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Tim Judson on February 10, 2011 - 12:32pm
Ask voters in any state what single issue concerns them the most, and the answer is likely to be the same: the economy and jobs. More than two years removed from a crisis that caused the greatest economic downturn in generations, Americans with a job still feel as vulnerable as ever, while those out of work through no fault of their own worry every day about finding an increasingly scarce commodity: a good job that will allow them to provide for their families.
Pair this with a tide of conservative victories on Election Day 2010, and American workers face evermore insecurity in their jobs as an all-out assault on workers’ rights in state legislatures across the nation ensues in 2011. But while conservatives view this moment as an opportunity to roll back labor standards that people fought and died for decades to establish, progressives know that now is the time we must do exactly the opposite.
At this historic moment, advancing measures that promise true job security -- protections that will stabilize the economic security of families, put more money in consumers’ pockets, and allow state economies to grow -- must be an essential priority for progressives in states across the nation.
While the electoral math may have made it more difficult to advance legislation to defend workers’ rights in many states, defending against anti-labor measures will not be enough to counter the Right. As conservatives shout misleading claims that their anti-worker proposals will inspire business confidence and economic growth, progressives must reveal these measures for what they are -- ideologically-inspired attacks that will lead to more job losses.
But to win back the hearts and minds of the nation, we must also demonstrate that we have better ideas for how true job security can ensure the economic security of the vast middle-class and working-class majority in this nation ,who have so far been left out of the economic recovery.
In fact, history shows that advancements in workers’ rights were a major factor in America’s recovery from the Great Depression, providing economic security for working families and making progress towards fulfilling the promise that everyone who is willing to work has the means to support their family. Progressives can continue this tradition by forcefully advocating for the job security policies outlined in Progressive States Network’s 2011 Blueprint for Economic Security:Paid Sick Days so that no worker risks losing a job just because they or a family member gets sick, cracking down on Wage Theft by unscrupulous employers stealing billions of dollars from hard-working Americans, and Restoring the Minimum Wage to ensure that no one who works full-time has to live in poverty.
Despite the onslaught of anti-worker measures in many states, strong legislation to advance workers' rights will also have its day in 2011, building upon what already exists in some states across the country. In fact, Connecticut is poised to make history by enacting the first state-wide Paid Sick Days law. Massachusetts will also move a strong Paid Sick Days bill, which has the support of the Governor and majorities in both chambers. Oregon has introduced a package of bills to strengthen Wage Law Enforcement. Maryland and Illinois are both advancing ambitious bills to Restore the Minimum Wage -- raising the wage to $10 per hour, and adjusting it annually for inflation. And California is advancing a bill to adjust the minimum wage annually for inflation.
Read below for much more on the policy solutions that progressive legislators and advocates across the nation are advancing in 2011 to ensure true job security for families -- and real economic security for states.
Paid Sick Days
There is no such thing as economic security when anyone can lose their job simply because they get sick. Yet that is precisely the case for millions of working families because we lack a basic labor standard for paid sick leave. Not having a paid sick days standard is devastating threat to people’s economic security when one in six people lose their job for taking sick time.
Our nation’s labor standards have failed to keep pace with changes in the workforce and no longer meet the needs of American families. Forty years ago a single wage-earner could support a whole household, today’s families depend on all adults working outside the home. And whereas one parent was usually available to take care of a sick child or take them to see a doctor, more and more such basic family duties involve an impossible choice between caring for a sick child and making ends meet.
In fact, because it is legal for employees to be fired for missing work when sick, many are denied unemployment insurance benefits but still face long-term joblessness. Just as we established other major labor standards in the 1930s to help lift us out of the Great Depression -- such as the minimum wage and the right to join a union -- we must take the opportunity now to improve the economic security and health of American workers.
The Solution: Paid Sick Days Model Legislation
This legislation would require employers to allow their employees to accrue paid sick leave time, at a minimum prescribed rate and capped at a specified level. Under model legislation, workers would accrue one (1) hour of paid sick leave time for every 30 hours of work, or up to nine (9) days per year. Employees must be able to use sick leave to care for their own health or that of a family member or domestic partner, including for ordinary medical appointments and preventative care. In addition, the “Safe Time” provision permits use of paid sick leave to seek assistance and relief for removing oneself from a domestic violence situation.
