NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING

  • Latest News
  • Pitch a Story
  • Work with a Journalist
  • Join the Blog Squad
  • Afghanistan
  • Africa
  • Asia
  • Baltimore
  • Canada
  • Egypt
  • Europe
  • Latin America
  • Middle East
  • Russia
  • Economy
  • Environment
  • Health Care
  • Military
  • Occupy
  • Organize This
  • Reality Asserts Itself
  • US Politics
  • The US Has Lowest Minimum Wage and Most Young People Without Jobs Among Wealthiest Countries


    Over 100 economists sign petition to raise the minimum wage -   August 14, 13
    Members don't see ads. If you are a member, and you're seeing this appeal, click here


      Share to Twitter
    Share to Facebook


    I support The Real News Network because it is one of the few remaining political voices of the people. - David Pear
    Log in and tell us why you support TRNN

    Bio

    Robert Pollin is Professor of Economics at the University of Massachusetts in Amherst. He is the founding co-Director of the Political Economy Research Institute (PERI). His research centers on macroeconomics, conditions for low-wage workers in the US and globally, the analysis of financial markets, and the economics of building a clean-energy economy in the US. His latest book is Back to Full Employment. Other books include: A Measure of Fairness: the Economics of Living Wages and Minimum Wages in the United States, and Contours of Descent: US Economic Fractures and the Landscape of Global Austerity.

    Transcript

    The US Has Lowest Minimum Wage and Most Young People Without Jobs Among 
Wealthiest CountriesJAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore. And welcome to this latest edition of the PERI report.

    Around the country, low-wage and retail workers have been striking for better wages. A new study by the Organization of Economic Corporation and Development has found that the U.S. minimum wage lags most rich countries. As a share of median income, the U.S. minimum wage ranks 24th out of 25 rich countries, according to Bloomberg News.

    Now joining us to talk about the latest news around the minimum wage is Bob Pollin. He's the founder and codirector of the PERI institute in Amherst, Massachusetts, and a regular contributor to The Real News.

    Thank you so much for joining us, Bob.

    PROF. ROBERT POLLIN, CODIRECTOR, POLITICAL ECONOMY RESEARCH INSTITUTE: Thank you very much for having me.

    NOOR: So, Bob, there's been a lot of talk of the minimum wage recently in the media. There's been workers striking around the country and one-day strikes. And Republicans have said we should eliminate the minimum wage altogether to boost jobs. But you kind of have a different take. You're one of 100 economists calling for an increase in the minimum wage to $10.50 an hour. Can you talk about why you say the minimum wage needs to be increased?

    POLLIN: The minimum wage in the country right now, at $7.25 an hour, is about $3 an hour--more than $3 an hour below what it actually was in 1968 in this country. In 1968 in this country, the minimum wage, after we properly adjust for inflation, was $10.65 an hour. That means in 1968--let's take a young girl in Texas walking into her job at McDonald's on the first day. Legally she would have to have been paid $10.65 an hour. That's in 1968. So the proposal by Congressman Alan Grayson is basically just to bring the United States minimum wage today back to where it was in 1968.

    Now, on top of that, if you allow for the fact that the economy's productivity has grown, which of course it has, which means that we can do things more efficiently, the economy's labor productivity has grown by 135 percent since 1968. So if you say that the--take the 1968 federal minimum wage and adjust for inflation and adjust for productivity, if you bumped up the minimum wage each time average worker productivity went up as well, the minimum wage today, the minimum wage today should be $25 an hour. So if we could afford a $10.65 minimum wage in 1968, we can easily afford a $10.50 minimum wage today.

    NOOR: A lot of critics of raising the minimum wage say that the cost will hurt these fast food establishments. What's your response to such claims?

    POLLIN: Well, we've heard this for generations, that if you raise the minimum wage, it actually hurts the people it's supposed to help. That is, the low-wage workers experience unemployment when you raise the minimum wage, they say, critics say, because businesses don't want to pay more, so they just won't hire as many workers.

