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Nathan Newman on May 26, 2006 - 5:52am
Back in 1968, the federal minimum wage was $1.60 per hour-- or if adjusted for inflation -- $9.16 per hour. Yes-- almost forty years ago, the minimum acceptable wage in this country was over $9 per hour. But the federal minimum wage has been allowed to collapse down to just $5.15 per hour. Luckily, states have been working to restore a real minimum wage and the Massachusetts Senate just voted to raise the state minimum wage to $8.25, what would become the highest state minimum wage in the country. And the bill would index the minimum wage to inflation to prevent the slow erosion of its value by rising prices. The state House still needs to approve a parallel measure Critics want to argue that the minimum wage would make the state less competive, but they can cite little evidence for their arguments. In fact, a 2006 Fiscal Policy Institute report found:
Between 1998 and 2003, the number of small businesses across the economy with fewer than 50 employees grew by 5.4% from 1998 to 2003 in states with a minimum above the federal level, compared to a 4.2% increase for the balance of the states.
In the higher minimum wage states as a group, small businesses had faster job growth (6.7% vs. 5.3% for the other 40 states combined); total annual payroll grew more (24.5% vs. 21.2%); and average payroll per worker increased by 16.7%, a greater increase than the 15.1% increase for the 40 states observing the federal minimum wage.
And in a recent Gallup Small Business Poll, small business owners generally see a higher minimum as a good thing: forty-six percent of small-business owners say they believe the minimum wage should be increased, far more than support the present wage level. Businesses paying a reasonable wage face unfair competition from irresponsible employers who compete not through innovation or good customer service but by exploiting their employees.
So Massachusetts can move towards setting a new standard in restoring the value of the minimum wage in our economy and rewarding good employers by forcing their low road competitors to pay a livable wage.