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Raise minimum wage, say some on the right

By
January 14, 2014 |

By Carolyn Lochhead
WASHINGTON — As East Bay Rep. George Miller spearheads a Democratic drive to raise the federal minimum wage, he is getting support from unlikely quarters, including Silicon Valley millionaire Ron Unz and conservative activist Phyllis Schlafly.

“People are starting to realize how much in federal subsidies are given to these employers that pay less than a living wage,” Miller said.

The federal government supplements low wages through such programs as food stamps, school lunches, Medicaid, housing vouchers and the earned income tax credit, a cash grant to the working poor.

Most minimum-wage workers are adults, not teenagers, and the vast majority are women. A study last fall by the UC Berkeley Labor Center found that half of fast-food workers were enrolled in at least one public assistance program.

Even full-time work often leaves minimum-wage workers in poverty. The study pegged the taxpayer cost of federal aid to low-wage workers at $243 billion a year for the fast-food industry alone.

Business-backed Republicans in Congress and their allied think tanks argue that raising the cost of labor would eliminate jobs. But they are scrambling to respond in the face of broad public support and rising alarm on the right that the economic recovery is bypassing most workers.

A Gallup Poll in November found that 76 percent of those surveyed, including more than half of Republicans, backed an increase in the federal minimum wage, currently $7.25 an hour.

Saving on welfare
Schlafly wrote last week in her online column that raising the minimum wage “may actually be worth considering” if it saves money on welfare.

“Legislation to raise the minimum wage would elevate many low-wage earners above the income threshold that qualifies them for benefits and should result in reduced welfare spending,” Schlafly wrote. “That’s a trade-off Republicans could support.”

Unz, a former Republican candidate for governor, is doing more than considering the idea. He’s sponsoring a proposed California ballot initiative that would raise the state minimum wage to $12 an hour by 2016.

Gov. Jerry Brown signed a law last year raising the wage to $9 an hour starting July 1 and to $10 by 2016 from the current $8, but Unz says that’s still too low.

“What we are faced with in America is the classic case of business interests privatizing the benefits of their workers and socializing the costs,” Unz said.

Such feelers on the right, however, have yet to catch on with congressional Republicans. The Republican Study Committee, representing House conservatives, announced an “anti-poverty initiative” last week that made no mention of the minimum wage and called poverty “often a symptom of deeper and more intransigent problems, like fatherlessness and community breakdown.”

The members said Congress should promote “personal responsibility” by bolstering foster care, encouraging violence prevention measures and “healthy marriage,” and other efforts.

Recession’s effects
Miller thinks the recession has undermined the appeal of the personal-responsibility argument to middle-class voters who have struggled to survive.

The working poor are “accepting every bit of personal responsibility you can possibly put on them,” Miller said. “They go to work every day. They work on unpredictable schedules. They have children at home. They still go to work. And when they come home, they’re poor.”

Miller’s bill, the Fair Minimum Wage Act – sponsored by Sen. Tom Harkin, D-Iowa, in the Senate and endorsed by the White House – would raise the federal minimum to $10.10 an hour over three years and index it to inflation.

“Republicans don’t know it yet,” Miller said, “but they’re going to vote to pass this bill.”

Rising income inequality is expected to be a central theme of President Obama’s State of the Union address later this month. There are signs that some on the right are open to the debate.

The conservative Weekly Standard, for example, ripped Silicon Valley’s extremes of economic and social inequality last month, describing a “master/servant” class structure of startup millionaires and the “tech spin-off jobs” they create for baristas, manicurists and pizza deliverers.

A report last month by the Congressional Budget Office said the top 1 percent of U.S. earners received 15 percent of the nation’s income in 2010, a 16 percent increase from 2009. Poor people’s share of U.S. income rose just 1 percent, and the middle-class increase was even less.

Huge gap for workers
Corporate CEOs earned 20 to 30 times more than the average worker in 1979; now they earn 273 times more, according to White House figures.

Some conservatives say that relying on “personal responsibility” isn’t the only solution to closing income gaps without raising the minimum wage. Martin Feldstein, who served as an economic adviser to former President Ronald Reagan, has called for raising the earned income tax credit, arguing that higher cash subsidies would permit wages to fall well below the current $7.25 federal minimum, which would boost job growth.

Unz, however, argues that a minimum-wage boost would be unlikely to cost jobs, because most low-wage workers are employed in service industries immune to foreign competition.

And in most cases, he said, the pass-through to consumers would be minor. A $12-an-hour wage, he estimates, would raise the price of a McDonald’s hamburger by a dime.

A $12 minimum wage would amount to a $50,000 annual income for a full-time working couple. Unz said that would amount to a giant government stimulus package that would help the working poor, save taxpayers money and be paid for entirely by the private sector.

“We’re talking about raising the value of work and cutting welfare,” Unz said. “That’s what Reagan used to say when I became a conservative.”

— Reach Carolyn Lochhead at clochhead@sfchronicle.com

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