Download the model legislation and a guide for adapting it to your state.
Why It Matters
- 44 million working people in the United States (42%) lack access to a single day of paid sick leave.
- 77% of food service workers lack access to paid sick leave.
- 16% of workers (1 of every 6) report having lost a job for missing work due to illness.
- 23% of American families have experienced job loss or discipline at work -- or been threatened with it -- for missing work due to illness.
- Workers without paid sick leave are 50% more likely to go to work while sick.
- Workers are 250% more likely to take a sick child or family member to the emergency room when they cannot schedule medical appointments during their normal work hours.
- Parents are 70% more likely to send a sick child to school when they lack access to paid sick leave.
A 2010 national study of Americans’ views on paid sick days shows that the there is unusually broad, bipartisan support for Paid Sick Days. The issue resonates deeply as a basic issue of fairness and equity, particularly because of its importance to families’ economic security. In fact, support for the policy is strongest for a universal standard applying to all workers and employers, and it decreases as compromises and carve-outs for certain businesses are built in. And candidates who support paid sick days enjoy a 41-point advantage over candidates who oppose the policy, even after hearing arguments on both sides.
The strength of public support for the policy, predicted by the polling, was demonstrated conclusively by its role in the Connecticut gubernatorial race last year. Newly elected Governor Dan Malloy used his strong support for paid sick days to distinguish himself from his opponents in both the primary and general elections and to illustrate his commitment to improving economic security for working families.
- 75% believe paid sick days are a basic workers’ right.
- 86% of Americans favor a law guaranteeing all workers 7 paid sick days per year. 69% strongly favor such a law.
- 80% feel that even small businesses should have to provide paid sick days.
- Support is strongly bipartisan, including 59% of “strong Republicans,” 77% of “Independents” and 78% of “Republicans Leaning Independent.” Upwards of 90% of all categories of Democrats support paid sick days.
- Support crosses every demographic: 88% of women, 64% of men, 75% of Hispanics, 77% of Whites, 90% of Blacks, 73% of those under 40 years, and over 80% of those over 40.
- By a 33-point margin (47% to 14%), more voters say they would favor a candidate who supports paid sick days.
- In message testing, even the weakest argument for paid sick days is more persuasive than the strongest argument against it.
Source: National Partnership for Women & Families
Messaging on paid sick days should emphasize the fundamental issues of job and economic security for working families, and the vital role that basic labor standards play in supporting economic recovery.
- “No one should lose their job because they get sick, yet without paid sick days that is happening to one out of every six American workers.”
- “No parent should have to choose between caring for their child and keeping a roof over their head, yet that is the reality for nearly a quarter of working families.”
- “Employers who do not provide paid sick days tend to be same employers that do not provide health insurance to their employees. The least those businesses can do is let their employees take care of their health without losing their paycheck.”
- “The cost of providing paid sick days is minimal and will not put anyone out of business. Our basic labor standards have never hurt the economy -- they are what built the middle class and lifted us out of the Great Depression. The erosion of workers’ rights is what made the economy unstable, and it’s time we built them back up.”
Countering the Opposition
There is plenty of ground on which to shed doubt on opponents of paid sick days when they “cry wolf” with predictions of doom and devastation if the law is enacted. In addition to job-loss claims, opponents have also argued that employees will abuse the policy, even though the number of days are capped and have to be accrued. And since the recession, they have argued that this is simply not the right time, despite the fact that workers need the security provided by paid sick days more than ever, and advances in labor standards have frequently been an important part of economic recovery since the Depression. Here are the facts:
- Opponents’ arguments to defeat Paid Sick Days have not stood up to scrutiny. In fact, business groups in San Francisco, which became the first place in the country to enact paid sick days in 2007, now say that their fears turned out to be unfounded and the issue is not a concern for local businesses. The city’s restaurant association says its predictions of employee abuse of the policy have not panned out, and in the end it has turned out to be “the best public policy for the lowest cost.”
