Letter: Minimum Wage Increase Will Boost Norwalk's Economy

  • Comments (8)

NORWALK, Conn. -- The Norwalk Daily Voice accepts signed letters to the editor. Send letters to norwalk@dailyvoice.com.

To the editor: 

I’m proud to live in a state that raised the minimum wage to help hard-working people make ends meet and not be a burden on the taxpayers. It is the right thing thing to do. 

It is also a solid way to stimulate the economy. When I get to Hartford, I will make sure to peg the minimum wage to productivity. Let me tell you why and how this needs to be done.

When instituted in 1938, the federal minimum wage was 25 cents an hour, at a time when you could buy a loaf of bread for a nickel. Since then, inflation has pushed up wages and prices, but up to the mid-70s, wages stayed ahead of inflation, and worker productivity soared. It was the heyday of the great American Middle Class. However, during the last 30 years, real wages sagged below inflation, until last year they fell below 1968 levels! Today, minimum wage workers would starve, if not for food stamps.

During the last 40 years, American workers’ productivity had doubled, yet their average real wages consistently fell behind the levels they had once enjoyed. Today, America is far richer, but the inflation-adjusted wages of non-supervisory workers in retail trade have fallen by almost 30 percent since 1973.They are not treading water, they are drowning!

At the same time, top management increasingly rewarded itself with enormous salaries. By 2007, the top 1 percent accounted for almost 25 percent and the top 10 percent about 50 percent of all income. Huge income advances for the people at the top, loss of income for those on the bottom. The rewards for increasing productivity is taken by those on top and seized from the rest of the working population. To give you an idea of the disconnect between those on the top and those on the bottom, in 2012, a “bad” year for hedge funds, the 40 top fund managers and traders made more money combined than the combined wages of 400,000 ordinary workers.

The opposition has stated that raising the minimum wage by 75 cents over two years will hurt small businesses and will cost jobs. I disagree.

There is overwhelming evidence from controlled studies that increases in minimum wages have no negative effects on low-wage jobs and put money in the pockets of workers. The higher minimum wages reduce worker turnover, benefiting both workers and employers. And it doesn't cost tax payers a dime. We’re talking about 70,000 to 90,000 hard working Nutmeggers getting $18 more a week to spend on groceries and other necessities. Compare this to the hedge fund managers “earning” $100,000 a day.

Minimum-wage workers spend what they earn. That leads to increased economic growth – the kind that benefits all wage-earning employees. I’m talking trickle up, not trickle down.

The impact of this additional spending will stimulate the economy, not by a huge amount, but significantly. Connecticut’s target wage is $9 by 2015. Also, the hike in wages will help workers avoid having to use our tax dollars to make ends meet. That's a selfish reason for supporting a minimum wage.

We would be recovering lost tax revenue rather paying taxes for welfare.

I am not suggesting that we peg the minimum wage in Connecticut to productivity on a 1-to-1 basis, but I propose a graduated, weighted formulation so that in ten years that goal can be achieved. This would amount to a huge stimulus of our economy, meaning more profits for businesses, less churning in our work force, and fewer taxes spent on welfare. It is a win-win situation, that all of us, regardless of party, can be proud of.

Andy Garfunkel

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    Comments

Comments (8)

This is the right move for the people and for the economy

...but according to the CBO, it will cost the USA 500,000 jobs....sure, some will benefit - and norwalk may be a net winner - but there remains No Free Lunch. Elsewhere in the USA a half million people will be at $0/hr.

why put 500k people out of work?

Actually the CBO States that raising the minimum wage will actually increase jobs.

That is incorrect, this is going to hurt the poor more than anything.

No you are 100 percent wrong it would help the poor such as yourself.
Here are some key takeaways from the CBO report:
1.More than 700,000 American workers would be lifted out of poverty
More than 1 million retail workers and their family members live in or close to poverty. By raising the minimum wage of full-time workers to the equivalent of $12.25 per hour, 734,075 people would be lifted out of poverty and an additional 769,191 people living near the poverty line would see their incomes rise to more than 150 percent above the poverty line.
2.GDP would rise by as much as $15.2 billion
A wage increase to $12.25 an hour would impact more than 5 million workers and their families. As these families have access to more money, they will spend more, translating to as much as $15.2 billion in new economic activity, according to Demos.

3.132,000 new jobs could be created
If the increase in economic activity reached $15.2 billion, retailers would need 132,000 new employees.

4.The wage increase would actually only cost retailers about 1 percent of total sales
Large retailers would need to absorb the higher labor cost for the 3.5 million workers earning less than $12.25 per hour. But according to Demos, most of this increase in costs would be returned to the firm in the form of productivity gains and increased revenues, amounting to only 1 percent of their total yearly sales.

5.It would generate as much as $5 billion in additional retail revenue
In fact, assuming that low-income families spend rather than save the money from the wage increase, retailers could expect at least 20 cents in new revenue for every additional payroll dollar. That would have added up to as much as $5 billion in 2012.

6.The average shopper would pay just 15 cents more per shopping trip at most
Even if the nation's largest retailers decided to pass off the cost of a $12.25 minimum wage increase entirely to customers, Demos found that an average household would spend just 7 to 15 cents more per shopping trip.