Women Wage-Earners — The Economy? — Get A Boost

Today the minimum wage in the United States goes up to $7.25 an hour. Of course, some people will argue that such an increase will hurt the economy, overlooking the fact that there's plenty of good news for women.

But, first to the naysayers, courtesy of the Associated Press:

At Bench Warmers Bar and Grill in the southeast Kansas farming town of Chanute, owner Cathy Matney has decided to let some of her dishwashers go rather than pay all 22 of her employees more.

"It's bad timing," said Matney, whose waitresses and cooks will have to pitch in with scrubbing pots and pans. "With the economy like this, there's a lot of people who are out of work and this is only going to add to it."


What the AP fails to fact-check here is that Matney's waitstaff likely only makes the federal minimum $2.13 cents an hour for tip-driven jobs, a rate which is actually not going up. So Matney can tell her staff (and the word) that it's the government's fault, but the fact of the matter is that she's not going to be paying "all" her employees more and won't be required to. Whoops.

The AP's next example isn't exactly any better.

Ryan Arfmann, who owns a Jamba Juice shop in Idaho Falls, Idaho, will be cutting hours to his staff, which is made up largely of college students, high schoolers and homemakers who want to make a few bucks.

"Am I going to fire anybody, no," Arfmann said. "But kids understand there's going to be hours cut."

Arfmann said he wishes the increase was spread out over a few more years, to make it easier for him to absorb the costs.

So, basically, Arfmann's employees — many of whom aren't solely reliant on the income, might lose a few hours here and there, but no one's getting fired? Well, that's a good reason to delay a wage increase for the Americans who are dependent on the income. And what does the AP forget to fact check here? It turns out that, in fact, the minimum wage increase was spread out over the course of the last 2 years.

The other examples aren't any better: they quote two people who worry that they might get fired, what with all the right-wing propaganda out there that they will be fired. It isn't until the end that the piece bothers to mention that if people have more money to spend because their wages go up, they'll be able to buy things they can't yet, and even that assertion is met with skepticism by the right-leaning economics approvingly cited in the article.


Tsedeye Gebreselassie and Paul Sonn, writing for The American Prospect, pick up that argument where the AP leaves off.

Minimum-wage increases go directly to those workers who will spend it immediately on basic necessities like food, gas, rent, and clothing. Economists at the Federal Reserve Bank of Chicago have shown that minimum-wage increases boost consumer spending substantially more than tax cuts do, and the Economic Policy Institute estimates that the July minimum-wage increase will generate $5.5 billion in spending over the next year. A strong minimum wage is therefore key to boosting consumer demand and shifting our economy back to one that is built on good jobs rather than on consumer debt.


You know, it's kind of the trickle-up theory: if you give consumers money to spend, they tend to spend it, leading to more demand for goods and services, allowing businesses to hire more people, which gives those people money to spend, increasing demands for goods and services. It's just instead of giving it to the rich through tax cuts (or the banks through bail-out money, since we all know how well that's gone) and hoping it trickles down, you make sure it's given to the people you want to have it in the first place.

Gebreselassie and Sonn also note the positive effects that the minimum wage increase will have on female workers, who make up a significant component of those earning minimum wage (and, since they comprise less of the recessionary layoffs, a less significant component of those who will be affected by stimulus spending).

But while unemployment is lower for women, so are their wages. That's why this month's boost in the federal minimum wage from $6.55 to $7.25 an hour couldn't come at a better time, especially because the overwhelming majority of minimum-wage earners are adult women, many of whom support children.

The minimum wage effectively sets pay scales for jobs like home health aides, child-care workers, waitresses, retail clerks, and janitors — in which millions of women today spend their career. The decline in the real value of the minimum wage over the past 40 years has dragged down pay in these sectors, which are some of the fastest-growing sources of jobs in the 21st-century economy. The upcoming increase, while modest, will help slow falling living standards for this deserving work force.


In other words, it's a more positive way to further narrow the ongoing gender gap in wages than simply seeing men driven out of work by the economy in disproportionate numbers.

The authors also note, unlike the AP, that the absence of an increase in the tipped-earner minimum will disproportionately affect women, too:

For tipped workers like waitresses and nail salon workers — a group that is overwhelmingly female — the situation is even worse. For them, the federal minimum wage is a shockingly low $2.13 an hour. And under another outdated exemption, workers in the fast-growing home-health-care industry, in which millions of women tend to the most vulnerable in our society — seniors, persons with disabilities, and the ill — are not guaranteed any minimum wage at all.


Recession or not, for some women, wage reforms still have a way to go.

Minimum Wage Hike Raises Recession Fears [Associated Press]
Women And The Minimum Wage [The American Prospect]


Related: Federal Minimum Wage Will Increase To $7.25 On July 24 [US Department of Labor]

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