Not even a drip: Big business reaps big profits, but benefits don’t trickle down to minimum wage workers

August 20th, 2012 | Economic Opportunity Institute

Economists, business owners, and policy experts agree: a raise for America’s lowest paid workers is long overdue.

drop of waterThe federal minimum wage hasn’t risen in three years, and at $7.25 an hour, it’s actually worth less than minimum wage in 1968.

Standing in the way of incremental increases in the minimum wage are groups like the National Federation of Independent Businesses (NFIB), a big business lobbying organization that has come under fire for receiving millions of dollars from Republican campaign funds. Perhaps unsurprisingly, the NFIB has ignored their own members in the minimum wage debate.

Instead of tackling their members biggest concern – lack of demand – the NFIB is arguing that labor costs, the single most important problem to just 3% of their members, is a major threat to small business.

Of course, the majority of low wage workers aren’t employed by mom and pop stores. More than 66% of low wage workers are employed by firms like Wal-Mart or McDonalds – major companies whose CEOs and shareholders enjoy billions in profits.

According to a recent report from the National Employment Law Project:

Pay for the average CEO at the top low-wage employers was $9.4 million in the most recent fiscal year. The 50 largest firms also returned a stunning $174.8 billion to their shareholders over the past five fiscal years – in many cases thousands of dollars per employee per year.

More than 90% of the largest 50 firms were profitable last year, with over three-fourths experiencing higher revenues now than before the recession. But big profits haven’t trickled down to employees. Low wage occupations actually experienced a 2.3% decline in real pay since the recession.

As wage stagnation continues at every level of middle class income, Congress has taken notice. Senator Tom Harkin (D-IA) and Representative George Miller (D-CA) have introduced legislation that would raise the federal minimum wage to $9.80 by 2014, and adjust it each year to keep up with the rising cost of living.

It couldn’t come at a better time. Post-recession job growth has concentrated almost exclusively in low-wage occupations, and the Bureau of Labor Statistics estimates that 7 out of the top 10 fastest-growing sectors over the next decade will be in low-wage industries.

The U.S. needs more jobs, but it needs good jobs – jobs that reward a hard day’s work with a decent wage. Supporting a strong minimum wage, here in Washington state and across the country, is the first step to reversing the downward spiral.

By EOI Intern Ashwin Warrior

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Posted in Minimum Wage

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