COLUMN: Raise the minimum wage … for the middle class

Published: Thursday, February 28, 2013 at 04:16 PM.

 

President Obama’s call during the State of the Union Address to raise the American minimum wage to $9 an hour sparked considerable debate about whether enacting such a proposal would increase growth or damage an already fragile economic recovery. Unfortunately, the president’s message and the Republican response by Florida Senator Mark Rubio both missed the much larger issue: the stagnation of income for the American middle class. As my college economics professor might say, politicians are killing gnats with sledgehammers.

Minimum wage workers deserve a decent wage and fair treatment. Whether small businesses can afford the higher salaries and larger payroll taxes if Congress indeed raises the minimum wage is a topic for another discussion.  What we would have liked the president and his Republican counterparts to address is not a bump at the lower end of the pay scale, but the creation of a plan to bring back middle class jobs that allow families to thrive and contribute financially to the economy. Some 70 percent of American GDP is consumer spending.  When the middle class suffers, the American economy suffers along with it. 

Harvard economist Michael Porter, interviewed by CNBC’s Closing Bell in an article by Justin Menza, says, “The American middle class is ‘hollowing out’ as the U.S. economy fails to compete effectively in a globalized world.”

“America used to be a uniquely productive, low-cost place to do business,” Porter said.  “But bit-by-bit this position has eroded. Regulatory costs have gone up … the legal system is more cumbersome, infrastructure is eroding and the country is falling behind on skills.”

Jim Tankersley of the Washington Post points to the disparity between U.S. job growth and income gains for previous economic eras versus our current one.

“In the past three recoveries from recession, U.S. growth has not produced anywhere close to the job and income gains that previous generations of workers enjoyed,” he said.  “ … a point of increased growth today simply delivers fewer jobs across the economy and less money in the pockets of middle-class families than an identical point of growth produced in the 40 years after the Second World War.”



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