Critics, Proponents Spar Over Minimum Wage

The federal minimum wage will rise Friday 70 cents to $7.25. Conservative economists say it will kill jobs; liberals say it will boost consumer spending, which will help the economy.

Copyright © 2009 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

ROBERT SIEGEL, host:

$7.25 cents an hour, that'll be the federal minimum wage for American workers starting tomorrow. It's the latest milepost in a long debate over whether there should even be a minimum wage, and if so, where it should be set. Presidents have been weighing in for decades, starting with Franklin Delano Roosevelt.

President FRANKLIN ROOSEVELT: Minimum wages should not be reduced.

President HARRY TRUMAN: The minimum wage fixed by law should be raised to at least 75 cents an hour.

(Soundbite of applause)

President JOHN KENNEDY: Yesterday, the Senate passed the $1.25 minimum wage. It was actually…

President BILL CLINTON: $4.25 an hour is no longer a minimum wage, but millions of Americans and their children are trying to live on it.

President GEORGE W. BUSH: Another area where we can work together is the minimum wage. I support the proposed $2.10 increase in the minimum wage over a two-year period.

SIEGEL: Presidents Roosevelt, Truman, Kennedy, Clinton and George W. Bush, who signed the 2007 bill that requires the minimum wage to move from 6.55 an hour to 7.25 an hour tomorrow.

NPR's David Greene joins us now to talk about this. And David, presidents have often been at the heart of these debates. They're always controversial. Why has this never been settled?

DAVID GREENE: Always very controversial, Robert. And you know that there's this powerful moral argument, you know, who doesn't want to help disadvantaged workers make more money? And we should say that two-thirds of minimum wage workers are women. And so there really is a matter of gender equity, as well. But, you know, after endless studies and statistics and research projects, there's just no firm consensus among economists that raising the minimum wage actually helps the poor.

And so you might say, how is that possible when you're actually giving people more money? And it's because on the other hand, some economists say that what happens when you raise the minimum wage is you can lose jobs in the economy. Jobs can be cut, and so fewer people are actually getting a paycheck. But there hasn't been a clear consensus around that idea either. And so you've got a lot of numbers, a lot of research pointing in different directions and this debate just keeps on going.

SIEGEL: Let's talk about this number, $7.25, what the minimum wage becomes tomorrow. How many people are affected because they actually make less than that?

GREENE: Yeah, it's a good question, Robert. The Labor Department says there are about 5 million people in the U.S. who make less than 7.25 right now. So they'll get a raise tomorrow. And one of them is a woman in Texas I spoke with Marisa Purvis. She's 20 and actually works two minimum wage jobs, one of them at a Sonic burger, the fast food joint. She runs hot dogs and hamburgers out to cars. She says after paying her college tuition and rent, there's just nothing left over. She's looking for any little bit that comes in. Let's listen to her.

Ms. MARISA PURVIS: I mean, any little bit helps. And my goal is to always make sure that I'm very friendly with my customers because the friendlier you tend to be with them and getting their order right, the more likely they are to give you a little tip.

GREENE: So that's Marisa Purvis. But Robert, it's not just her. She makes 6.55 an hour. If we look at Americans making, say, less than $9 an hour, we're talking about roughly 15 million workers. They might see a change starting tomorrow if businesses that pay a bit more than a minimum wage also increase their wages just, you know, to keep pace.

SIEGEL: But we're in a recession and it's rough on business as it is.

GREENE: And that's really the question of the moment. We don't know what's going to happen when we raise the minimum wage in the middle of this recession. We're talking about, you know, 9.5 percent unemployment. One fear is that you're not going to see that ratchet effect. Business that pay, you know, 8.50 an hour will say, well, I don't have to change anything I do. And they'll just keep going as is.

And, also, there's a concern that this is going to hit businesses at their most vulnerable. You know, they just have no extra money hanging around right now and so if they're forced to pay out more in wages, they'll just cut hours or maybe even cut some of those low wage jobs.

SIEGEL: And this is the argument that opponents of increasing the minimum wage make that you raise the minimum wage. They say you actually end up hurting the people whom you're trying to help.

GREENE: That's exactly right. And that's the argument they're making right now. But there's an entirely different view from some other economists. Let's go back to Marisa Purvis, the woman you heard from. You know, she told me she can't afford to buy a new CD right now, when it comes out. Well, she's got an extra 10, 20 bucks a week and can buy a CD or grab dinner on the weekend with her friends from college.

If a few million people like her can spend a little more out there, that might be a good thing for the economy - an economy that needs a kick start. So, some economists say this is the perfect time.

SIEGEL: An extension of the stimulus, they would say.

GREENE: Exactly. And we should say one of the big proponents of stimulus, President Obama, actually supports raising the minimum wage even more than this. At least he did as a candidate. He said he wants much higher than 7.25 and hour. But we'll see where this goes, you know, whether Mr. Obama brings higher minimum wages on the agenda in a tough economy is an open question. And, you know, Senator Ted Kennedy of Massachusetts has always been the standard bearer of this issue. He's in very poor health and it's hard to see someone sort of taking over with the same passion that he's had.

SIEGEL: Thank you, David.

GREENE: Thank you, Robert.

SIEGEL: That's NPR's David Greene speaking with us from New York.

