Working For Poverty Wages

Sunday, October 16, 2005

Virginia's poorest workers need a raise.

The state's hourly minimum wage of $5.15 has not changed since 1997, although inflation has eroded its value by 17 percent since then. Minimum-wage earners in Virginia now earn just a third of what the average American makes, the largest gap since 1949. For an unmarried worker without dependents, that translates to about $9,900 annually after deductions for Social Security and Medicaid -- just $300 above the federal poverty threshold.

Legislation that I will introduce in the next session of the General Assembly would add a dollar to that minimum wage next year and 75 cents more in each of the following three years to bring the income of these workers up to a livable level.

The hot housing market has left many minimum-wage earners in a bind. The U.S. Department of Housing and Urban Development reports that a one-bedroom unit in the Washington area rents on average for $915 -- more than the monthly earnings of a minimum-wage worker. The average rent of a one-bedroom apartment in the Richmond-Petersburg area is $668; in the Roanoke area, the figure is $463.

Good evidence that Virginia's minimum wage is not keeping pace with the rising cost of living is the increasing enrollment in food-stamp assistance. Nearly 486,000 Virginians received food stamps last year, up 41 percent since 2001.

Some argue that raising the minimum wage will force businesses to lay off employees to hold down costs, but no reputable study supports that theory. Princeton economists David Card and Alan Krueger studied minimum-wage employees in New Jersey and found that increasing the minimum wage had little or no effect on employment. Robert Solow, an MIT economist and Nobel laureate, has said that evidence that minimum-wage increases cost jobs is weak.

An Economic Policy Institute study recently found that if Virginians earning the minimum wage got an increase, not just the workers but also businesses, the economy and the society in general would benefit.

Increasing the near-poverty-level wage would foster greater family stability and lower employee turnover. Businesses would not have to invest as much in training new employees, with greater worker productivity as a result. Money earned from a higher minimum wage also would enter the economy and reduce reliance on government services.

Seventeen states and the District have raised their minimum wages since 1997. Nine of those states are led by Republican governors who understand that the benefits of a higher wage are felt throughout their states.

Washington has repeatedly rejected raising the federal minimum wage, so Virginia must do what is necessary and right. Raising the minimum wage is the minimum it should do.

-- Al Eisenberg

a Democrat, represents Arlington in the Virginia House of Delegates.

aleisenberg@comcast.net


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