Monday, June 20, 2005

Rendell comes around on the minimum wage

I didn't see it when the story first came out, and actually saw the AP article at conservative blogcenter, Grassroots PA, but, it turns out that Ed Rendell is reading the tea leaves, and now supporting increasing PA's minimum wage.

From the article:
As his primary-election opponent Robert P. Casey Jr. pushed for an increase in Pennsylvania, Rendell countered that Congress should raise the minimum for all states. Rendell argued that a higher state minimum would put Pennsylvania at a competitive disadvantage for attracting new business.

But the governor made an unexpected U-turn this month when he told reporters that he would demand a minimum-wage increase from lawmakers if they asked him to endorse a legislative pay raise. He said he favors gradually boosting Pennsylvania's minimum to $7.15 an hour.

Rendell's press secretary, Kate Philips, attributed the shift to two factors: an increase in the number of surrounding states that have a higher minimum wage, and Congress' failure to raise the current rate of $5.15 since 1996.

"The governor still believes it should be increased at the federal level, but we can't wait for leadership from the president on this any longer," Philips said.
Probably, as the article says, a lot more to do with 2006 elections than with a real change of heart, but, good news nonetheless.

18 Comments:

At 12:26 AM, Blogger Brett S. said...

From your friends at Stand with Santorum '06..... It's on!!

 
At 7:28 AM, Blogger Rep. Mark B. Cohen said...

As the prime sponsor of the most comprehensive minimum wage bill ($7.15 an hour at the beginning of 2007,matching New York and New Jersey, plus cost of living increases in perpetuity, matching Oregon, Washington, and Florida), I believe Rendell's embrace of the minimum wage shows the power of activists in forcing an issue to the public forefront and the wisdom of the AFL-CIO's national strategy for state governments.

Rendell's support does not guarantee that the Republican controlled state senate will go along, but John Perzel has indicated that House Republicans, as they have done before, will acquiesce in passing some version of a minimum wage increase.

Today there will be a rally in Harrisburg to raise the minimum wage. Hopefully the pressure will continue to build and something worthwhile will happen before the legislature recesses for the summer around the 4th of July.

 
At 9:05 AM, Blogger raider.adam said...

Minimum wage really doesn't help anything. It doesn't create jobs. The vast majority of people affected by minimum wage, in regards to pay increases, are teenagers.

At least he isn't supporting something dumb like a living wage law. We can be thankful for that.

Good article on minimum wage done by several professors that contradict the Princeton study.

http://www.cato.org/pubs/regulation/reg18n1c.html

 
At 9:35 AM, Blogger Ben Waxman said...

raider, you are totaly wrong about the majority of people who are working at the minimum wage. It's not mostly teenagers, that's just a common misconception. Study after study after study has shown that many people who work minimum wage jobs have a family to support and are often struggling to make basic ends meet.

 
At 11:15 AM, Blogger ACM said...

on the down side, I hear that Rendell spokespeople backpedaled from this almost the next day. but I haven't seen it on the record.

A Smoke-Filled Room thinks minimum wage is a spotlight issue for June:
http://asmokefilledroom.blogspot.com/2005/06/june-spotlight-pa-minimum-wage.html

keep the pressure on!

 
At 11:25 AM, Blogger Friedman said...

There was an op ed in the Daily News a few months back that talked about one of the unintended consequences of raising the minimum wage; sometimes, as jobs pay more, they become more attractive to a wider pool of employees (e.g. teenagers) who then crowd out employees who are more in need of a job. Not an argument against raising the minimum wage, just something to be aware of.

 
At 4:22 PM, Blogger raider.adam said...

Waxman,

Could you link me to such a study please? I would just like to see where you are getting your numbers from (I am not against gthering info from a variety of sources). As an example, the one I posted (at table 1) showed from 1990-1991 only 3% of the population in the 25-64 age group making the minimum wage or lower, whereas 44% of 15-19 age group do.

 
At 4:30 PM, Blogger raider.adam said...

And before someone else points it out, yes, I do know that 3% of a 25-64 age group would probably be larger than 44% of a 15-19 age demographic, numerically.

I am referring to the fact that minimum wage jobs tend to be the realm of non-skilled workers.

People raising families at the minimum wage mark are never going to get anywhere, no matter what the minimum wage is. Giving them $.50 an hour is nto going to help, ultimately. It jsut delays the inevitable. Job training and otehr such programs are the best way to alleviate such issues.

Even if you put the minimum wage above the poverty level, the market will adjust and they will eventually be below the poverty level again due to increase in the cost of goods.

Getting them out of minimum wage jobs is what solves the problem. Give a man a fish, he eats for a day. Teach him how to fish ...

 
At 11:31 PM, Blogger Marc said...

About the policy:

Adam assumes that increasing the minimum wage leads to an increase in prices. It ain’t necessarily so.

Raising the minimum wage is central to a high-road strategy of economic growth. There is usually more than one way to produce any good.
The low-road way is for businesses to use unskilled workers who come and go frequently. The high-road way is for businesses to encourage workers to stay for a time and develop the skills to be more efficient at their jobs. The best way to encourage workers to develop skills is to pay them more. The higher pay need not raise costs if it leads workers to become more skilled and more productive.

