The Concord (N.H.) Monitor, Feb. 28, 2013
President Obama has proposed raising the federal minimum wage to $9 per hour and indexing it for inflation. In New Hampshire, lawmakers will consider three bills raising the minimum wage, one to $8 per hour, one to $8.25, and one to $9.25. That last, most generous, proposal would be about 40 cents less per hour than a single person would have to earn to afford food, clothing and shelter in New Hampshire, according to a Massachusetts Institute of Technology study.
Passage of the president’s proposal would render the first two New Hampshire proposals moot. Though at first glance its chances for passage might seem remote, 2014 is an election year, one that will determine whether Republicans keep or lose control of the House of Representatives. Voting against an increase in the minimum wage at a time when the gap between the truly wealthy and everyone else is at robber baron levels might be politically dangerous enough to overcome Republican intransigence. But in case Obama’s proposal doesn’t pass, the Legislature should act to raise the state’s minimum wage.
To be equal in purchasing power to its value in the 1960s, the minimum wage would have to be $9.40 per hour. Despite that, of the three bills before lawmakers, the one calling for the minimum wage to increase by the smallest amount, from $7.25 to $8 per hour, strikes us as the best choice for two reasons. First, as the smallest increase, it has the best chance of passage. Second, the bill calls for indexing the minimum wage for inflation, which would prevent its limited purchasing power from shrinking every year.
We urge New Hampshire’s congressional delegation, including small-business owner Sen. Kelly Ayotte, to support both an increase in the federal minimum wage and the indexing of it for inflation. That would help insulate the minimum wage from a political battle that for decades low-wage workers have usually lost.
The productivity of America’s workforce has never been higher, yet most low- and middle-income wage earners continue to fall behind. A single person who works full-time at the minimum wage doesn’t earn enough to pay for the necessities of an independent life. That’s a disincentive to work in a society that is at its strongest when everyone who can work does.
The tired old warning that increasing the minimum wage will kill jobs has failed to prove true time and time again. Some job losses occur, but the effect is short-lived and minimal because when people at the bottom of the economic ladder get a raise, they spend it. Consider what happens when the minimum wage goes up. The owner of an ice cream stand may have to pay some employees a bit more and be tempted to hire fewer people. But that impact tends to be countered because, thanks to an increase in the minimum wage, more people find that buying an ice cream cone is no longer a treat beyond their reach. Business picks up and, to keep up, the low-wage employer has to hire.
Raising the minimum wage, ideally at the federal level, and indexing it for inflation may not be the most effective way to shrink the income gap and improve the lot of low-wage workers. A combination of higher pay plus tax credits would be more effective, but it’s a long overdue measure that would improve life for millions of people and improve, rather than harm, the economy.