Raise That Wage Rep. Kim

State Rep. Patty Kim is making headlines advocating for a higher minimum wage.

At a news conference at the Harrisburg YWCA, the first-term Democrat said she is working on a bill to increase the minimum wage from $7.25 an hour in two steps. 

The first step would bump the rate to $9 an hour 60 days after enactment. The wage would reset to $10.10 an hour one year later.

She held a press conference at the Harrisburg YWCA last Thursday. 


While the odds of a first term Representative in a Republican controlled legislature are long Rep. Kim's efforts are commendable. She joins part of a larger state and nation-wide conversation about raising the minimum wage.

In Philadelphia State Senator Christine Tartaglione is pushing a bill to raise the minimum wage. Katie McGinty, the governor candidate who Rep. Kim supports, became the first candidate to advocate the measure as well.

“One of the best ways to get the economy moving is to put money into the pockets of people who work,” McGinty said. “Too many wage earners, working moms in particular, are holding down full-time, 40-hour-a-week jobs and still finding it too hard to make ends meet and support families. That’s because the minimum wage hasn’t kept pace with the rising cost of living today. That needs to change.”

On the national stage, most recently New Jersey raised their minimum wage through a ballot referendum that passed with a 20 point margin. The win is commensurate with nation wide attitudes about it being raised.

It is no secret that there is a powerful opposition lobby to minimum wage increases. Not only companies who simply don't want to pay a higher rate for labor but serious economists, usually of the Chicago/Austrian schools and libertarian in their politics. These academics make an earnest argument that by raising the cost of labor, you will unemploy everyone who's skills the market determines are worth lower than the base rate of pay. 

One institution you may find making such an argument in halls of the Pennsylvania State Capitol is the Commonwealth Foundation.

They are not wrong, there is no doubt that when the price of labor is too high consumption (employment) will drop, but there are many economists who would gladly debate that the minimum wage is not so high, or not going to be raised so much that it would truly slow demand for labor; Joseph Stiglitz, Jeffrey Sachs, Laura Tyson, Robert Reich and of course Paul Krugman.

In fact corporate profits and holdings are at an all time high, and wages have not kept pace with productivity for years. 

These economists and many others argue that stagnating wages may be one of the biggest contributors to the current and future economic downturns. You may say," Wait! The housing market caused the economy to crash in 2008, Did it not?" 

It did, but because wages stagnated and consumption continued to grow, the consumption could only be fueled by one thing; credit. 

The point is not of course that credit is bad, and a discussion about whether a consumer based economy is a problem can be saved for another day. The point is that people do not have enough money to get by, let alone spend frivolously. 

Aside from the ethical imperative, estimates show that increasing the minimum wage positively benefits the economy as a whole:

A 2011 study by the Chicago Federal Reserve Bank finds that minimum wage increases raise incomes and increase consumer spending, especially triggering car purchases.  The authors examine 23 years of household spending data and find that for every dollar increase for a minimum wage worker results in $2,800 in new consumer spending by his or her household over the following year.

A 2009 study by the Economic Policy Institute estimates that Obama’s campaign pledge to raise the minimum wage to $9.50 by 2011 would inject $60 billion in additional spending into the economy.

Low wage workers need the money to get by, and the American people need them to have the money so they can spend it, creating demand, markets, and jobs to fill it. 

Rep. Kim, Senator Tartaglione, Candidate McGinty, and many others, keep fighting to raise that wage!