- These views are supported by strong evidence that paid sick days has no negative impact on jobs or the economy. Studies show that San Francisco County’s job market outperformed all neighboring counties since its paid sick days law went into effect. Between 2006 and 2009, San Francisco experienced a net loss of jobs of only 3%. All surrounding counties had greater job loss rates, by at least 30%; on average, San Francisco’s job market outperformed its neighbors by 70%. These figures stand up in looking at industries where the policy has the greatest impact: employment rates in retail, hospitality, and food service all performed two to three times better in San Francisco.
- Providing paid sick days is good for business, and can even have a net positive economic impact on business performance. When employees have access to paid sick leave, they are healthier and more productive, they don’t infect their coworkers, and businesses experience lower rates of turnover. Decreasing turnover alone can help the bottom line for businesses, through avoiding the substantial costs in hiring, training, and lost productivity. Analyses of several states’ paid sick days bills reveal they would save businesses on the order of hundreds of millions of dollars per year, including $959 million in California, $73 million in Connecticut, $272 million in Illinois, $130 million in Massachusetts, and $111 million in North Carolina.
Going On The Offensive
Progressives can use paid sick days as an effective counter to calls to roll back labor standards and workers’ rights. We have seen these threats to workers’ rights in Wisconsin and Florida, where those governors have stated that public sector workers must sacrifice pay, benefits, pensions -- and even their right to join a union -- to “level the playing field” with private sector workers:
“We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots,” [Wisconsin Governor Scott] Walker, a Republican, said in a speech. “The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers.”
Advocating for paid sick days is a powerful platform from which to call out such proposals as regressive efforts to use public employees as straw men (and women) to accelerate a race to the bottom for all workers.
Addressing an Agenda of Economic Security through Paid Sick Days
In addition to directly improving job and economic security, Paid Sick Days has important implications for other economic security issues.
- Controlling health care costs: Workers who lack paid sick days often cannot access medical care (or preventative care) during normal business hours. For instance, they are twice as likely as people with paid sick days to seek medical attention in a hospital emergency room, and 2.6 times as likely to accompany a child or family member to the emergency room. Also, because it is harder for them to get preventative care, they are often more sick when they do seek treatment. All of which means that not setting a paid sick leave standard is unnecessarily driving up public health care costs. It also amounts to an uneconomical and wasteful government subsidy to businesses that fail to provide paid sick days, most of whom also do not provide health coverage to their employees.
- Reducing the spread of disease: Particularly since the outbreaks of H1N1 flu virus, public health officials have emphasized how important it is for people not to go to work when sick, or to send a sick child to school. Those simple measures can substantially reduce the spread of disease, increasing productivity and lowering health care costs. Workers without paid sick days are 50% more likely to go to work while sick, and 70% more likely to send a sick child to school, simply because they cannot always choose their health over their job and keeping a roof over their head.
Cracking Down on Wage Theft
For millions of working people across the country, even having a job provides little economic security because their employers routinely refuse to pay them the wages they are owed under the law. Antiquated and ill-enforced wage laws have made it common for employers -- particularly in low-wage industries with low unionization rates -- to illegally withhold pay from their employees. Many employers also misclassify their employees as “independent contractors” to avoid wage laws, employment taxes, and workers compensation insurance.
In just three cities (Chicago, Los Angeles, and New York), wage theft amounts to $56.4 million in stolen wages each week -- a multi-billion-dollar drain on local economies and tax revenues, and a vast redistribution of wealth from hard-working people to corrupt employers. As a result, low-wage workers lose on average 15% of their earnings -- thousands of dollars per year that are crucial to their families’ economic survival. These violations deprive both the economy of crucial consumer spending and state and local governments of tax and other revenues, while increasing the demand for public assistance and services.
The Solution: Wage Enforcement Model Legislation
Best practices in wage law enforcement consist of: increasing penalties to be an effective deterrent; preventing misclassification of workers as independent contractors; enabling workers to sue their employers directly; requiring employers to maintain complete and accurate payroll records; protecting employees from retaliation; and expediting the resolution of wage theft claims. Download model legislation here.
NOTE: Our model legislation assembles all of these provisions together in a single bill. However, in most states legislators and advocates will need to tailor it to amend their existing statutes.
Why It Matters
- 26% of low-wage workers report being paid less than the minimum wage.
- 60% of those workers are paid more than $1/hour less than the minimum wage.
- 76% of workers report not being paid the legally mandated time-and-a-half for overtime when they have worked more than 40 hours per week.
