Here’s something from the Economic Policy Institute:
“Last week, Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-CA) introduced the Fair Minimum Wage Act of 2013, which would raise the federal minimum wage in three incremental increases to $10.10 per hour by 2015 and then index it to inflation. This would bring the minimum wage, after adjusting for inflation, roughly back in line with its historical high value from the late 1960s.
Yet even after this increase, the minimum wage would still be lower than it could be given the economy’s growth over the past 45 years. Had the minimum wage increased at the same rate as the average American production worker’s wages, it would be about $10.50 today. If it had been raised at the growth rate of productivity—i.e., the economy’s overall capacity to generate income per hour worked—it would be nearly $19 per hour. See our full analysis of the impact of raising the minimum wage in Raising the federal minimum wage to $10.10 would give working families, and the overall economy, a much-needed boost.”
Senator Harkin’s idea about raising the minimum wage to $10.10 per hour from the $7.50 is kind of stupid when you think about it because it’s not very much, although about 25 percent of the people earning the current minimum wage are adults with children and they would benefit from the raise.
However, the redistribution of income from the 99 to the 1 percent over the last thirty-two years is what ails the economy. It’s why the economy doesn’t create jobs at the same rate as it used to, two or three decades ago.
Currently, 1 percent take home over 30 percent of the all the income created in the United States compared to 7-8 percent thirty-two years ago. The 1 percent don’t do anything to create jobs in the USA. As I’ve shown over and over again in my book and on this blog, for the most part, the rich destroy jobs, as do tax cuts for the rich. For proof, just look at current income and wealth distribution and then at how weak the economy is. You’ll discover a correlation there.
The 99 percent have experienced the inverse of that redistribution. We take home about 68 percent of the national income compared to 92-93 percent thirty-two years ago. That means we don’t have the ability to buy stuff like we did decades ago, and the result is a weak economy since the demand for goods and services is much lower per capita. Furthermore, the 1 percent are taking more and more of the total national income. By 2015, they’ll probably steal close to 40 percent of it all since they’re stolen 88 percent of all national income growth from 2009-2011. It was probably even more in 2012, or at least as bad. This trend is the thing that is rotting the economy, corrupting our government, destroying the future of the nation, and turning the USA into a banana republic. That’s what Democrats like Wall Street Senator Ron Wyden and Wall Street Congressmen John Boehner and Earl Blumenauer have done for America.
Federal legislation has been and is being used to redistribute the nation’s income, such as free trade treaties. So federal legislation can be used to put some of the money back in the pockets of the 99 percent. You can begin by raising the federal minimum wage to $10.10 an hour in increments like Senator Harkin desires, but instead of tying it to the growth of inflation, which is massively understated by the government for the purpose of redistributing income from the 99 to the 1 percent, it would be better to tie increases to productivity growth.(See Record Corporate Profits? How’d they Do That? The Inflation Income Redistribution Scam for how inflation is deliberately understated by the US government.)
If the Economic Policy Institute (EPI) is correct, the minimum wage should be over $18 an hour if it had been linked to productivity growth. It’s inflationary impacts would have been minimal since it would have been incrementally increased over 45 years, and since the government massively understates inflation any way, and especially since it would not have been more than productivity gains.
In today’s economy, increasing the minimum wage to $10.10 and then tying it to productivity growth would generate greater demand for goods and services. Some critics might argue that small businesses would suffer under such a policy, and that might be a reasonable point-of-view, but there’s a way around that.
Initiate a two-tiered federal minimum wage. Increase the minimum for everybody to $10.10 an hour by 2015. Tie increases in the minimum wage to the national growth of productivity for any business with jobs and assets outside the nation, such as money stowed away in the Caymen Islands to avoid paying US taxes, or for any publicly traded, limited liability corporations. Those are the companies that are making record profits, and so they can share a little more with their lower level employees here in the USA without any hardship. These companies might even think twice about moving more and more jobs overseas, although most of them have moved tons of them, and whatever jobs they can ship away, they’ve already done it. Some of them have even shifted production to European nations that have higher minimum wages than the USA anyway.
This would spur the demand for goods and services and to a little tiny degree, it would slow or even reverse US economic decline, by redistributing income from the 1 back to the 99 percent.
As for the second tier, let local businesses pay $10.10 an hour by 2015 and tie the growth of the minimum wage to the understated inflation rate. Recent studies show increases in the minimum wage on state levels have raised the demand for goods and services and created jobs in the process. This minimum wage might have some minor inflationary impact, but if it does, the government will understate it anyway.
If wage increases keep up with productivity growth, economic theory tells us that there should be no inflation. Any increase in the minimum wage tied to the understated inflation rate will almost assuredly be less than the growth in productivity, and therefore such a yearly rate increase can not be inflationary.
Think about what the US might be like nowadays if increases based on productivity growth had happened over the last forty-five years. This would have offset a little of the income redistribution that has taken place over the last thirty-two years, and which is destroying the US economy and the middle class. The demand for goods and services would have been greater than it is today, meaning the economy would be stronger. The rich would not be so rich. Instead of stealing 32 percent of the nation’s income, it would probably only be about 27-29 percent. So they would’ve had less money to purchase the political favors of politicians from both major parties.
Since our economy can afford to let a tiny percentage of parasitic rich people suck away 32 percent of the nation’s total income, essentially allowing a “kept unproductive, but parasitic welfare class” to get something for nothing, the economy should be able to divert a tiny bit of their ill gotten money toward a higher minimum wage tied to productivity gains. That’s what shared prosperity is all about. Isn’t that what an economy with a representative government is supposed to be for? To represent all the people and not just those who can most afford to purchase politicians like they would well trained sheep dogs, such as Wyden and Boehner?
Besides, if the economy can afford to let rich people steal hundreds of billions of dollars per year from the 99 percent via federal legislation, and can give them trillions of dollars a year whenever the market threatens to depress their earnings and the values of their assets, such as stocks and bonds (which means the 1 percent are shielded from market forces except when it is to their advantage), and since it is obvious that letting them steal so much money only weakens the economy, then lifting working people out of their poverty with an increase in the minimum wage tied to productivity gains can only strengthen the economy. It would also help to slow or maybe even reverse the slide of the United States to banana republic status, which it is hurtling toward in less than fifteen years.
In other words, it’s time to raise the minimum wage and tie a great deal of it to productivity gains. We can afford a two-tiered system. We cannot afford to let it not happen.