The no-brainer of raising the minimum wage

By: - April 9, 2015 12:17 pm


One of the biggest problems with the so-called Carolina Comeback frequently touted by Governor Pat McCrory and state legislative leaders is that it is leaving thousands of North Carolina workers behind— and not just the ones who are unable to find a job and are no longer counted when the often-cited unemployment rate is calculated.

Many people lucky enough to have jobs are earning less. That is beyond dispute. Workers in North Carolina have less buying power than they did before the Great Recession even though the state’s overall economic output has increased by more than 18 percent.

Much of the job growth during the recovery has been in low wage industries that pay workers the $7.25 an hour minimum wage or close to it, making it almost impossible for them to make ends meet.

The N.C. Justice Center reports that 80 percent of the new jobs created since 2009 don’t pay enough to cover the costs of housing, food, transportation, health care and other basic needs.

There any many things state and federal policymakers should consider in response to the problem, but one is easy to do, easy to understand, and popular with the voters.

Raise the minimum wage.

Raising it to $10 an hour would affect roughly a million workers in the state. Contrary to claims by folks on the Right, most of the people who would benefit are not teenagers or first time workers or folks who only work part-time.

More than 85 percent are over 20 and more than half are full-time workers trying to provide for their families.

And there’s plenty of evidence that raising the minimum wage helps the overall economy too. States that have raised their minimum wage are doing better than states that haven’t. They have lower unemployment and higher job creation.

That makes sense when you consider the economic impact of raising the wage. In North Carolina that would mean $2 billion more in pay for workers that will end up circulating in the economy.

There’s also compelling evidence that a higher minimum wage helps businesses directly too by reducing employee turnover and increasing productivity.

Folks who have an ideological opposition to increasing the minimum wage—or don’t believe it should exist at all—always claims that it causes a significant loss of jobs, hurting the very people that raising the wage is designed to help.

But that’s not what the economic studies show. A higher minimum wage may result in a small reduction in hours for some workers, but not massive layoffs, and the workers affected still come out ahead overall since their hourly pay is higher.

And maybe most appealing for politicians, people in North Carolina and around the country support a minimum wage increase. Voters in conservative states like South Dakota, Nebraska, Arkansas and Alaska approved ballot initiatives last November to raise the minimum wage and polls show that nearly 60 percent of North Carolinians support an increase.

Help for low-wage workers and their families. More money pumped into the economy by workers spending their higher wages, creating more jobs.

A boost for business from more loyal and productive workers. And the voters overwhelmingly support it. There aren’t many issues like that.

Now if the folks running North Carolina these days can manage to put the economic health of the state and the well-being of the people they represent ahead of their rigid ideology, we could be on the way to a real Carolina Comeback, one that helps everybody, not just the folks at the top.

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Chris Fitzsimon

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts "News and Views," a weekly radio news magazine that airs on multiple stations across North Carolina. [email protected] 919-861-2066