- 25% of hourly workers regularly have to start work earlier or stay later than their scheduled shift -- for which 70% receive no pay at all.
- The U.S. Department of Labor has only one investigator for every 170,000 workers. In 1941, there was one DOL investigator for every 9,000 workers.
- In just three cities, studies show that wage theft deprives workers of $56.4 million each week -- or more than $2.5 billion each year.
- Low-wage workers on average lose 15% of their income to wage theft each year -- amounting to $2,634 out of $17,616 in total earnings.
- 43% of workers experience retaliation after complaining to their employer about wage violations, including everything from firing or pay cuts, to dangerous work assignments or calling immigration authorities.
- 10%-30% of employers misclassify employees as independent contractors. Misclassifying just 1% of the workforce costs $250 million per year in Unemployment Insurance fund contributions alone.
- States lose millions of dollars each year in unpaid taxes. In 2005 and 2007 alone, California recovered over $170 million through auditing employers for misclassification scams.
- Misclassified employees are ineligible for unemployment insurance and workers’ compensation, further exacerbating their economic insecurity.
Source: Harvard University Labor and Worklife Program, 2004
While there has not been a national poll recently on enforcing wage laws, there is every reason to believe that legislation to crack down on wage theft enjoys strong public support. National polls on other basic labor standards show that large majorities rank closely related policies as “very important.” For instance, a national poll on paid sick days asked people to say how important they think various labor standards are for protecting workers’ rights. 70% rated the minimum wage as very important, and 69% rated time-and-a-half pay for overtime as very important.
Those levels of support on principle also translate into high levels of support for specific policy proposals. While 70% also rate paid sick days as very important, 86% of those polled strongly support a law guaranteeing seven paid sick days per year. By the same token, 67% support raising the minimum wage by nearly $3 to $10 per hour -- including a slim majority of Republicans (51%) and nearly half of those who identify with the Tea Party (47%). Because wage enforcement legislation is aimed at cracking down on employers who are breaking the law and taking advantage of hard-working people, support is likely even stronger than for basic labor standards that apply to all employers.
Messaging on wage law enforcement should emphasize basic issues of fairness and economic security, and its fundamental role in boosting consumer spending and rebuilding the economy:
- “We must level the playing field between everyday, hard-working people and corrupt employers, who feel they can get away with dodging taxes and stealing their employees’ wages.”
- “By failing to punish employers who violate our wage laws, we put law-abiding employers at a competitive disadvantage. In an economy like this, that failure is creating a race to the bottom, where working families are having the bread stolen from their mouths but can’t even report it for fear of losing their jobs.”
- “When hard-working, law-abiding people lose, we all lose. With wage theft, this is an economic reality: the wages stolen from workers are needed to feed children, support local economies, and provide essential services.”
Countering the Opposition
Opponents of legislation to curb wage theft and misclassification typically argue that the laws will be burdensome to business and expose them to spurious complaints by workers. The truth is, workers have nothing to gain by making false wage claims: law-abiding employers who keep accurate records of hours worked and wages paid earn the respect of their employees and insulate themselves from frivolous complaints. Taking down a business is not in workers’ interest, as it only compromises their own job security. The high incidence of these crimes, and their devastating impact on families’ economic security, necessitates updating and improving wage law enforcement. Not improving enforcement only protects corrupt employers at the expense of workers and law-abiding businesses.
Going On The Offensive
Wage law enforcement provides a strong platform for pushing back against anti-labor measures, as well as unbalanced public sector job and program cuts.
- Public Sector Program Cuts and Layoffs: Every year, states lose millions of dollars in revenue to corrupt employers who are dodging employment, income, workers compensation, and unemployment insurance taxes. As long as states have failed to recoup these lost revenues, there is no reason to cut essential programs and services. California’s audits of employee misclassification in 2005 and 2007 alone yielded $170 million in lost revenue and resulted in 45% of the audited employers reclassifying workers properly as employees. The audit also found a startling increase in the problem, with the incidence of misclassification increasing 54% from 2005-07.
