Asheville Citizen-Times
| April 27, 2006
Section: EDITORIAL Edition: FINAL Page: 4A STAFF STORY |
| M Most people grasp the fundamental reality that in 2006 in North Carolina, it's nearly impossible to house, clothe, feed, transport and provide basic medical care for a single individual, much less a family of two or three or four, on $10,712 a year. That's the annual amount a person working full-time and earning minimum wage makes before FICA and other deductions. The minimum wage in North Carolina last changed in 1997, when Congress boosted the rate nationwide from $4.15 an hour. Because of inflation, the purchasing power of $5.15 in 1997 had been reduced to $4.31 cents in 2005. And it continues to erode. Yet the cost of gasoline, home heating, medical care and many other essentials continues to rise, in some cases at a staggering rate. North Carolina lawmakers are scheduled to debate increasing the minimum wage to $6 an hour during the short session of the General Assembly this summer. Lawmakers in the house approved a proposal to raise it by that amount last year. The bill is awaiting action in the Senate Finance Committee. The increase would aid about 3 percent of the state's workforce or about 101,000 workers. The main opposition seems to be coming from small businesses. "Our research shows that North Carolina could lose 135,000 to 170,000 jobs with an increase in the minimum wage," said Gregg Thompson, executive director of the North Carolina chapter of the National Federation of Independent Businesses. "Small businesses, who are our members, have to absorb that increase in some capacity." Thompson's numbers are hard to buy for several reasons, not the least of which is that they predict more jobs will be lost than pay minimum wage. In fact, several studies have shown that raising the minimum wage does not lead to increased unemployment. A 1998 study by the Economic Policy Institute found that unemployment and poverty rates dropped following the last increase in the federal minimum wage in 1997. Other studies, in states that have increased the minimum wage since the 1997 federal increase, have shown that those states did not experience increased unemployment as a result. One study, by the Fiscal Policy Institute, actually found that small businesses performed better in states with higher minimum wages. That could be because they experience less turnover and improved employee morale or because consumers have more money to spend or for some other reason, but the massive job losses predicted by Thompson don't appear to have occurred elsewhere. Thirty-five percent of those who receive minimum wages are their families' sole breadwinners, and most of them are women, according to statistics compiled by the Center for American Progress. But it isn't just minimum wage earners who benefit. So do taxpayers, who otherwise subsidize their employers through Medicaid, housing subsidies, food stamps and other social service programs that such families rely on because their income doesn't come close to covering the basics. Increasingly, America is becoming the two different Americas John Edwards talked about in his 2004 presidential campaign. In the CIA World Factbook, the country profile for the United States says in the section describing the economy: "The onrush of technology largely explains the gradual development of a 'two-tier labor market' in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20 percent of households." Earlier this month new figures from the Federal Reserve showed that the richest 1 percent of families held 33.4 percent of the nation's net worth in 2004, the Wall Street Journal reported. The next wealthiest 9 percent held 36.1 percent of net worth, while families in the top 50 percent to 90 percent held 27.9 percent. Families in the bottom 50 percent saw their share of the nation's net worth fall to 2.5 percent from 2.8 percent in 2001. That's an unsustainable trend that must be reversed. Either we figure out a way to provide those families in the bottom tier with a living wage and an opportunity to become part of the American dream or we will create an increasingly unstable social environment where drugs, crime and dependence on social programs drives up the cost of government and undermines our security. That's not even taking into account the enormous toll in human potential lost to our nation in an ever more competitive global environment for lack of opportunity. North Carolina can't reverse the trend alone by increasing the minimum wage. But it can certainly take one small step in that direction. GRAPHIC WITH ARTICLE |
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