    The only problem with that argument is that it's inconsistent with the evidence and has been for generations. First of all, one piece of evidence. In 1968, when the minimum wage was $10.65 an hour, the U.S. unemployment rate was 3.7 percent, not 7.5 percent, what it is today. So, clearly, we can operate an economy with a very low level of unemployment along with a decent minimum wage. So that general point is also true.

    But then, if you get into more specifics, what actually happens when the minimum wage goes up? Does it cause unemployment in, say, the fast food industry, where you have a high concentration of low-wage workers? And the answer is, from the research, is that it does not.

    The question is: well, why doesn't it? Because, okay, you are raising the business's cost. Then why doesn't it cause higher unemployment, businesses laying off workers? The answer here, I believe, is that--we've done--myself and my coworker Jeanette Wicks-Lim have done research, along with other researchers, that find that the overall cost increase that, say, a McDonald's would experience due to a minimum wage increase is generally modest. So, for example, if we go from today's minimum wage of $7.25 to $10.50, how much would it cost an average fast food restaurant like McDonald's? What Jeanette Wicks-Lim and I found is that the average fast food restaurant would experience a cost increase equal to 2.7 percent of its total sales--2.7 percent of sales. Well, that's something, but it's not that much, just to put it in some perspective. For a McDonald's, say, if you're charging $4 for a Big Mac and you wanted to absorb the cost of the wage increase through the price of the Big Mac, you'd raise the price of the Big Mac from $4 to $4.05, $4 to $4.05. That would cover half of the entire cost increase for all the workers at McDonald's getting a wage increase to $10.50. Now, yes, you would still have to cover the other half, and that could come through the firm becoming modestly more productive. That--and here's how you get modestly more productive. You have less turnover and you have less absenteeism. You have the workers more committed to the job. And then, yes, modest cuts, relative cuts for the owners. The owners would have to absorb maybe 1 percent of that cost. And through that combination, you could cover the entire cost increase to bringing workers up to a $10.50 minimum wage at fast food restaurants. At other types of businesses, the adjustment would be much less.

    NOOR: One of the other things you hear thrown around Fox News and by conservative pundits is that, you know, these low-wage minimum wage workers are all teenagers, and we know that's not true. Ninety-one percent of minimum wage workers are not teenagers, in fact. That being said, the U.S. boasted the highest share of young people with jobs in 2000 among wealthy countries. Now the opposite is true. The employment rate of 25- to 34-year-olds is the lowest among wealthy countries according to The New York Times. Bob, could the U.S. non-employment rate among young workers be related to the low minimum wage?

    POLLIN: Yeah, well, I mean, you have the situation in which we have overall a very low percentage of the overall adult and teenage workforce is in the labor force. In fact, you know, we have a 7.5 percent unemployment rate. But if we were to bring back the workers who have dropped out of the labor force, the official unemployment rate would go back up. I don't have it exact, but probably around over 8 percent right now. So you've had people drop out. You've had people drop out in--the young people drop out. And why do they drop out? Well, to a very large extent they drop out because they're discouraged, because they're not getting jobs because of the slack in the labor force. So it could also be to some extent the fact that the wage is too low. But in my view, the primary factor is the slack in the labor force, so that you have relatively high rates of people dropping out of the labor force. And that's why you have--while you have a 7.5 percent unemployment rate officially, you have closer to 14 percent who are either unemployed or underemployed or who have recently dropped out of the labor force. That's about 22 million people.

    NOOR: Bob Pollin, thank you so much for joining us.

    POLLIN: Thank you very much for having me.

    NOOR: Thank you for joining us on The Real News Network.

