SULLIVAN'S SALVOS
August 14, 2015
Sullivan’s
Salvos 8/18/15
In this edition:
*Minimum Wage
*Did You Know?
*Minimum Wage
The
Johnson County Board of Supervisors recently took steps to raise the minimum
wage on a countywide basis. The goal is to reach a minimum wage of $10.10 per
hour by 1-1-17.
I
recognize that this is controversial. Some business owners hate it. But
frankly, too many of our citizens are in crisis. One out of every six of our
kids lives in poverty. The federal and state governments refuse to address this
crisis. So local government has to step up.
This
is not the first time local government has intervened in the “free market”. Local
governments pick winners and losers all the time. It is just the first time
local government has intervened on behalf of the workers.
I
served for several years as the Executive Director of a local nonprofit. It was
(and is) a business. I was responsible with making certain that we finished in
the black. During that time, there was a local movement afoot to require all
government contractors to pay a living wage. This was going to be a challenge
for us, as we were not allowed to set our own prices – the state controlled
that. Yet I am proud to say that within two years, we were paying the living
wage. (Though in the interest of full disclosure, only 5-6 employees had
employer-provided health insurance coverage.)
It
was not easy, and sacrifices had to be made. One of those was management wages.
As Executive Director, I only made 2 times the wage of our lowest paid worker.
But you know what? That was OK. It was totally fair.
Here are the answers to
some frequently asked questions:
Why do this?
The
answer is pretty simple: many of our neighbors are hurting. Families double up
because they cannot afford the rents in Johnson County. Families routinely use
food banks to get through the week. (19,000 Johnson County citizens are food
insecure.) Cars go unrepaired. Kids go to school with clothes that do not fit.
One small anomaly – an illness, something breaks down, etc. – and a family’s
world comes crashing down. People work 2-3 jobs, yet still cannot get ahead.
Personally, I cannot
sit back and allow our current situation to exist knowing that I have the power
to make it better. It is a moral imperative. What’s more, I truly believe this
will be good for the local economy.
Will jobs be lost?
There
are businesses that will fail whether we do anything or not. While some jobs
likely will be lost, even more will be gained. As low-wage workers have more
money to spend, consumer demand will create jobs. Grocery stores, restaurants,
bars, auto repair shops, movie theaters, clothing stores, etc. will all have
more customers with more money. They will undoubtedly need to hire in order to
meet demand. That means jobs. (Consumer spending makes up 70% of the US
economy.) And the jobs being created will pay more than the jobs being lost.
Other jurisdictions have seen increases in employment follow increases in the
minimum wage.
Will jobs move elsewhere?
Not minimum wage
jobs. These are primarily service sector jobs, which simply follow population.
Retail, fast food, etc. cannot move jobs to China or India. And even moving
them to Cedar Rapids is unrealistic; no one is going to drive to CR just for
fast food.
Will workers see their hours cut?
Our economy is
lacking consumer demand. When workers have more income, they spend it at local
businesses. Those businesses will need employees to keep up with demand. So
while anything can happen at any given business, most employers should see a
need to fill more shifts, not less.
Why $10.10? Why not $20? Why not $50?
Because
$10.10 makes life better for a lot of people without damaging our economy. Some
people honestly believe there should not be a minimum wage. Those folks are a
very small minority. So if we can agree that the vast majority believes there
should be a minimum wage, we are simply arguing about the level. Clearly, $7.25
is not working for our economy. We know that. All the statistics support this
argument. Yes, a minimum wage of $50 would cause problems. But no one is
suggesting that. We are suggesting $10.10.
Won’t raising the minimum wage only affect
teenagers?
According
to the Economic Policy Institute, the average age of workers who would benefit
from a higher minimum wage today is thirty-five. Eighty-eight per cent are over the age of twenty.
Won’t raising the minimum wage drive up prices?
You
are already paying for low wage jobs – through your taxes. What’s more, studies
do not bear out a huge jump in prices. For example, if McDonald's doubled the
salaries of its employees to $14.50 an hour, not only would many of them go off
public benefits, but so would the company-- and a Big Mac would cost just 68 cents more (another study
says only 14 cents.) At Walmart,
increasing wages to $12 per hour would cost the company only about one percent, so that
made-in-China $10 item would run you all of $10.10. (Source: Center for Labor
Research and Education.)
Shouldn’t we instead focus on other programs, such
as the Earned Income Tax Credit (EITC)?
The
EITC is a great program, and it should be expanded. But increasing the EITC does
not preclude a higher minimum wage. We can, and should, do both.
What’s
more, programs that prop up low wage jobs are paid for by all taxpayers. Say
you own a business and pay your employees well. Under all these schemes, your
tax dollars make up the difference for low-wage workers. In other words, you
subsidize the guys who pay low wages.
What about small businesses?
Two-thirds of all minimum
wage workers are NOT employed by small businesses. Better yet, one survey shows
three out of five small
business owners favor raising the minimum wage; their profits depend on a
strong local economy, which requires more money in local consumers' hands. Most
small businesses cannot off-shore jobs, or export their way to profit, so
micro-economics matter. Sad to say, 50-80 percent of most small businesses
already fail for various reasons,
even with a minimum wage that has not kept up with inflation (wage costs are
actually lower now than in the past; in 1968 the federal minimum was $1.60 per
hour, approximately $10.70 in 2013 dollars.) Factors other than labor costs
seem far more significant.
Can Johnson County do this legally?
Contrary to the
statement put forth by Iowa Workforce Development (IWD), I believe we can. And so does County Attorney Janet Lyness, who
reviewed all the legal issues and sees no impediments.
What Does Your Religion Say?
This is a government
proposal. Religion has nothing to do with it. And many folks are non-religious.
But if you ARE a religious person – consider what your faith says about helping
the poor. As you spend your time judging which poor folks are worthy, I urge
you to refer to the religion of your choice. What does it say about judging
others? Again, what does it say about help for the poor?
It
is important to understand – this is NOT a political winner. Most of the folks
who will benefit from this will not vote. Business owners will mobilize against
me. I receive no personal gain from this; only personal headache. But it is not
about me. It is about thousands of poor people who are in a crisis.
Whenever
possible, I like to make decisions based upon data. The data here is clear –
raising the minimum wage will be good for our local economy.
*DID YOU KNOW?
President Franklin Roosevelt signed
the federal minimum wage into law in 1938, during the Great Depression. The
stated purpose was to keep America’s workers out of poverty, and increase
consumer purchasing power in order to stimulate the economy. The minimum wage
was last increased January 1, 2008.
Anyone
interested in learning more about County government should take a look at the
County website-
"Sullivan’s
Salvos" is sent once per week to any interested party. It will give a
brief update on issues of interest to Johnson County residents.
These messages
come solely from Rod Sullivan, and neither represents the viewpoints of the
whole Board of Supervisors nor those of groups or individuals otherwise
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As always,
feel free to contact me at 354-7199 or rodsullivan@mchsi.com. I look forward to
serving you!
---Rod
posted by Rod Sullivan @ 9:17 AM
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