Former Labor Secretary Robert Reich reminds us today of one of those pesky facts that so often get in the way of the conservative polemic against raising the minimum wage, namely, that it creates more jobs by increasing the purchasing power of consumers.
When in 1996 I recommended the minimum wage be raised, Republicans screamed it would cause job losses. In fact, in the four years after it was raised, the U.S. economy created more jobs than were ever created in any four-year period. A minimum wage hike puts more money into the pockets of people who will spend it, and that spending creates far more jobs than are lost when a relatively few employers decide they can’t afford to pay the higher wage.Thinking people knew that anyway. Remember in 1914 when Henry Ford doubled his employee's wages to a then-staggering $5.00 a day? Critics (like Republicans today) warned it would cripple the auto industry and bankrupt the Ford Motor Company. Instead, of course, it jump-started purchasing power, increased the profitability of the company, and reduced turnover (which was the real goal Ford had set out to achieve). And in the process, it enabled Ford employees to buy Model Ts and built America's middle class.
that the estimate was imprecise, with the job losses likely to fall in a range from practically nothing to one million.The real story in the CBO report is the wage hike would directly lift the wages of 16 million Americans and indirectly another 8 million -- thereby adding $31 billion to the paychecks of low-wage Americans.
That the positive effect of this increased spending power will dwarf any short-term job losses should be clear to anyone who is not a shill for corporate shareholders. And why is lifting people out of poverty not justification enough?