- Right-to-Work and Dues Check-off: Adding tough wage enforcement provisions to anti-union legislation can help divide support among conservatives. Alternatively, wage enforcement can be used as a good platform from which to lead fights against these anti-union measures. The purpose of right-to-work (for less) and legislation barring dues check-off provisions in collective bargaining agreements is fundamentally to weaken unions by making it more difficult to collect membership dues. This is bad for both states and for workers, as unions serve an accountability role to make sure that employers obey the law and pay workers what they are owed. Weakening them will only empower more employers to violate the law, depriving the state of even more revenue unless the state takes steps to crack down on wage theft and misclassification. Wage theft is an actual crime undermining the economic security of millions of families who have no one looking out for them in the workplace. Compared to that, how unions collect membership dues is a non-issue.
- Repealing Prevailing Wage and Public Sector Wage Standards: Wage theft and misclassifcation are particularly rampant in the construction sector among employers that do not pay prevailing wage. Eliminating prevailing wage is a red herring: there is abundant evidence that prevailing wage requirements actually save states money on construction contracts, because the work is of higher quality and more often completed on time. Eliminating prevailing wage opens states up to disreputable contractors who will enrich themselves by stealing public resources owed to workers as wages -- wages that boost local economies and come back to state and local governments. Wage law enforcement levels the playing field for responsible, law-abiding businesses with which states contract for construction and services. Strategies for using wage enforcement to combat prevailing wage repeals include:
- Introducing alternate legislation with a coalition of reputable contractors, labor unions, and worker and immigrant advocates.
- Amending the prevailing wage repeal bill to include strong transparency and wage enforcement provisions that can help to divide backers of repealing wage standards.
Addressing an Agenda of Economic Security through Wage Enforcement
Passing wage enforcement legislation should be a part of an overarching agenda to bring economic security to our workers and their families, to our communities, and our states.
- Revenue Generation: As indicated above, improving wage law enforcement offers an important counter-narrative to those who argue that the only way for states to meet their budgets is through devastating cuts in essential programs and services. Several states have studied the impact of misclassification, in some cases finding that upwards of 40% of workers are misclassified. In several states, revenues lost to misclassification alone amount to hundreds of millions of dollars.
- Immigration: Wage law enforcement has proven to be extremely effective in changing debates on immigration and defeating anti-immigrant legislation. By focusing on corrupt employers who take advantage of workers, progressives can unite all working people behind a common agenda. In 2009, the Iowa Senate used this approach to defeat an anti-immigrant bill that had passed in the House of Representatives. In fact, inadequate wage law enforcement has contributed to the dysfunction of our immigration system and created a dangerous and corrosive labor market that undermines everyone’s economic security.
Restoring the Minimum Wage
Job security necessitates raising wage standards, so that those who work full-time are able to earn enough to rise out of poverty. Employers too frequently count on the expendability of underpaid workers, requiring them to depend on public services for health care and income assistance, and irresponsibly increasing the cost to everyone else. Low-wage industries, such as food service, also have very high turnover rates -- often approaching 200% or more per year.
In fact, raising wage levels is critical to everyone’s job security and to building a stable economy. To rebuild the middle class, we have to raise the wage floor to create a strong foundation of consumer spending to promote business expansion while allowing families to meet their basic needs. The build-up to the 2007-08 economic collapse was due more than anything else to stagnating incomes since the 1970s. During that time, the real value of the minimum wage declined precipitously by 50%, in parallel with sharply rising income disparity. In essence, the distribution of wealth had become too top-heavy, and helped topple the economy.
The Solution: Minimum Wage Policy Options
Campaigns to raise the minimum wage in at least two states in 2011 (Maryland and Illinois) are focused on the principle of restoring the minimum wage to its value in 1968 (~$10/hour), when the middle-class was its most robust and the gap between the rich and the poor was at a historic low. Model legislation would boost the minimum wage to $10-$10.50 per hour, and adjust it annually to ensure that wages never decline again. From that point, the law should provide for annual cost of living adjustments to the minimum wage. Additional features such as reducing or eliminating discounted wage rates for tipped employees and enhanced enforcement provisions are also important to consider.
Source: Institute for Policy Studies
Why It Matters
- From 1968 to 2007, the minimum wage was cut nearly in half -- declining in value from $9.50/hour to $5.15/hour.
- In 2011, it represents a nearly 30% pay cut from 1968 -- and is falling each year.
