Douglas Hall, Ph.D, the director of Economic and Fiscal Policy at the Economic Progress Institute (EPI) spoke before the House Finance committee to present actual facts about the need to raise the minimum wage here in Rhode Island. One important fact:
“Because of the impact of inflation,” said Hall, “any year in which we do not increase the minimum wage, we are effectively giving our lowest paid workers in this state a wage cut.” (See here)
There was no increase in the minimum wage in Rhode Island this year.
Hall began by citing a report from EPI that determined that the per hour wage to live in Rhode island is $12.38 an hour, a far cry from the present minimum wage of $9.60 and not even close to the proposed $10.50. (See here) “We’re talking about families that are making less than $20,000 a year,” said Hall. “Clearly, in a state like Rhode Island, that’s not going to get you to where you need to be.”
Increasing the Earned Income Tax Credit (EITC) helps low-income families, but the best way to help low-income families is to increase both the EITC and the minimum wage. (See Douglas Hall’s explanation on this virtuous pairing of programs here.) We need to keep moving forward on these programs, said Hall, to get low-income Rhode Island families “closer to a wage where they can support themselves.”
The vast preponderance of all the studies done on increasing the minimum wage’s effect on job loss over the last decade have shown that “There’ really no effect on unemployment,” said Hall, contrary to the suggestive questioning of several Republican and Democratic lawmakers.
Yes, said Hall, answering the questions raised by the anti-minimum wage lobbyists, we have increased the minimum wage many times over the last few years, but if you factor in inflation, you will see that people are making about a dollar more than they were in 2000. “These are not numbers that are going through the roof and these are not numbers that are crippling the economy,” said Hall.
Who makes minimum wage in Rhode Island? Contrary to the right-wing myths being bandied about by some of the legislators on the House Finance committee, there are about 77,000 Rhode Islanders directly impacted when the minimum wage is increased, and another 16,000 affected by the “cascading effect.” That is, these workers will have their wages increased to keep them above minimum wage. This adds up to about 93,000 affected Rhode Island workers. Raising the wage to $10.50 will put $65.2 million in their pockets, and subsequently into the Rhode island economy.
There are a lot of misconceptions about who the minimum wage earners are, says Hall. 61 percent of minimum wage earners are women. More workers on minimum wage are 55 and older than there are in their teen years. 65 percent are 25 years old or older. “We’re talking about adults, many of whom are trying to provide for their families and put food on the table, etc,” said Hall.
45,000 Rhode Island children have a parent who would be positively affected by increasing the minimum wage. 53 percent of those who would benefit are full-time workers. 27 percent of those affected are in the retail sector, 20 percent are in leisure and hospitality, and 19 percent are in health and education.
“You’ll often hear people say, ‘they need to get an education and get a better job,'” said Hall, “The fact is that 44 percent of those that would be benefitting from increasing the minimum wage have some college education or a college degree. And the education of those at the low end has actually increased significantly over the last 25 years.”
Michael Araujo, executive director of Rhode Island Hobs with Justice, drew his figures on who will be affected by increasing the minimum wage from the Bureau of Labor Statistics, but his numbers were not all that different from Hall’s. “We’re talking about adults,” said Araujo. “This was not intended as a ‘training wage’ when it was initially started by FDR in ’38, it was considered to be a living wage, and designed to be as such.”
“Employees aren’t widgets,” said Araujo. “So when we use those high school economics metrics of ‘if X goes up then Y goes up,’ that’s not exactly how it works. Human beings don’t move like products, they move like human beings and they have different costs and different needs. So it’s very important that when we consider the minimum wage we consider them as people and not as a simple balance sheet item. It’s a little bit more complicated than that.”
“When we look at the cost of childcare in this state, it amounts to a little over $12,000 a year,” said Araujo, “That’s a significant amount. It competes with the value of rent.” A family earning minimum wage makes the decision to work multiple jobs and not see their children.
The idea that raising the wages of minimum wage workers hurts those making slightly more than minimum wage is nonsensical. “The [idea that the] value of the workers the next tier up goes down because the bottom rises is kind of a false metric,” said Araujo, “It goes against the very principle that a rising tide raises all boats. In fact, it’s the exact opposite argument. You’re saying that a rising tide sinks other people.”
“Tthe $32 million in increased economic activity multiplies,” said Araujo. Taking the money out of the profits of employers and putting it into the pockets of employees is stimulative. Low-wage workers spend their money immediately.