My Turn: Plenty of good reasons to raise minimum wage

Last modified: 3/12/2014 2:35:00 PM
Just last month, the WMUR Granite State Poll found that 76 percent of respondents expressed support for a particular position, a remarkable level of agreement in these polarized times.

What was the issue that brought so much of New Hampshire together?

Were respondents asked whether they wanted winter to be over? Were they asked if they thought the Red Sox would repeat as World Champs? While both would probably poll well, neither question was included in the survey.

Rather, the issue that generated such widespread backing was a two-stage increase in New Hampshire’s minimum wage to $9 per hour by 2016.

Perhaps Granite Staters recognize that, due to legislative inaction and the corrosive effect of inflation, the purchasing power of the minimum wage has dropped significantly over the past 35 years. In 1979, one hour of minimum wage work earned someone $9.47 in today’s dollars. Nowadays, the same hour of work results in a wage of $7.25, a loss of more than $2 per hour or about 23 percent. Stretched over a week, a month, or a year, that’s less food on the table, gas in the car, or heat in the apartment, all for the same amount of work.

Maybe they understand that raising the minimum wage can benefit local businesses by increasing demand, reducing costly employee turnover, or fostering greater productivity. After all, if New Hampshire’s minimum wage were increased to $9 per hour over the next two years, low-wage workers would receive, in the aggregate, an additional $64 million in wages. Since low-wage workers, by necessity, tend to spend every dollar they earn, that means millions of dollars flowing into cash registers at local stores and shops. A recent study by economists at the Federal Reserve Bank of Chicago confirms this likely outcome, as it reviewed past minimum wage increases and concluded that every $1 increase in the minimum wage boosted consumer spending among affected low-wage households by several hundred dollars in the months immediately after those increases.

It could be that poll respondents were motivated by state pride. Twenty-one states and the District of Columbia now have minimum wages above New Hampshire’s $7.25 per hour, including all of our New England peers. In fact, by 2016, Vermont and Connecticut will both have minimum wages of at least $9 per hour, while Massachusetts seems poised to enact a minimum of at least $10.50 per hour.

Our fellow citizens may have voiced support for a higher minimum wage simply because they know how difficult it must be to try to make ends meet for anyone now paid at that rate. Someone working full-time at the current minimum wage makes less than $300 per week or about $15,000 per year.

As a result, low-wage workers must often choose which utility bill to pay that month or whether to visit the doctor or take the car in for repairs. Raising the minimum wage to $9 per hour would ease this struggle for more than 75,000 Granite Staters and would, on average, increase their annual wages by $870.

Granite Staters probably also realize that old stereotypes no longer hold true. Contrary to popular belief, the vast majority of the people who would benefit from a higher minimum wage are not teenagers. In fact, of those who would be affected by a $9 per hour minimum, 72 percent are adults age 20 and older; 32 percent work full-time; 59 percent are women; and 14 percent are parents.

Whatever the reason, the message is clear: Now is the time to raise New Hampshire’s minimum wage.

(Jeff McLynch is executive director of the New Hampshire Fiscal Policy Institute.)

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