- The federal minimum wage is 20% less than the poverty level ($18,310 for a family of three).
- In 2007, the wealthiest 10% brought home half (49.7%) of all personal income -- up from 35% in 1968. During this time:
- The top 0.01% saw their share of personal income quadruple
- The lower 90% saw their share decline by nearly 25%
- The 2007-09 minimum wage increase produced a $10.4 billion increase in consumer spending.
- In 2008, 42% of persons requesting emergency food assistance are fully employed, as are 19% of the homeless.
- Between 1968 and 2008, productivity rose 111% while the average wage fell 3% and the minimum wage fell 34%, adjusted for inflation.
The minimum wage enjoys near-universal support, and large majorities are almost always in favor of increasing it.
- 70% believe the minimum wage is “very important” for protecting workers’ rights.
- In a 2010 poll, 67% of Americans say they support restoring the minimum wage to its historic value of $10 per hour.
- 35% strongly support such an increase.
- Support for the increase to $10 crosses all demographic lines, from 86% of Blacks and 84% of Latinos, to solid majorities of White evangelicals (58%) and White mainline protestants (56%).
- 80% of Maryland residents currently support a bill to restore the minimum wage to $10 per hour and adjust it annually according to the cost of living.
- Support crosses all demographic and regional lines in the state, including 72% of Eastern Shore residents, 60% of Republicans, and 62% of Tea Party members.
- Candidates who support restoring the minimum wage enjoy a 52-point advantage in voter preference over candidates who oppose it.
- 71% of Illinois residents currently support a bill to raise the minimum wage to $10.50 per hour, and 77% support annually increasing the wage rate to keep up with inflation.
- Strong support crosses all demographic and regional lines in Illinois, from 77% in Cook County (Chicago) to 63% in Southern Illinois
- Support is resilient to public debate. After hearing arguments on both sides, Illinois residents prefer restoring the minimum wage by a 2-to-1 margin (65% to 33%).
Chart: Support for Increasing the Minimum Wage to $10 per hour:
Source: Public Religion Research Institute, 2010
- Messaging on the minimum wage should emphasize basic issues of fairness and economic security, and its fundamental role in boosting consumer spending and rebuilding the economy, while ensuring families can meet their basic needs.
- “No one who works full-time should have to live in poverty.”
- “People in America didn’t need sub-prime mortgages when a hard day’s work meant you could actually pay the bills and put food on the table.”
- “Our small businesses can’t grow and create jobs unless their customers have more money in their pockets.”
- “The real reason the economy collapsed is that we failed to prevent the redistribution of wealth in this country -- from working- and middle-class Americans to the wealthiest and most privileged. An America that doesn’t work for working people is not an America that works.”
Countering the Opposition
For opponents of the minimum wage, there has never been a good time to raise wage standards: when the economy is bad, they argue that it will make things worse; and when the economy is good, raising wages will make things bad. When it comes to the state minimum wage, they argue that rising wage standards will chase jobs over the state line. The truth is, these arguments are just “crying wolf” : raising wage standards has never had a negative impact on jobs and economic security; in fact, it has been an important factor in stabilizing the economy and helping the country recover from economic crises going back to the Great Depression when the national minimum wage was first established.
Opponents of the 1938 Fair Labor Standards Act claimed that the minimum wage would spell economic doom, by removing workers’ incentive to work hard, forcing companies out of business, and, according to Georgia Rep. Edward Cox, “destroy[ing] small industry.” Of course, none of those things happened, and the nation embarked on the greatest period of shared prosperity in world history, with a thirty-year trend of rising incomes and shared wealth. Since then, opponents have continued to cry wolf with their “job-killer” arguments, howls of pain, and predictions of socialist takeover, despite the clear fact that rising minimum wage levels and other labor standards clearly contributed to rising income levels, economic stability, and the development of a large middle-class.
New research on the impact of minimum wage increases shows conclusively that raising wage standards does not “kill jobs” or chase away industry. Researchers looked at every county on opposite of the border of every state that raised its minimum wage, from 1990 to 2008. They found no evidence that raising the minimum wage caused job losses or increased unemployment, though it did have a demonstrably positive effect on workers’ incomes. The researchers also found that raising the minimum wage decreases turnover and raises productivity in restaurants and small businesses by making it easier for them to attract and retain qualified, dedicated workers. They also point out that the minimum wage work tends to be concentrated in service and retail industries that serve local needs and markets, and in which employers cannot just pull up stakes and relocate.
