MB Civic

By Derrick Z. Jackson | August 5, 2006 | The Boston Globe

AS GOOD AS it is that the minimum wage is rising in Massachusetts and elsewhere, the great gorge between the working poor and the wasteful rich remains far from being bridged.

The Legislature ignored ridiculous rationalizations against an increase and overrode Governor Mitt Romney’s veto of the hike. The minimum wage will be $8 an hour by 2008. When he vetoed the increase, Romney whined that “such abrupt and disproportionate increases would threaten to eliminate jobs in Massachusetts.” After the veto override, Romney’s press secretary, Eric Fehrnstrom, said, “The governor favored an increase in line with inflation and periodic reviews every two years. The Legislature wanted an increase that substantially exceeded the rate of inflation and we thought that was too much, too fast.”

Even as advocates for the working poor were celebrating here and in places like Chicago, where the city council passed an ordinance requiring “big-box” retailers such as Wal-Mart, Home Depot, and Target to pay $10 an hour by 2010, virtually everyone knows this is the least that politicians can do. The progressive think tanks of United for a Fair Economy and the Institute for Policy Studies have calculated that if the minimum wage had risen at the same rate of CEO pay since 1990, it would stand at $23 an hour.

As for horrible effects on the economy, the Massachusetts Budget and Policy Center, which analyzes economic issues faced by moderate- and low-income-budget people, said the rise will increase the purchasing power of the 315,000 workers who would benefit from the increase. It cites studies, including one in March by the Fiscal Policy Institute of New York, that found that the 10 states with minimum wages above the federal minimum of $5.15 an hour had better economic performance from 1998 to 2003 than the other 40 states. That study found that the number of small businesses with fewer than 50 employees grew by 5.4 percent in the 10 states and the District of Columbia with higher minimum wages. Such businesses grew by 4.2 percent in the other states. It also found that those small businesses had faster job growth and higher payrolls per worker in the higher minimum-wage states than the lower ones. “The superior performance of the higher minimum-wage states was also demonstrated for total job growth and total retail job growth (that is, job growth among businesses of all sizes),” the study said.

With its raise, Massachusetts leads a growing parade of states that now have higher minimum wages than the federal minimum wage. Last weekend, the US House passed a minimum wage of $7.25. But Republicans nastily hitched the rise to an obscene cut in the estate tax. The Senate this week rejected the cynical compromise.

The Center for Budget and Policy Priorities calculated that the minimum wage would give 6.6 million workers an average dollar benefit of $1,200 apiece. The estate tax cuts would give 8,200 of our wealthiest citizens an average benefit of $1.4 million apiece. The cuts are so massive that the CBPP estimates that it would cost the Treasury $753 billion over the next 10 years. In addition, a Senate report this week found that the ultrawealthy, including the owner of the New York Jets football team and the producer of the Power Rangers children’s television show, are using offshore accounts to skirt up to $70 billion a year in taxes. Those two items stand to rob Americans of well over a trillion dollars over the next decade.

The federal minimum wage was frozen by wealthy interests for nearly the last decade. The wage had fallen to 31 percent of the average hourly wage of $16.59 for nonsupervisory workers, the lowest share in six decades. Its purchasing power was at its lowest levels in five decades.

The Massachusetts Budget and Policy Center warns that unless the minimum wage is tied to inflation, the erosion of its value will resume. The $8-an-hour law still falls short of the real, inflation-adjusted value of the minimum wage of nearly 40 years ago, $9.23 an hour in 1968. Romney complained about the “abrupt and disproportionate” effects of raising the minimum wage. Even with the rises around the nation, America’s wealth and income remains cut into proportions beyond moral justification.