Push for minimum wage hikes: Prelude to wage inflation or labor unrest?

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This weekend the Mines has dug into the minimum wage hike issue, leaving the tailings for readers to think about and hopefully discuss.

Ten states raised the minimum wage this year. Almost a dozen, including Connecticut and Maine are looking at raising the floor on wages in coming years. And, in Washington, D.C., there’s a proposal to require employee to pay American workers a minimum of $10 an hour.

There are numerous political elements at work here, but financial pain is really at the heart of why there’s so much traction to the push for giving workers a raise.

Check out these numbers:

The Bureau of Labor Statistics released a little report on Thursday detailing the results of its quarterly survey of employers. This is a comprehensive report on employment and wages every employer in the nation that pays unemployment insurance taxes must file.

According to the BLS, workers in only three states in the third quarter of 2012 were making more money than they did in 2011. Two states, Minnesota and Oregon, reported the average wage had not changed in a year.

So in 45 states, workers actually made less on average than the year before. The BLS also found that of the 328 largest counties in the country, 274 of them saw wages fall. Fairfield County, which ranks 9th in the nation for highest average weekly wage, suffered the fourth largest decline in pay among counties. The average pay in Fairfield County dropped $58 to $1,371. In America, the average worker took home $906 a week, $10 less than the year before.

It’s a slap in the face to a lot of families that have labored through four or more years without a raise while costs for gasoline and food have gone up. Many Dr. Dooms in the investment community have been predicting the U.S. is headed for a period of hyper-inflation, largely due to the money printing at the Federal Reserve, which has kept interest rates effectively at zero allowing cheap credit to permeate the economy. Despite this, inflation hasn’t jumped, one reason is that wage inflation hasn’t happened. After all, if a loaf of bread rises to a cost of $70, wages will have to follow.

And so now, we get a push on minimum wage as people continue to fall behind.

Tsedeye Gebreselassie, a staff attorney with the National Employment Law Project, which supports many of the minimum wage hike campaigns, put it pretty succinctly. The reason minimum wage needs to rise is because it’s no longer just for entry level workers. There are adults trying to live off of $8.25 an hour in Connecticut. The national minimum wage is $7.25.

And there’s support for this contention. A survey of workers in Connecticut by Connecticut Voices for Children found that 47,000 parents in the state worked for minimum wages in the state. Of the more than 226,000 low paying jobs in Connecticut, 185,000 were filled by people over the age of 20.

So, at last, it looks like there’s going to be a little wage inflation in the country, but it’s not going to be easy.

During a debate on Connecticut’s minimum wage in February, one opponent to the minimum wage said if it goes up, employers will hire fewer workers and expect more out of them.

Talk to anyone who has kept a job through this recession and tough times and they’ll tell you they’re doing a lot more for the same amount of money. Now, financially stressed families barely making it now, will be told to work harder and longer hours, for a raise that still only keeps their heads above water.

Now there have been worse times for American workers. Certainly workers in the late 19th and early 20th centuries had it worse than those today, but the question is, if employers continue to ask workers to do more for effectively less, does that set the stage for a period of labor unrest?

Rob Varnon

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