    End

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


    Comments

    Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

    Comments


    Latest Stories


    The Modern History of Venezuela and Popular Democracy - Edgardo Lander on RAI (9/9)
    An Asia "Pivot" Should Mean Cooperating with China to Solve the Global Environmental Crisis
    Assessing the U.S. Environmental Movement
    Intimidation and Political Interference Goes Unpunished in UAW Case
    Exclusive Investigation Uncovers How BP Uses Bribes To Do Business
    The Modern History of Venezuela, The Protests and Democracy - Edgardo Lander on RAI (8/9)
    Greek Politics 4 Years After The Financial Crisis
    CBO Report Confirms U.S. Deficit Back to Normal Level
    Israel Uses Refugees as "Currency" in Arms Trade with Africa
    Who Will Pay for Climate Change Disaster?
    Canada Shifts to Right Under Harper, Mimicking the United States
    The Savings and Loan Crisis Demonstrates the Importance of Glass-Steagall
    South African Platinum Miner's Struggle Challenges ANC Leadership
    TRNN Original Report: Manning Determined to Fight Back After Army Upholds 35- Year Sentence
    Hundredth Anniversary of the Ludlow Massacre
    The Bundy Ranch Standoff Demonstrates Values Shared by Corporations and the Far Right
    The Resegregation of American Schools
    The Modern History of Venezuela, Why Still So Much Crime? - Edgardo Lander on Reality Asserts Itself (7/9)
    What Role Has Russia Played in Eastern Ukraine?
    Can Johns Hopkins Afford to Pay A Living Wage? (2/2)
    University Sit-In Targets World's Largest Private Coal Company
    The Modern History of Venezuela and the Need for a Post-Oil Economy - Edgardo Lander on RAI (6/9)
    Can Johns Hopkins Afford to Pay A Living Wage? (1/2)
    One Percent of Environmentalists Killings Lead to Convictions
    Investigation Finds Former Ukraine President Not Responsible For Sniper Attack on Protestors
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Ukraine Transitional Gov't Moves Militarily To Reclaim Seized Buildings
    IPCC Report Flawed By Narrow Focus on Carbon Emissions
    The Modern History of Venezuela: The Bolivarian Revolution - Edgardo Lander on Reality Asserts Itself (5/9)
    Obama Signs Directives to Reduce the Gender Wage Gap
    Eastern Ukraine Lacks Political Representation in Kiev
    Demystifying the Role of Mitigation in the Most Recent IPCC Report
    Hypersurveillance State Won't Prevent Another Boston Marathon Bombing
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Univ. of Maine Faculty Reinstated After Students Protest Against Cuts
    The Modern History of Venezuela from 1908 to 1973 - Edgardo Lander on Reality Asserts Itself (2/9)
    IMF Will Address Global Inequality, Says Managing Director Christine Lagarde
    Raising Big Banks' Leverage Ratio Good, But Not Nearly Enough
    TRNN Replay: Austerity Road to 19th Century
    Has Palestinian Maneuvering Revived Peace Talks?
    Late Jackson Mayor Lumumba's Son Wins Primary to Replace His Father, Runoff Election Ahead
    Quebecers Reject PQ and Elect a Liberal Government Representing Big Business
    TRNN Debate: Decriminalization vs. Legalization
    The Beginning of the Chavez Era - Edgardo Lander on Reality Asserts Itself (4/9)
    "Off With His Head": Court Upholds Obama's Power to Kill
    Workers at Nation's Top Hospital Strike For Fair Wages
    From Exile to Radicalization in Venezuela - Edgardo Lander on Reality Asserts Itself (1/9)
    Rwanda 20 Years Later: Genocide, Western Plunder of Congo, and President Kagame
    Ukrainian Protesters in the East Demand More Autonomy From Kiev Government