There is nothing new about this strategy. It is the strategy Henry Ford used when he paid his workers $5 a day, far above the going rate. It is the strategy my father used in our family hotel business when he would offer to pay more productive dishwashers 50% more than the minimum wage in order to keep them working and to reduce the number of dishwashers we needed. (Even in “unskilled” work like washing dishes, one can learn to be more efficient. I know as I worked as a dishwasher more than once.

Why won’t businesses follow a high road strategy wages themselves? One reason is that it takes some time for workers to become more skilled. Another is that businessmen lose a little bargaining power over more skilled and thus less easily replaceable workers not just with regard to wages but also with regard to working conditions. And a third is that the culture in which we live holds so-called unskilled work in contempt.

On the politics:

Was it a coincidence that Governor Rendell’s switch on the minimum wage occurred two days after the founding conference of Neighborhood Networks, which was attended by a few people with ties to folks in the Rendell administration? I don’t think so.

Some folks on this list have pointed out that our conference was not as diverse as it ideally should have been. That was true and we are working hard and I think successfully, to bring a broader range of people into NN. But if we are too white and middle class right now, we are also at the core of Rendell’s political base.

By the way, the minimum wage campaign is another example of the labor / community coalition that in the form of the Pennsylvania Transit Coalition, kept our transit fares from skyrocketing.

 
At 9:38 AM, Blogger raider.adam said...

Your examples are different. Ford and your father are private business choosing to pay more to eliminate turnover and get better skilled employees.

Government raising the minimum wage is not going to accomplish that. In your father's example, the dishwashers will stay because if they went somewhere else, they would be paid less, most likely. Whereas if the dishwasher on minimum wage leaves, even if minimum wage goes up a dollar, he is still going to make at least the same money. your father's dishwashers would be risking a pay cut.

Then, as another example, say your father pays $6.00 an hour for his help and minimum wage is $5. He pays the little extra to get the help to stay.

Minimum wage goes up to $6. To keep the same philosophy, your father would then be forced to raise his help to $7 an hour, to stay above the minimum wage to encourage retension.

Minimum wage affects the market. If it didn't, it would imply minimum wage is ineffective. The problem is, minimum wage is only a temporary bandaid before the market readjusts. It is not a solution.

 
At 9:41 AM, Blogger DanielUA said...

raider.adam-

Would you be in favor of lowering the minimum wage? Getting rid of it altogether?

I ask this very honestly.

 
At 2:29 PM, Blogger raider.adam said...

No. I believe the use of the minimum wage is to prevent extreme labor abusement, not to increase quality of life.

Minimum wage would keep from the prototypical sweatshops developing, but not to artificially inflate the wage beyond the market.

 
At 2:42 PM, Blogger DanielUA said...

See, there is where you have a problem though. Because you would agree that given inflation, every year you do not raise the minimum wage, you are effectively lowering it, right?

Is $5.15 some magical number that is perfect for this moment in time? And, since you are not in favor of lowering it, shouldnt you want to index it?

What is your opinion of what an American worker should be paid per hour, at minimum?

 
At 5:00 PM, Blogger raider.adam said...

I'm not in favor of lowering it, because it is all ready in place for years, so it is ultimately a moot point.

As for inflation, yes, effectively the buying power of minimum wage does drop.

As for what the american worker should be paid, that is the tricky part and an additional catch of it. Why have a federal minimum wage when there are varying degrees of cost of living throughoput the country? Does $5.15 get you as far in California as it does in Alabama?

 
At 5:18 PM, Blogger DanielUA said...

No, it is not a moot point. My question to you is whether you would like to lower the minimum wage? It seems untenable to say "OK, we should have a minimum wage," but that wage should never go up. At some point, doesn't the point of a minimum wage become moot? Did you think 5.15, a whopping $10,300 per year, was too high when it came in? If not, why wouldnt you want to raise it to today's dollars?

 
At 8:05 AM, Blogger Marc said...

Raising the minimum wage forces ball businesses to follow a high road business strategy, the one Ford and my Father chose. If they have to pay more for labor, they will be motivated to do those things that encourage workers to develop their skills and stay with them longer. And, ultimately, they will be seek to invest in technology that requires more skilled labor and thus that further encourages them to train workers with the ultimate result of dramatically increasing the productivity and wages of workers.

Marc Stier

 
At 8:27 AM, Blogger Marc said...

raider.adam,

One more point. The fundamental error you are making is to assume that minimum wage increases automatically are translated into price increases. This is simply not true. I have already given you one reason. Another reason is that, whether businesses can pass on wage increases depends upon the competitive structure of the industry in which they are found. Unless wage increases effect every business in the industry here (and potentially abroad) in the same way, businesses will not be able to increase their prices. And remember that the relevant "industry" may be quite broad as it includes goods that are substitutes for one another. Furthermore since
minimum wage workers make up only a small part of the workforce, even if prices go up in industries that have a lot of minimum wage workers, they won't necessarily go up (or go up as much) in other industries. So the prices minimum wage workers pay will not rise as fast as their wages and the ultimate effect will be an improvement in their standard of living and, I should add, in the economic health of neighborhoods in which the working poor live.

Marc Stier

 
At 11:14 AM, Blogger Goldspider said...

Rendell was right on the money when he argued (during his campaign in 2002) that raising the state minimum wage "would make it harder for us to attract business to the state."

But now, Rendell favors a minimum wage increase that will drive businesses (and jobs) from the state. How exactly does that help Pennsylvania workers?

This is simply Rendell pandering to his union cronies for the upcoming election.

 

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