Letter: Smart Capitalists and Patriotic Millionaires Say Hike the Minimum Wage
The Agenda Project (which is behind Patriotic Millionaires, Top Wonks, and other progressive initiatives) is preparing an open letter supporting an increase in the minimum wage.
They’re looking for more signatories.
SMART CAPITALISTS FOR AMERICAN PROSPERITY
Dear Mr. President and Honorable Members of the U.S. Senate and House of Representatives,
We are writing to ask you to put partisan differences aside to advance growth, prosperity and economic freedom by raising the minimum wage to at least $11.00 per hour and indexing it to inflation.
We make this request as business owners, employers and investors who are members of the so-called Top 1%.
We make this request for the following reasons:
1. IT’S GOOD FOR AMERICAN BUSINESS. Workers with higher wages are consumers with greater disposable income. More customers with more money = higher profits for American businesses.
2. IT’S GOOD FOR AMERICAN TAXPAYERS. Minimum wage earners don’t make enough to support their families and as a result many rely on government programs to make ends meet. A decent wage would increase the number of self-reliant Americans and decrease government expenditures.
3. IT’S GOOD FOR AMERICA’S GLOBAL LEADERSHIP. The US is the richest county in the world but its minimum wage significantly trails that of other developed countries. In order to maintain its global leadership, the U.S. must ensure decent earnings for its working citizens.
Raise the minimum wage.
Thank you,
Smart Capitalists for American Prosperity
If you’re in that rarified company, your voice is incredibly powerful. Drop a line to Erica Payne (epayne at agendaproject.org) to add your signature. And if you know anybody who’s in that category, psssst: pass it on.
Cross posted at Asymptosis.
IT SHOULD BE GOOD (GREAT?) FOR (FORMER!) LOW WAGE BUSINESSES TOO:
A $15 an hour minimum wage would send about 3.5% of GDP the way of 45% of American workers — about $560 billion (much of it to bottom 20 percentile incomes who today take only 2% of overall income.).
Could raising the wages of 45% of the workforce actually raise demand for the goods and services they produce? Sounds sensible at some level; raising wages so much ought to add demand somewhere – but, is it all smoke and mirrors? Before the 45% — who would get a wage hike to $15 an hour — can raise demand anywhere, they would need to get the extra cash from somewhere else – meaning the 55%. (Bottom 45 percentile incomes – not wages – currently take 10% of overall income – so, at no time are we talking giant chunks of the economy here.)
The 45% can get higher pay even as “numerical” (to coin a phrase?) demand for their output declines due to higher prices — as long as labor gets an bigger enough slice of the new price tags. This can be compared to a leveraged buyout or buying stocks on margin.
Products produced by low-wage labor tend to be staples whose demand tends to be inelastic. Demand for food is inelastic – maybe even fast food. If the price of your Saturday family jaunt to McDonald’s rises from $24 to $30, are you really going to eat at home (the kiddies haven’t forgotten the fundamental theorem of economics: money grows on trees :-])? And fast food should be the most worrisome example: lowest wages to start with; even so, highest labor costs, 25%.
Wal-Mart is the lowest price raising example (surprise) with 7% labor costs. Jump Wal-Mart pay 50% and its prices go up all of 3.5%.
If low wage labor costs average 15% across the board and go up 50%, overall prices increase only 7.5% — and that is for low wage made products only; nobody’s car note, mortgage payment or health premium is affected. If demand drops just enough for price increases to maintain the same gross receipts (conservative, even without inelasticity), low wage income should improve appreciably.
Allow me to cite: from a 1/ll/14, NYT article “The Vicious Circle of Income Inequality” by Professor Robert H. Frank of Cornell:
“… higher incomes of top earners have been shifting consumer demand in favor of goods whose value stems from the talents of other top earners. … as the rich get richer, the talented people they patronize get richer, too. Their spending, in turn, increases the incomes of other elite practitioners, and so on.”
The same species of wheels-within-wheels multiplier ought to work the at both ends of the income spectrum — and likely in the middle. A minimum wage raise to $15 an hour is not going to send most low-wage earners in pursuit of upper end autos, extra bedrooms or gold seal medical plans. Wal-Mart and Mickey D’s should do just fine, OTH – which in turn should keep Wal-Mart and Mickey D’s doing even better.
Denis: Excellent. And that’s all before the possibility that some of those wage increases *won’t* be passed on to customers, but will appear as slightly lower profits. Economic incidence and all that.