    Hunger Strikers Demand President Obama Halt His Record 2 Million Deportations
    Indian Parliamentary Elections - A Primer With Vijay Prashad
    West Looks to Carve Up Ukraine & Privatize Industries Held by Kleptocrats
    Where Are Israeli-Palestinian Peace Negotiations Headed?
    The Multiple Kingdoms of Saudi Arabia (5/5)
    Do the Afghan Presidential Elections Signify Progress?
    Republican Presidential Hopefuls Pay Homage to Billionaire Casino Tycoon Sheldon Adelson
    Will Extremist Lieberman Become Israel's Next Prime Minister?
    Why do the Saudis Want the US to Attack Iran? (4/5)
    Immigrant Advocates and Families Tell President Obama 'Not One More'
    Elections, Pipelines, and Protests - The Canada Panel
    Chris Hedges on "Israel's War on American Universities"
    Baltimore Residents Decry Lack of Affordable Housing
    Yellen Talks the Talk But Will She Walk the Walk?
    Hopkins Hospital Workers Speak Out against "Poverty Wages"
    Will Venezuela's New Floating Exchange Rate Curb Inflation?
    The European Central Bank's War on Wages is Pushing Europe's Economy to the Brink
    Supreme Court Decision Opens Floodgates for More Campaign Cash
    Charles Keating, the Financier Behind the Savings and Loan Scandal, Dies at 90
    Saudi Arabia and the al-Qaeda Monster (3/5)
    Maryland Residents Voice Opposition to Natural Gas Fracking Export Facility
    Supreme Court Ruling Gives Wealthy Individuals More Influence Over Elections
    What are the Saudis Afraid Of? - Madawi Al-Rasheed (2/5)
    Baltimore's MICA Adjunct Professors Set to Vote on Unionization
    Boycott of Israel Moving to Next Level?
    Hypocrisy Dressed Up as "Realism" Justifies American Alliance with Saudi Dictatorship
    Immigration Reform in the Shadows of Cesar Chavez's Legacy
    Leaked Senate Report Shows Use of Torture As "Ineffective"
    UN Report Says Climate Change Will Threaten Food Production Worldwide
    The Hypocrisy of US Calling for Enforcement of International Law
    How the Ecuadorian Economy Grew in a Global Recession
    'Shadows of Liberty' Trailer
    Kristina Borjesson on Why CBS Shut Down Her investigation into Flight 800 (2/8)
    Glen Ford on Racism in the American Media (3/8)
    Paul Jay on What Drives Corporate Media and What Drive The Real News (4/8)
    Creating a New Media Paradigm After Citizens United (5/8)
    Should The Left Engage with the Mainstream Media? (6/8)
    What Is the Financial Backing For The Real News? (7/8)
    Standing up to Character Assassination (8/8)
    Oligarchs, Fascists and the People's Protest in Ukraine
    TRNN Debate: Is Obamacare In the Interest of Workers?
    Too-Big-To-Fail Advantage Remains Intact For Big Banks
    Obama and the Saudi Agenda
    TRNN Replay: Investigating the Saudi Government's 9/11 Connection and the Path to Disilliusionment - Sen. Graham on Reality Asserts Itself pt 1
    The Iraq War's Real Legacy
    Petitions with 100,000+ Signatures Call for Snowden's Passport to be Reinstated
    We Need to Harness People Power - Andy Shallal on Reality Asserts Itself (4/4)
    BC Pipeline Fight and Quebec Elections - The Canada Panel
    Jonathan Schell - 1943-2014: Board Member of TRNN on Why We Need The Real News
    Teachers on Strike from the UK to Argentina
    Connecticut Poised to Become First State with $10.10 Minimum Wage
    Oil Spill Threatens Wildlife and Local Economy
    DC School Test Scores Up, But Poor Black Kids Are Doing Worse - Andy Shallal on RAI (3/4)
    Obama's Proposal To End NSA Bulk Data Collection Won't Protect Privacy
    How Google, Apple & The Biggest Tech Companies Colluded to Fix Workers' Wages
    An American Should be One that Questions Their Government - Andy Shallal on RAI (2/4)
