 50 states signed a “Business for a Fair Minimum Wage” statement.
It read: “[H]igher wages benefit business by increasing consumer purchasing power, reducing costly employee turnover, raising productivity, and improving product quality, customer satisfaction and company reputation.”
Listen to those words, Walmart! You badly need to improve your reputation, given your recent major missteps.
Catching up with a 1968 federal minimum wage of $10.50, inflation adjusted, should be a winnable goal this year. Once the media starts regularly reporting on the human consequences of unlivable wages, and once the entry of more and more of the thirty million workers to marches, rallies and town meetings grows, neither the Republicans nor the Blue Dog Democrats will be able to stop this drive. Congressional districts all have many such workers in their districts and polls show 70 percent popular support for raising the minimum wage. That includes millions of workers who call themselves conservatives.
The April Congressional recess – the first two weeks of the month – will be the first opportunity to show up where it counts – at the town meetings held by senators and representatives back home. Filling those seats usually requires two to three hundred local voters. If workers rally, by the time the lawmakers go back to Congress, they’ll have a strong wind to their back to face down the lobbies for greed and power, who have money, but don’t have votes.
Check out our website timeforaraise.org and join this long overdue initiative.

Ralph Nader is a consumer advocate, lawyer, and author. His latest book is The Seventeen Solutions: Bold Ideas for Our American Future. Other recent books include, The Seventeen Traditions: Lessons from an American Childhood, Getting Steamed to Overcome Corporatism: Build It Together to Win, and "Only The Super-Rich Can Save Us" (a novel).

CBO on the deficit

The last report by the Congressional Budget Office is a positive welcome development. It might even act as a force for the two parties to arrive at a "grand bargain". The following is from the US News.

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CBO Paints Rosier Economic Picture for 2013

Budget estimators predict better growth, lower debt

By Danielle Kurtzleben

February 5, 2013

Congressional Budget Office Director Douglas Elmendorf gestures as he speaks during a news conference about the office's annual Budget and Economic Outlook at the Ford House Office Building on Feb. 5, 2013.

For the first time in five years, the government is projected to have a deficit below $1 trillion, the Congressional Budget Office reported on Tuesday.
But as with the last CBO estimate of the nation's budgetary and economic outlook, estimates could shift depending on what Congress does with spending and the economy.
The report estimates that under current law the fiscal year 2013 deficit will come in at $845 billion, or around 5.3 percent of GDP. That's about half of where the deficit was in 2009. But CBO adds that debt as a share of economic output would remain at "historically high" levels—around $12.2 trillion, or 76 percent of GDP at the end of fiscal year 2013. That's the highest share of GDP that the national debt will have been since 1950, according to the CBO.

As for the broader economy, the office has sharply improved its outlook. In August 2012, the CBO predicted that the U.S. economy would shrink by 0.5 percent in 2013, with unemployment hitting 9.1 percent at the end of the year. Now, the office projects growth of 1.4 percent this year, with unemployment at 8.0 percent at the end of the year.
Though better than previous estimates, CBO's predictions still represent a bleak outlook. If the economy only grows by 1.4 percent in 2013, that's a slowdown from around 1.9 percent in 2012. And if unemployment remains above 7 percent through 2014, as the office projects, it will be 6th consecutive year with the jobless rate above 7 percent. That will make it the longest period of sustained high unemployment 70 years, the CBO says.
CBO's director Doug Elmendorf told reporters at a Tuesday press briefing that full economic recovery could be a long time in coming.
"We expect output to remain below its potential level until 2017, almost a decade after the recession started in 2007," he said.


Still, all of these estimates are contingent upon what Congress does in the coming months. The sharply positive revisions are due in large part to Congress veering away from the so-called "fiscal cliff"—stopping tax hikes for most Americans and putting off until March across-the-board budget cuts totalling $1.2 trillion over 10 years.
Often criticized by congressional Republicans who say the CBO too often skews its findings to support Obama administration policies, its latest report argues that all of the projections are conditional upon what Congress decides to do about sequestration.
If lawmakers allow across-the-board cuts to medicare, defense and other discretionary spending—or if they fail to enact a long-term debt ceiling agreement or maintain government funding—CBO would likely have to revise down its estimated economic outlook, officials say.

Job Discrimination?

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Although the Great Recession ended in 2009 the number of unemployed is still very high. As many of you know, there are many different metrics for measuring unemployment the most popular of which says that the US has currently a 7.9% unemployment rate.  That is estimated to be over 10 million people. To understand the significance of the above numbers one must keep in mind that the labour force in the US is currently estimated to grow at over 1 million every year i.e about 100,000 new jobs a year. At the present rate of creating 150,000 then it would take a long long time to make significant cuts into that reserve of unemployed. Sadly the African American population carries an unemployment burden that is far larger than its proportion in the population.

Scholars sketch bleak economic picture for black Americans

By Michael A. Fletcher, Published: February 1

Scholars gathered for the African American Economic Summit at Howard University on Friday sketched an alarming picture of the financial ills afflicting the black community even as the nation recovers from the recession.
The white-black wealth disparity is more than 20 to 1. Black homeownership has declined. Black joblessness is up. Black income is down.
As the conferees gathered, the government released new figures showing the black unemployment rate at 13.8 percent, nearly double the 7.0 percent for whites. The overall jobless rate is 7.9 percent.
As bleak as the economic picture is for black Americans, the immediate prospects for improving it are worse, many participants said. They agreed that chances are remote for the kind of aggressive, targeted action needed to combat those problems and close the economic disparities that have long separated blacks and whites.
“We are basically talking about an economic system that is shot through with discrimination,” said Bernard E. Anderson, a former assistant secretary of labor.
Despite that, Anderson and others said, President Obama seems reluctant to attack economic disparities between blacks and whites head-on.
Anderson said that Obama’s second inaugural address was notable for lifting up gay rights, sounding the call for immigration reform and signaling his determination for women to receive equal pay in the workplace. “But there was not a single, blessed word on race,” he said.
Anderson said that he has met with Obama’s economic advisers in years past, but did not get the sense that they were interested in any racially targeted economic remedies. “He does not want to be labeled a president who is consumed by racial inequality in this country,” Anderson said.
Others at the conference said that Obama took office during the worst downturn since the Great Depression and had his hands full forging policies to keep the economy from a full meltdown.
Meanwhile, administration officials have pointed out that the president’s policies have led to 35 consecutive months of private-sector job growth and more than 6 million new jobs. They also note that the president’s work to expand Pell Grants and extend the earned-income and child tax credits have helped millions of African Americans.
Nonetheless, conferees said that more needs to be done to close the racial disparities that have long been a feature of the nation’s economic life.
During the depths of the crisis, Obama often said he wanted to build a better, more durable economy in the recovery. Conference participants said they are challenging him to live up to his word.
“We would all like to see him pursue that course,” said Ralph B. Everette, president and chief executive of the Joint Center for Political and Economic Studies, which co-sponsored the event.
Several scholars offered far-reaching, if politically unlikely, policy prescriptions.
Duke University professor William A. Darity Jr. said policymakers should pursue a large-scale public jobs program to dramatically lower unemployment. Darrick Hamilton, an economist at the New School, said the government should divert some of the money used to fund the income-tax deduction for mortgage interest to fund “baby bonds” that would provide $15,000 for disadvantaged newborns of any race to invest later in higher education, a business or a home.
The remedies need to be bold because “racial disparities are persistent and they are ubiquitous,” said Enrique A. Lopezlira, a lecturer at Howard. “It is hard to explain in a context that does not include some sort of institutional racism going on.”