Minimum Wage and The Two Americas

In the primaries of 2004 and 2008, there was a reason I supported the Democrat I supported for President. Despite the eventual personal failings of the candidate, the message of Two Americas put forward by John Edwards really resonated with me. That message has a lot of truth behind it. I do not really believe there is any doubt whatsoever that the economic policies of our government for the last 30 years have really only succeeded in doing one thing well: Creating Two Americas. One of the very few and very rich who really do get to live by a different set of rules and get preferential treatment. Another of all the rest of us who work harder and constantly find it harder to get by. Nobody is on our side.  

Although John Edwards has relegated himself to the scrap heap of disgraced politicians—that message should not die. That is why it encouraged me to see David Cooper of the Economic Policy Institute using the term once again in his commentary on May 15th laying out the case for raising the minimum wage. The term is just as relevant now as it was when a leading candidate used it in two Democratic primaries for President:

There's a sense today that we, as a country, are dividing into two Americas. In one, corporate stockholders and owners of capital become increasingly wealthy as profits and dividends continue to rise. In the other, ordinary workers gain more education, work longer hours and improve their productivity, yet often struggle to make ends meet.


This is especially relevant when you look at productivity as compared to wages:

We see this divergence in the economic data. Since the 1970s, productivity has risen dramatically, along with corporate profitability and pay for the highest earners. Yet middle- and low-wage workers' incomes have barely changed. In fact, for the lowest-paid workers, incomes have actually fallen—partially because of the erosion in value of the minimum wage.


And for those of you who would argue that we cannot raise the minimum wage or prices will go up, we will lose jobs or feel that lower income Americans making more will end up costing or hurting you consider this. When we allow multi-billion dollar corporations to keep their workers in poverty it not only hurts the American economy but skyrockets the national debt. One we are all responsible for:

A minimum wage of $7.25 is not enough to live on. Full-time minimum-wage workers today earn about $15,000 a year. In 1968, they earned about $20,000 per year in today's dollars. While certainly not enough for a life of luxury, it is enough for a family of three to stay above the poverty line—which can't be said for today's minimum-wage workers.

In fact, no matter what propaganda Conservatives and Corporate apologists will spew like gospel one thing is clear: Raising the minimum wage will help our country as a whole in a few different ways.

The multiple positive effects that would result from a higher minimum wage are clear: It would boost the earnings of working families hardest hit by the Great Recession, spur economic growth, and create about 140,000 net new jobs. In an economic climate in which wage increases for the most vulnerable workers are scarce, raising the minimum wage to $10.10 by July 1, 2015, is an opportunity that America's working families cannot afford to lose.


While we are at it, we need to significantly deal with the tipped minimum wage also. It has been stagnate much longer than the real minimum wage and is now worth nothing at all:

Workers who rely on tips are subject to a special tipped worker minimum wage, which has remained frozen since 1991 at a meager $2.13 per hour. The result has been to drag down pay for tipped workers in many of our nation's fast-growing service industries, such as restaurants, hotels, nail salons, and car washes, where millions today spend their careers. When it was created by Congress, the tipped minimum wage provided tipped workers an economic cushion and brought their pay closer to a living wage—something our economy badly needs more of today.

A 2009 report by the National Employment Law Project finds that the stagnant minimum wage for tipped workers is a key factor behind falling living standards and growing economic insecurity for workers in tipped industries. Since the tipped worker minimum wage was frozen at $2.13 in 1991, its value has fallen by 36% in real terms. As a result, waitresses and waiters—the largest group of tipped workers—have three times the poverty rate of the workforce as a whole.


While the recommendation for tipped workers is 70-percent of the minimum wage, I have a better idea. Why not just do away with any sub minimum wage altogether? Why are all workers not entitled to the minimum wage? If you do your job well enough that costumers think you deserve extra why should that be used against your right to earn a fair wage?

The plain and simple fact of the matter is that there are indeed Two Americas. Anyone who does not believe this simply is not paying attention to facts:

During the first two years of the nation's economic recovery, the mean net worth of households in the upper 7-percent of the wealth distribution rose by an estimated 28-percent, while the mean net worth of households in the lower 93-percent dropped by 4-percent, according to a Pew Research Center analysis of newly released Census Bureau data.

From 2009 to 2011, the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.

From the end of the recession in 2009 through 2011 (the last year for which Census Bureau wealth data are available), the 8 million households in the U.S. with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $0.6 trillion.


There is no question that most of America deserves a raise. Raising the minimum wage helps everyone and it is time that Americans shared in the prosperity. Everyone is feeling the pinch of working harder, being more productive and still not getting ahead. Employers in this country can afford to pay more. The market has recovered and they are once again reaping huge profits on our labor. It is far past time our government quit catering to them and started working for us.

Even with a Democratic President we are seeing the widening of the gulf between the Two Americas and we need to demand that this America becomes one once again. A strong middle-class needs to be rebuilt to fuel our economy.  

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