Proposed Minimum Wage Increase Would Still Leave US Workers Trailing Counterparts

[Adele Edisen]

Moneynews
Proposed Minimum Wage Increase Would Still Leave US Workers Trailing Counterparts
Friday, February 15, 2013 01:57 PM
By: Glenn J. Kalinoski

The lowest-paid U.S. workers would continue to lag behind their counterparts in many industrial countries if President Barack Obama's proposal to boost the minimum wage to $9 an hour is passed.

Data from the Organization for Economic Co-operation and Development (OECD) show nine nations where the minimum wage is more than $9 per hour, according to CNNMoney.

Australia has the world's highest minimum wage, at $16.91 an hour.

Several European nations also pay far above the minimum in the United States. France has boosted its level to $12.68 per hour, while U.K. workers earn at least $9.50 per hour.

While Canada does not provide a national minimum wage, the lowest provincial level is in Alberta, where workers are paid at least $9.73 per hour. Those in Yukon receive at least $10.27 per hour.

Eight nations have no type of minimum wage, according to OECD, including Italy and Germany. Some nations have very low minimums that are established on a monthly or weekly basis, rather than per hour.

Monthly minimums tend to be the rule in China. The highest is in the Shenzhen province, where workers receive about $240.49 per month. Beijing's hourly minimum is $2.24. The government increased minimum wages across most of the country to 40 percent of the average salary by 2015.

"There are some developed economies with lower minimum wages than the United States, but not many," CNNMoney stated.

In his State of the Union speech this week, Obama proposed raising the federal minimum wage to $9 per hour from $7.25 hour by the end of 2015. That would restore its real value to what it was at the beginning of the Reagan administration, according to a White House fact sheet.

An increase would impact 15 million workers. Obama also suggested indexing the minimum wage to inflation after 2015, according to the fact sheet.

The last increase in the minimum wage was in 2009. Although this was implemented in the first year of Obama's presidency, it was the result of a 2007 law signed by President George W. Bush, Bloomberg reported.

© 2013 Moneynews. All rights reserved.

Adele

[Adele Edisen]

Highest income increase of 11% went to the rich 1% of the population. The 99% of the population saw a DECREASE of 0.4% in their income.


The New York Times
February 15, 2013

Incomes Flat in Recovery, but Not for the 1%
By ANNIE LOWREY

(Emphasis mine - AE)

WASHINGTON Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data.

The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent.
Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel considered second only to the Nobel, concluded that "the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s."

The disparity between top earners and everybody else can be attributed, in part, to differences in how the two groups make their money. The wealthy have benefited from a four-year boom in the stock market, while high rates of unemployment have continued to hold down the income of wage earners.

"We have in the middle basically three decades of problems compounded by high unemployment," said Lawrence Mishel of the Economic Policy Institute, a left-of-center research group in Washington. "That high unemployment we know depresses wage growth throughout the wage scale, but more so for the bottom than the middle and the middle than the top."

In his analysis, Mr. Saez said he saw no reason that the trend would reverse for 2012, which has not yet been analyzed. For that year, the "top 1 percent income will likely surge, due to booming stock prices, as well as retiming of income to avoid the higher 2013 top tax rates," Mr. Saez wrote, referring to income tax increases for the wealthy that were passed by Congress in January. The incomes of the other "99 percent will likely grow much more modestly," he said.

Excluding earnings from investment gains, the top 10 percent of earners took 46.5 percent of all income in 2011, the highest proportion since 1917, Mr. Saez said, citing a large body of work on earnings distribution over the last century that he has produced with the economist Thomas Piketty of the Paris School of Economics.

Concern for the declining wages of working Americans and persistent high levels of inequality featured heavily in President Obama's State of the Union address this week. He proposed raising the federal minimum wage to $9 from $7.25 as one way to ameliorate the trend, a proposal that might lift the earnings of 15 million low-income workers by the end of 2015.

"Let's declare that in the wealthiest nation on Earth, no one who works full time should have to live in poverty," Mr. Obama said in his address to Congress.

Mr. Obama's economic advisers say that he has been animated by the country's yawning levels of inequality, and the administration has put forward several proposals to address the gap. Those include higher taxes on a small group of the wealthiest families and an expansion of aid to lower- and middle-income families through programs like the Affordable Care Act.

The data analyzed by Mr. Piketty and Mr. Saez shows that income inequality as measured by the proportion of income taken by the top 1 percent of earners reached a modern high just before the recession hit in 2009. The financial crisis and its aftermath hit wealthy families hard. But since then, their earnings have snapped back, if not to their 2007 peak.

That is not true for average working families. After accounting for inflation, median family income has declined over the last two years. In 2011, it stagnated for the poorest and dropped for those in the middle of the income distribution, census data show. Median household income, which was $50,054 in 2011, is about 9 percent lower than it was in 1999, after accounting for inflation.

Measures of inequality differ depending on whether they are measured after or before taxes, and whether or not they include government transfers like Social Security payments, food stamps and other credits.

Research led by the Cornell economist Richard V. Burkhauser, for instance, sought to measure the economic health of middle-class households including income, taxes, transfer programs and benefits like health insurance. It found that from 1979 to 2007, median income grew by about 18.2 percent over all rather than by 3.2 percent counting income alone.

In an interview, Mr. Burkhauser said his numbers measured "how are the resources that person has to live on changing over time," whereas Mr. Piketty and Mr. Saez's numbers measure "how are different people being rewarded in the marketplace."

"That's a fair question to ask, but it's a very different question to ask than, What resources do Americans have?' " Mr. Burkhauser said. Notably, many of the Obama administration's progressive policies have been aimed at blunting the effects of income inequality, rather than tackling income inequality itself.

Mr. Saez has advocated much more aggressive policies aimed at income inequality. "Falls in income concentration due to economic downturns are temporary unless drastic regulation and tax policy changes are implemented," Mr. Saez said in his analysis.

The recent policy changes, including tax increases and financial regulatory reform, he wrote, "are not negligible but they are modest relative to the policy changes that took place coming out of the Great Depression. Therefore, it seems unlikely that U.S. income concentration will fall much in the coming years."

Adele

[Peter Lemkin]

We are number 1 again?! While there is no official legal lower limit in Norway, the average starting salary is $23/hour [along with full pension and full health care!]. America has become a third world nation and since the early 1960s the purchasing power of the average salary had DECREASED. Once a single family member could support a family and pay the mortgage on a home. Now the two parents, the children and the pets must all work more than 40 hours per week in many cases and are still left without health care or money to save or spend on leisure.