National Consumers League

Labor Day thoughts: Minimum wage and the Presidential election

With the celebration of Labor Day this weekend, it’s a good time to ask what role the minimum wage will play in the Presidential campaign. This is right up our alley; NCL’s great leader Florence Kelley originally wrote and helped to pass the first minimum wage laws in the states. And this remains an issue near and dear to NCL.

Hillary Clinton is calling for a wage of $12 an hour by the year 2020. Bernie Sanders and Martin O’Malley, the two other declared Democratic presidential candidates, are pushing for $15 by 2020. They are both too low if you look at what is needed to pay basic costs of living – for only one person - in 14 states and Washington DC. Right now it’s $12 an hour!

Among Republican candidates, the views are all across the board. Some want to raise it, some want to keep it at the current $7.25 and Carly Fiorina says the federal minimum wage law should be abolished. Uh huh – we’ve been there before. Florence Kelley is rolling over in her grave I’m sure! None of the following states have any minimum wage laws: Alabama, Louisiana, Mississippi, South Carolina and Tennessee. In Georgia and Wyoming, the minimum wage is $5.15. So without a federal floor for minimum wage, employers in those states would be free to – and would – pay poverty wages. Kelley and her allies saw the pennies paid to the poorest most exploitable in the workforce and worked for a minimum.

Rising profits should mean rising wages but unfortunately the market doesn’t work that way. Goldman Sachs chief economist Jan Hatzius, told Bloomberg news that in 2013 after-tax corporate earnings grew by as much as 11 percent per share. Hatzius went on to say that U.S. workers didn’t get much of a raise in 2013, leaving more profits left over for shareholders. Overall, hourly wages grew by just 2 percent in 2013, five times slower than corporate profits. So much for the market regulating wages.

We think the candidates, especially the democrats, need to recalibrate their numbers and raise substantially the minimum wages they are calling for in the years to come. That would be a great Labor Day gift, especially to the lowest paid of America’s workers.