Editorial: U.S. economy needs a higher minimum wage
The American economy is stuck.
The recession has been over, according to well-paid economists and bureaucrats, for more than four years. But long-term unemployment remains stuck at its highest level since World War II.
Financial inequality is only getting worse, which means that more and more money is pooling in places where it is useless to the broader economy, behaving as so much mosquito-breeding brackish water.
The federal budget deficit is declining, and interest rates are practically frozen at levels undetectable without an electron microscope.
It is time to raise the federal minimum wage.
That level was last increased, to $7.25 an hour, in 2009. But, indexed for inflation, the purchasing power of the minimum wage has wavered, mostly downward, since 1968.
The wealth of the 1 percent, the salaries of CEOs and corporate profits have been soaring. But the ability of hourly employees to support their families, educate their children and set something aside for retirement or a rainy day is inert at best.
An increase in the minimum wage to $10.10 an hour over two years is before Congress and has the support of President Obama. It should pass.
The knee-jerk reaction to such a plan expressed by, among others, Utah's Rep. Jason Chaffetz is that making labor cost more will cause businesses to buy less of it. But the real work of economic analysis increasingly shows that autonomic reflex to be inaccurate.
It is more likely that more money flowing through paychecks to more people will move rapidly through the economy, make workers more productive and loyal, reduce expensive absenteeism and turnover and benefit the whole of the economy as more people have money to spend.
Not only that, making employers pay the actual cost of their employees' living expenses will cut the burden underpaid workers place on the taxpayers, through everything from Medicaid and food stamps to remedial education and prisons.
The argument that higher pay will push jobs oversees has little to recommend it. Industrial or knowledge jobs that are exportable are either already gone or are already paying well above the minimum wage. The jobs that would be affected, mostly retail and food service, cannot be outsourced to Bangalore.
It is time to raise the minimum wage. The costs will be small. The benefits will accrue to the whole of the economy.