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Archive for February 26th, 2013

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A recent poll by the Pew Research Center shows that 71 percent of the US public favors raising the federal minimum wage. Nineteen states already have higher minimum wages. Fifty percent of Republicans also support an increase, as opposed to 47 percent opposed.

Wall Street is also against raising it. That’s because when wages go up, share prices go down. That’s because higher wages can cut into corporate profits in the short term. In the long term, however, rising real wages increase demand, spur sales, push up profits and create jobs. Recent studies show raising the minimum wage has a small impact on unemployment, most likely because it increases the demand for goods and services.

According to a study by the Economic Policy Institute, “The multiple positive effects that would result from a higher minimum wage are clear: It would boost the earnings of working families hardest hit by the Great Recession, spur economic growth, and create about 100,000 net new jobs. In an economic climate in which wage increases for the most vulnerable workers are scarce, raising the minimum wage to $9.80 by July 1, 2014, is an opportunity that America’s working families cannot afford to lose.”

Despite the positive impacts of a raise, on behalf of Wall Street, House Republicans will vote in goose step against any increase, as will some corporate Democrats.

Conversely, when wages go down, share prices go up. That’s good if you’re a member of the 1 percent, but it’s bad for the economy and the 99 percent in the long term. When real wages go down, so does the demand for goods and services. In the long run, corporate profits cannot be constantly raised, which is something that must occur in the long term, otherwise, the Ponzi Scam known as Wall Street would collapse.

As demand goes down due to the massive redistribution of income from the 99 to the 1 percent legislatively undertaken over the last 32 years by the federal government, Wall Street has had to invent new investment instruments that redistribute income from the 99 to the 1 percent. In the past, this has included bonds backed by home mortgages and credit default swaps, neither of which has been good for the economy.

So overall, an increase in the federal minimum wage will be a good thing (however tiny) for the vast majority of Americans, as well as for the economy. They’ll have more money to spend. Better yet, CEO’s and rich shareholders will possess less money with which to purchase politicians.

Click below for related links.

Study from the Economic Policy Institute

One study on the impact of raising the minimum wages

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