Going On The Offensive
The decline in the value of the minimum wage is the single, most clear example of why we need to raise our labor standards and boost workers’ rights -- not to go the other way by continuing to contribute to workers’ economic insecurity.
- Public Sector Program Cuts and Layoffs: Raising the minimum wage is an instant revenue generator for state and local governments, just like cracking down on wage theft and employee misclassification. And by rapidly increasing spending in local communities, it shores up state economies and makes it possible for businesses to grow and create jobs. Tax breaks for corporations and the wealthy are simply windfall profits that create no incentive to expand businesses, because they reward companies and those flush with capital for doing nothing.
- Pension Cuts and Privatization: Restoring the minimum wage can be an important tactic for shifting the conversation away from hyperbolic attacks on public employees’ modest retirement plans and attempts to confuse the public about short- versus long-term financial problems. The retirement security problem facing most people is not that some people have pensions, but that most people have no retirement security of their own. That is a direct result of the stagnation of personal income for everyone but the wealthy over the last thirty years. Many people began speculating on their own homes and were seduced by sub-prime mortgages because they had no other option to fund their retirements. Raising the minimum wage will generate revenues for states and boost local economies -- but it will also shore up people’s long-term economic security so that no one is without retirement security.
- Repealing Prevailing Wage and Public Sector Wage Standards: Restoring the minimum wage is an important platform for changing the debate on efforts to repeal prevailing wage and other wage standards in government contracts. Eliminating prevailing wage is a straw man: there is abundant evidence that prevailing wage requirements actually save states money on construction contracts, because the work is of higher quality and more often completed on time. The problem is not that workers earning prevailing wage earn too much -- it’s that workers earning minimum wage earn too little. Eliminating prevailing wage opens states up to disreputable contractors who enrich themselves by underpaying and misclassifying employees -- practices that come back to cost states in Medicaid and other public services low-wage workers and their families rely upon to get by. Restoring the minimum wage will save states money, generate additional revenue, and shore up local economies by boosting spending.
- Right-to-Work and Dues Check-off: Restoring the minimum wage is important for developing a powerful counter-narrative that all workers can buy into by speaking to how we can concretely bolster families’ economic security. The growth of America’s middle-class was made possible by raising labor standards and the expansion of union membership. Those institutions made sure not only that working people shared more equally in the nation’s prosperity -- they fueled the growth of the economy through boosting families’ financial security. Attempts to weaken unions have gone hand-in-hand with the decline in the minimum wage and the perilous economic disparities and insecurity that devastated our economy in 2008 and continue today. If conservatives are successful in undermining unions, the next thing they will go after is the minimum wage. States can do far more to benefit workers and grow the economy by taking the opposite tack and restoring the minimum wage. Union workers typically earn 21%-32% more than non-union workers -- far more than what any union members charge themselves in dues. Workers who don’t want to join a union or pay dues don’t have to, but those that do will be better off and have greater means of job security through union membership.
Chart: Real Value of Minimum Wage, 1938-2005 (2005 Dollars):
Source: U.S. Bureau of Labor Statistics
Addressing an Agenda of Economic Security through Restoring the Minimum Wage
Restoring the minimum wage supports a wide range of economic security issues -- it is the essence of economic security in itself. At the same time, it can contribute toward advancing several other economic security issues, most directly tax reform and health care reform.
- Progressive Tax Reform: Restoring the minimum wage concretely supports progressive revenue reforms by providing a wider, more stable and evenly distributed tax base. It also increases revenue from lower income brackets without having to increase their taxation rates. At the same time, by lifting families out of poverty, it reduces the cost of federal and state safety-net programs the working poor rely upon.
- Health Security: Much of the debate on health care reform has centered on the requirement that people not covered by their employer obtain their own insurance. That concern will resonate much less by improving job security and raising incomes. In conjunction with progressive insurance exchange models that will lower the cost of insurance, restoring the minimum wage will make it easier for families to manage the cost of health care and their overall economic security.
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