McDonald’s recently got an Egg McMuffin on its corporate face.
The fast-food giant teamed up with Visa six months ago to publish an online financial site demonstrating how its workers can survive on low wages. The site includes a sample monthly budget: the planner assumes workers will need a second job to make ends meet; it allots $20 a month for health insurance and $600 for rent; and it budgets zero dollars for heating, which may be fine in Miami, but not many other places in the United States.
These and other absurdities in the proposed budget prove that a worker is hard pressed to make ends meet on McDonald’s low wages. McDonald’s low-wage workers earn an average $8.25 an hour, a dollar above the federal minimum wage. Imagine the plight of those earning the minimum $7.25 an hour?
Another example of the plight of low-paid workers surfaced before Thanksgiving when a Walmart in northeastern Ohio held a holiday canned food drive — for its own employees, who evidently are paid too poorly to afford a holiday feast.
Many progressives are trying to improve the plight of the working poor by pushing to raise the federal minimum wage. President Obama called for a steep rise in the national rate in his last State of the Union speech, and he has signed on to a congressional Democratic proposal to set the hourly rate at $10.10. Republicans oppose an increase, and prospects for action on the federal rate in the dysfunctional Congress are dim.
Republicans argue that a higher wage is a job killer. “When you raise the price of employment, guess what happens? You get less of it,” says House Speaker John Boehner. The U.S. Chamber of Commerce claims “raising the minimum wage hurts workers on the lower end of the pay scale in that it does kill jobs.” Academic studies, however, show that there is no evidence for this assertion; in fact, the research finds that raising the minimum wage does not lead to job losses even during an economic downturn.
Conservatives also suggest that a higher minimum wage forces small business to fire workers. Unfortunately for this contention, two-thirds of low-wage workers are employed by large corporations.
Another false argument frequently invoked is that a raise in wages would increase prices, forcing Americans to buy cheaper foreign-made goods. But 60 percent of minimum-wage workers are employed in food service or sales, not in manufacturing. As Paul Krugman puts it, “Americans won’t drive to China to pick up their burgers and fries.”
Republican opposition to any increase in the federal rate has given Democrats an opening to pursue a hike at the state and local level. It’s an argument that appeals to working-class Americans in this era of growing inequality in income and wealth, and it has the support of many unions.
Elizabeth Warren is one Democrat who could make this issue and other progressive causes the centerpieces of a possible campaign for the presidency in 2016. The Massachusetts Democrat has pointed out that if the federal minimum wage had kept pace with increases in worker productivity, the wage would be about $22 an hour now, three times the current rate.
Congress’s inability to act threatens to create a patchwork of wage rates. Workers in one locality might earn substantially more than those working similar jobs nearby. California Democrats recently passed a law raising the minimum to $10 an hour. New Jersey voters last month approved an $8.25 state wage the same day they overwhelmingly reelected Republican Governor Chris Christie, an opponent of the higher rate. Voters in SeaTac, Washington, narrowly endorsed a $15 an hour wage for the small city south of Seattle, which could raise pay for about 6,500 workers in and around the Seattle-Tacoma International Airport.
Democrats believe raising the minimum wage has appeal even in red states, and they hope to use the issue just as Republicans used initiatives to ban same-sex marriage as a tool to boost voter turnout in 2004. Sharing a ballot with a measure to raise the minimum wage may help Democrats in 2014 and 2016 by defining differences between the parties and increasing turnout.
A hike in the minimum wage is the entering wedge for a wider discussion over income inequality. In the 1960s and 1970s the minimum wage was roughly half the median wage in the nation. Had the wage kept pace with inflation, it would be about $10.77 now, and a living wage, studies show, in costlier regions like the Washington metro area, New York City, and San Francisco would be about $13 an hour or more.
The ability of fast-food franchises and large retailers like Walmart to pay at or near the minimum wage is an important contributor to increasing inequality. A substantial hike in the rate is just the opening salvo of a larger debate.