Copyright © 2009 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Minimum Wage Hike Spurs Optimism And Debate

Marisa Puvis i i

Marisa Purvis, 20, works two minimum wage jobs that help pay her way through Sam Houston State University in Texas. And while home on breaks, she works a third job at a grocery store called Foodtown. Melissa Galvez for NPR hide caption

itoggle caption Melissa Galvez for NPR
Marisa Puvis

Marisa Purvis, 20, works two minimum wage jobs that help pay her way through Sam Houston State University in Texas. And while home on breaks, she works a third job at a grocery store called Foodtown.

Melissa Galvez for NPR
Federal Minimum Wage Goes Up Graphic

Millions of America's low-wage workers are about to get a raise.

On Friday, the federal minimum wage will jump from $6.55 to $7.25 an hour. Congress approved that raise two years ago.

Back then, lawmakers didn't know the country would be in the grips of a deep recession this summer. And now, economists are debating how the increase will play out.

Some worry that forcing higher wages will hurt small businesses when they're most vulnerable. Others say raising the minimum wage will help the economy by generating more consumer spending.

Days And Nights At An Eatery

Jamie Clark is the face of the American low-wage worker — someone directly affected by Friday's change in the law.

The 24-year-old single mom is raising a 4-year-old while living in a crowded house with her own parents and siblings.

Clark spends her days, and many nights, at a downtown New Orleans eatery.

"We wait on tables," she says. "It's a small restaurant. We bus our own tables. You sort of do a little bit of everything." But she's still not earning a lot of money.

Right now, Clark's boss has to make sure that, including tips, she goes home with at least $6.55 an hour. With tomorrow's raise, Clark knows she'll be coming home to her son with at least $7.25 for each hour of effort.

It might not seem like much. But up until now, her son, Edward, has been getting his clothing and toys from neighbors once their kids are done with them.

"That's what I'm thinking about in my head," Clark says. "I'm like, $7.25? Now I can buy this. It's just really embarrassing not to be able to provide those simple things."

Maybe the extra money isn't enough for new clothing for Edward. But Clark thinks she has a better chance of buying a few of his school supplies. And perhaps just one of those Transformer toys he's been begging for.

"Being able to buy a toy for my son — that puts money back in the economy," Clark says.

Economic Boon Or Stumbling Block?

But that's where Clark dips into the debate brewing among economists.

Many economists, like Eileen Appelbaum, director of the Center for Women and Work at Rutgers University's School of Management and Labor Relations, believe Clark is right: If low-wage workers have a bit more money to spend, that's good for the economy in a recession.

Appelbaum adds that a minimum wage hike is a good thing, no matter the timing.

"The minimum wage has always and ever and still is today a working woman's issue," she says." Two-thirds of minimum wage workers today are women. Why is it that we devalue the work women do? Why do we assume taking care of old people, working in hospitals, being a nursing aide, a home health aide, a child care worker — that the skills involved in that are things women are just born knowing? So why would we have to pay for them?"

Other economists, however, see potentially harmful effects on the economy — especially during a recession.

"It's hard to tell a story that something that everyone thinks helps people doesn't," says Richard Burkhauser, a Cornell University economist and another veteran of the long-simmering minimum wage debate.

Burkhauser says that as a rule, there are more effective ways — such as the Earned Income Tax Credit — to help the working poor.

Forcing small businesses to pay out higher wages can be a strain, and business owners often decide to cut jobs for low-skilled workers, he says. He adds that businesses are in a squeeze as it is.

"This is absolutely the worst time to raise the minimum wage," he says.

There is at least one anecdote to back that up.

A Lull In Maryland

Along the sun-drenched boardwalk in Ocean City, Md., businesses — pizza and ice cream shops, and those places where you can get anything pierced — are complaining about a drop in tourism.

The Sportland Arcade already cut eight summer jobs this year to tighten the budget.

On Friday, they'll be paying employees more.

That's good news for Sashi Nawaratnasamy, a college student spending her summer at the arcade, tending to those machines where you pop in a quarter and try to use a crane to pick up prizes.

She says she is hoping to make $3,000 to take back to school this fall. Her hourly wage will bump from $7 to $7.25 on Friday. That's only $15 more a week, but Sashi says she'll resist the temptation to go out to more dinners this summer and let the extra cash add up.

"No, I'll hold onto it for college," she says. "That's why I came here."

But her bosses are worried.

"Last time was 10 times busier in Ocean City, and we're just trying to tough it out," says Stephanie Hippler, one of the managers at the arcade. "Bad timing definitely, I would have to say, for us to up our payroll."

The arcade's general manager, Robyn Phillips, says the business has been keeping payroll down as much as possible this summer. She may have to find a way to offset Friday's wage increase by cutting back on hours and giving three days off instead of two days.

"You cut as much as you can," she says.

Just how businesses like this respond to the minimum wage hike is something economists will watch closely in coming months.

Living On The Edge

Marisa Purvis is just happy about what the wage raise means for her.

The 20-year-old is a student at Sam Houston State University in Texas. She has two $6.55-an-hour jobs that pay her way through school — one in the music department and another as a "car hop" at Sonic, the fast-food chain.

During the summer, she works an $8-an-hour job at a grocery store.

As of Friday, Purvis knows that at two of her jobs, she'll be making 70 cents more for each hour of effort.

Every little bit counts, she says, because she feels like she's living on the edge. None of her three jobs offer health insurance or benefits.

"It's always uncertain," she says. "Sometimes things will come up, and you have to put some of that money towards a flat tire you got. Or you may have to drive a lot because your family member is dying, and you have to spend that extra money on gas. You're only making $6.55. It's really stretching that penny."

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.