    What's Driving Putin & Obama's Posturing on Ukraine?
    Hundreds of Students & Faculty Occupy College Campus to Fight Cuts to Public Higher Ed
    Due Process 'Impossible' In Harsh Death Sentencing Of Over 500 Muslim Brotherhood Members
    Has Anglo-American Capitalism Run Out of Steam?
    Being the "Other" in America - Andy Shallal on Reality Asserts Itself (1/4)
    TRNN Debate: Should Baltimore 'Ban The Box'?
    How Fallujah Became the Iraqi Government's New Battleground
    Why I Decided to Blow the Whistle on the NSA
    NASA Climate Predictions Show Serious Threat To Humanity
    Professor Who Teaches Israel-Palestine Conflict Accuses College of Violating His Academic Freedom
    CIA and NSA Wrongdoing Requires Independent Investigation, Says Former Church Committee Staff
    Are Tuition Breaks Enough To Combat High Student Debt And Low Graduation Rates?
    Industries Across the U.S. Are Stealing Wages From Their Lowest Paid Workers
    Who In Ukraine Will Benefit From An IMF Bailout?
    NSA Recording All International Calls From U.S.
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (2/2)
    BP Gets Green Light to Drill in Gulf, But Has Safety Improved?
    Residents Still Not Drinking Tap Water Two Months After West Virginia Spill (1/2)
    Libya's Descent Into Turmoil Three Years After NATO Intervention
    From Pipelines to Peladeau - Canadian Report
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (1/2)
    Congressional Progressive Caucus Budget Strikes Back Against Austerity
    Libya Three Years Later - Chaos and Partition
    Why Was Gaddafi Overthrown?
    Should Ukraine and West Accept De Facto Crimea Joining Russia? (2/2)
    Tony Benn Saw Socialism as the Culmination of Democratization
    Why Didn't Bush/Cheney Attack Iran and Can Obama Make and Sell a Deal? - Gareth Porter on Reality Asserts Itself (3/3)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi? (2/2)
    Crimea Referendum: Self Determination or Big Power Manipulation? (1/2)
    Sen. Graham: President Must Side with Openness About CIA and 9/11
    Manufacturing a Narrative for War - Gareth Porter on Reality Asserts Itself (2/3)
    Protesters Hit the Streets of Brooklyn to Demand $15 Minimum Wage
    Hammer: 'Moral Bankruptcy' Behind Massive GM Recall
    White House Withholds Thousands of Documents from Senate CIA Probe
    I Grew Up Believing in Time Magazine's Version of America - Gareth Porter on RAI (1/3)
    Western European Banks Vulnerable to Ukrainian Sovereign Debt Crisis
    TRNN Debate: What's Driving Inflation in Venezuela? (2/2)
    CIA vs. Senate: Who Is Obama Protecting?
    Will Tipped Workers Get Excluded Again From Minimum Wage Hike?
    TRNN Debate: What's Driving Inflation in Venezuela? (1/2)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi?(1/2)
    TRNN Replay: A Look at Who's Poised to Become No.2 at the Fed
    How Right-Wing Nationalism Rose to Influence in Ukraine (2/2)
    Netanyahu Attacks Boycott As Campaign Enters New Phase
    Moving Towards a Police State - Michael Ratner on Reality Asserts Itself (7/7)
    Fighting Reagan's Secret, Illegal Wars - Michael Ratner on Reality Asserts Itself (6/7)
    Puerto Rican Independence Movement and Cuba Further Radicalized Me - Michael Ratner on RAI (5/7)
    The Butcher of Attica - Michael Ratner on Reality Asserts Itself (4/7)
    MLK and a Radicalizing Moment in American History - Michael Ratner on Reality Asserts Itself (3/7)

    RealNewsNetwork.com, Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

    All original content on this site is copyright of The Real News Network.  Click here for more

    Problems with this site? Please let us know

    Linux VPS Hosting by Star Dot Hosting