As a longtime businessman, I see a deficit in America that has received far too little attention. That’s the wage deficit experienced by growing numbers of Americans, with serious consequences for our economy.
On Jan. 1, the minimum wage increases in Rhode Island and in nine states that adjust their minimum wage to match the rise in inflation: Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington.
But the federal minimum wage will be the same as 2013 begins as it was in 2009 – just $7.25 an hour, or $15,080 for full-time, year-round work.
That’s an impoverishing income anywhere in America, but even more so in high-cost states like New York, where my business is based.
Too many Americans are working an 8-hour day struggling just to pay rent. Even carefully budgeting every dime, they can’t afford to fully cover the most basic expenses: shelter, food, transportation, health care and clothing. That’s bad for those workers and families, and it’s bad for American business.
We should be raising the minimum wage to the level where workers can afford rent, food and other necessities for themselves and their families.
Raising the minimum wage benefits businesses in three ways: productivity, profit and prosperity.
With more adequate wages, businesses experience decreased worker turnover and greater worker morale and productivity – all good for the bottom line.
The number one factor in business growth and hiring is customer demand. Consumer spending makes up 70 percent of our economy.
Raising the minimum wage puts more money in the hands of low-income workers – the very people most likely to need to spend additional dollars in their paychecks. That means increased consumer buying power, which means increased demand for goods and services, which means more revenues and profits for businesses, and a stronger, more prosperous economy.
When millions of full-time workers see the American Dream increasingly out of reach, it’s not just a nightmare for them. It’s a nightmare for our nation.
We cannot restore the American Dream when the floor under our economy has fallen so far under the cost of living that employers today can pay an entry-level wage that is lower than their counterparts paid in 1956, adjusted for inflation.
The year 1956 is so long ago that most Americans, including me, weren’t even born yet. Yet, our federal minimum wage is just $7.25 while the value of the 1956 minimum wage is $8.46 in today’s dollars. That’s no formula for economic success.
Sen. Tom Harkin of Iowa and Rep. George Miller of California introduced the Fair Minimum Wage Act in Congress in 2012. It calls for incrementally raising the minimum wage to $9.80 and then indexing it to the cost of living. That’s the least we should do to make up ground lost since 1968, when the minimum wage was worth $10.58, adjusted for inflation.
If the minimum wage were raised to $9.80, 28 million Americans would see their wages go up, according to the Economic Policy Institute.
More than a million veterans would get a much-needed raise.
Among the 28 million workers who would benefit from a $9.80 minimum wage, 88 percent are at least 20 years old and 42 percent have at least some college education.
Moreover, nearly 22 million children have a parent whose income would rise if the minimum wage were increased to $9.80.
There is no good reason people working full time should be living in poverty.
There is no good reason people working full time should have to depend on food banks or food stamps to feed their families.
There is no good reason people working full time should be living in their cars or homeless shelters.
Yet, we see this more and more because of the wage deficit.
Working Americans must make at least enough to buy basic goods and services or we will never be able to rebuild the consumer demand that businesses need to thrive and create millions of new jobs.
Without a decent floor under wages, the middle class will continue to sink. And the American Dream that once inspired so many, including my parents, will become increasingly the privilege of the few.
America needs a minimum wage raise now.
Ross is managing partner of D Alexander Ross Real Estate Capital Partners, a New York-based real estate and construction firm. He is a member of Business for a Fair Minimum Wage.