American Workers Get an Overdue Pay Raise

With all of the talk about the conservative obstructionism in Congress that is keeping important bills from becoming law, Tuesday brings something worth celebrating: The federal minimum wage, which had been frozen at $5.15 an hour for almost 10 years, increases 70 cents an hour, to $5.85 cents an hour.

The minimum wage increase is the one item on the Democrats' change agenda that has actually become law since the party took control of Congress last year. It came at what some activists consider too high a price, since it was attached to a measure authorizing continued funding for the Iraq war as well as a package of business tax cuts. Nonetheless, for more than 5.3 million workers, the increase is real, and real important as the first step in a broader effort to improve conditions for working people in America.

The sponsor of the minimum wage increase bill in the House, Rep. George Miller, D-Calif, has called the increase a "down payment" on a larger effort to make sure that American workers receive their fair share of the wealth their labor produces.

"Thirteen million Americans will be able to better provide for their families because of action taken by this Democratic Congress to raise the minimum wage," Miller said in a statement his office issued Friday. "In the wealthiest country in the history of the world, it is an outrage that anyone who works full-time would still wind up in poverty. Everyone who puts in an honest day's work should receive a fair day's pay. That's why, as a first step, this minimum wage increase is so urgently needed."

It is also a day to reemphasize that while conservatives insist on doling out favors to America's richest, with the predictable outcome that the wealthiest 1 percent have massively profited while the bottom 20 percent have fallen behind in the Bush era, a progressive economic policy of ensuring fair wages and benefits for workers helps the entire economy.

"I think it is very symbolic that this was our first accomplishment," said Rep. Steve Cohen, D-Tenn. He added that it was particularly, and sadly, ironic that a bill intended to help people at the bottom of the economic ladder was attached to a bill that continued the administration's catastrophic policies in Iraq. It showed the contrast between the priorities of the Democrats and those of the Bush administration, Cohen said. Cohen and Miller were among the members of the House who spoke to bloggers and progressive radio hosts in the Capitol Tuesday in a room set up by the Democrats to celebrate the minimum wage increase.

John Arensmeyer, a former owner of an e-commerce company who now is president of Small Business Majority, said in an interview I did with him that all of the evidence that he has seen from such organizations as the Fiscal Policy Institute and the Economic Policy Institute is that "when you have a higher minimum wage, you have a healthier economy."

"In order to have a healthy, stable, 21st century economy, it's necessary to have a wage floor that approximates the minimum you can live on," Arensmeyer said. While conceding that there are some differences in the economics of running a technology firm and a restaurant or a small grocery store, he said that in his own experience "at the end of the day it was worth it to pay a little more" for a more loyal, committed worker.

And while some businesses may have to increase prices to cover the cost of increased worker pay, there is also increased spending power to offset those increased costs. In the end, the economy is better off.

Two more 70-cent wage increases are on the horizon as a result of the bill passed by Congress, which would bring the minimum wage to $7.25 an hour by July 2009. That sounds great-but consider this: In my first jobs as a teenager in Washington D.C., I earned what was the federal minimum wage from 1968 to 1974, $1.60 an hour. The equivalent wage today, if the minimum wage had kept pace with inflation, would be $8.96 an hour. (You can use one of several consumer price index calculators available on the Internet, such as this one from the Federal Reserve Bank of Minneapolis, to compare the new federal minimum wage to the wage you earned at your first job.)