The $3 dividing line

Maybe not for much longer

“Whether you support Sen. Sanders or support me, there’s much more that unites us than divides us,” said Hillary Clinton, throwing out an olive branch to his supporters after her raft of primary victories on Tuesday

Not so much, responded Bernie Sanders. He says he will take his disagreements all the way to the Democratic convention in July, seeking a party platform calling for “a $15 an hour minimum wage, among other things, while dismissing Clinton’s $12-an-hour counter as “not bad, but not good enough.”

Fact is “the fight for $15,” has, in principle, already been won. California and New York, accounting fo close to 20 percent of the U.S. population, have passed it. Cities and counties in Washington, Oregon, Pennsylvania, Massachusetts (where all health care workers will be covered), even true-red Montana, have passed $15-an-hour ordinances. Washington D.C. is working on it. And Hillary Clinton may already know it.

Right now, there are two bills in Congress: one, sponsored by Sanders, calling for a $15 minimum, the other, by Sen. Patty Murray, D-Wash., setting the minimum at $12. Endorsing Murray’s bill last July, Clinton said, “Let’s not just do it for the sake of having a higher number out there. But let’s get behind a proposal that actually has a chance of succeeding.”

That was then. Realizing which way the wind is blowing, Clinton, who has supported Fight for $15 campaigns on state and local levels, said she would sign a $15-an-hour federal minimum wage should it come to her desk — should she become president. “Of course I would sign it,” she said during her debate with Sanders in Brooklyn earlier this month. And, of course, that would depend on what Congress looks like come January.

The last time the federal minimum wage was increased, to $7.25-an-hour, was in 2009, below the six-decade average of $7.97 in inflation-adjusted terms. Actual take home pay: $6.26. An estimated 40 percent of minimum wage earners currently fall below the federal poverty line.

If a $15-an-hour minimum were enacted today, the U.S. would rise from 11th in the developed world standings to #1, topping Australia and Luxembourg. In at least one respect it would make American great again, if not in the way Donald Trump intended.

It also takes America into “uncharted waters,” according to Princeton University economist and Clinton adviser Alan Kreuger. While a $12-an-hour federal minimum would be okay, he wrote in an op-ed in The New York Times,

$15 an hour is beyond international experience, and could well be counterproductive. Although some high-wage cities and states could probably absorb a $15-an-hour minimum wage with little or no job loss, it is far from clear that the same could be said for every state, city and town in the United States. Although the plight of low-wage workers is a national tragedy, the push for a nationwide $15 minimum wage strikes me as risk not worth taking.”

Economists at UC Berkeley have have been venturing into the $15 waters at the state and local level for some time. Last month, Berkeley’s Institute for Research on Labor and Employment (full disclosure: I’m affiliated with the institute as a journalist-in-residence) published a study on the potential impact of New York’s minimum wage. The New York law, like California’s and others on the books, will be implemented in stages, with New York City’s higher-priced five boroughs reaching $15 by 2019 and the rest of the state by mid-2021.

Drawing on U.S. Census and Bureau of Labor Statistics data, combined with existing data on labor markets, business operations, and consumer patterns, economists at IRLE developed an analytical model integrating the potential upsides and downsides of a $15 minimum wage.

The study estimates pay increases will average 23.4 percent for 3.16 million members, one third of New York’s workforce; that includes a “ripple effect” from above-minimum wage workers receiving concomitant raises. Just under 80 percent of workers in the restaurant industry are projected to receive a wage increase.

Layoffs are estimated to be offset by new hires, with a net gain of 3.200 jobs statewide. For-profit businesses can expect a 3.2 percent in payroll costs, offset in part by productivity, lower staff turnover and other savings, for an annual price increase of 0.14 percent. The analysis does not account for state and local government workers or employees in the nonprofit human services sector

In sum, it is possible for New York State to effect a vast improvement in living standards for over a third of its workforce without generating a net adverse employment effect … [T]he increase in wages would help reverse decades of wage declines for low-paid workers. The net impact of the policy will therefore be very positive.

One caveat:

In the poorest areas of the state, generally those that are rural … compared to higher wage areas, the minimum wage increases in these areas will have greater positive effects on workers and greater negative effects on low-wage businesses. The net effect in poorer areas is likely to be less positive.

The study also acknowledges a degree of uncertainty in any potential impact study, especially “if future economic conditions vary from current forecasts.”

“Our studies of $15 in L.A, New York State and San Jose definitely have lessons for states with similar wage distributions,” Michael Reich, who heads IRLE’s $15 minimum wage project, told me. “These would include at least Washington, Oregon, Massachusetts, New Jersey and Connecticut, and undoubtedly others as well.” (A University of Washington analysis this month of Seattle’s ordinance, which started phasing in last year, “found little or no evidence of price increases in Seattle relative to the surrounding area.”).

Addressing Krueger’s doubts, Reich said, “IRLE research provides a method for studying a $15 federal minimum wage, which Krueger should welcome. Until we do the study we do not know how it will come out. We hope to conduct such a study later this year.”

Meanwhile, Fight for $15 marches on. Fourteen states and municipalities — have it on the books. More modest increases have occurred in 18 states, including deep red Alaska, Arkansas, Nebraska and South Dakota in the past three years. Minimum wage workers in at least 15 cities and counties will be seeing fatter pay packets this year. An overwhelming majority of Americans, including 60 percent of Republicans, favor raising the minimum wage. Fifty-nine percent (mostly Democrats and Independents) support a $15 minimum, to a Public Religion Research Institute poll last month.

Die-hard opponents of the minimum wage still have some tools at their disposal, however. There’s North Carolina’s HB-2, the Public Facilities Privacy and Security Act, enacted “to create statewide consistency in regulation of employment and public accommodations.” The moving force behind the state’s notorious anti-transgender “bathroom law,” the statute can be used to block a North Carolina municipality, Charlotte say, from raising its minimum wage above the state’s $7.25-an-hour. Then there’s the Living Wage Mandate Preemption Act, model legislation drawn up by the American Legislation Executive Council, a corporate-funded organization behind state measures such as ‘Stand Your Ground’ pro-gun laws, voting restrictions and voiding energy conservation regulations

According to the National Law Employment Project, preemption bills have been introduced in 31 state legislatures to bar local governments from supeceding their state’s minimum wage, usually $7.25 or less. In February Alabama’s legislature rolled back Birmingham’s $10.10 minimum wage back to $7.25. Last June, Michigan governor Rick Snyder signed a similar preemption law. Other states considering preemption recently include New Mexico, Arizona and Idaho. “This has been on our radar for many years and especially so now,” Tsedeye Gebreselassie, an attorney at the National Employment Law Project told The Nation in February.

In a Fireside Chat on June 24, 1938, the night before signing the Fair Labor Standards Act instituting the federal minimum wage (25 cents-an-hour for a 44-hour week), President Roosevelt said:

“Do not let any calamity-howling executive with an income of $1,000.00 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves, tell you — using his stockholders’ money to pay the postage for his personal opinions — tell you that a wage of $11.00 a week is going to have a disastrous effect on all American industry.”

There’s less calamity-howling (or “catastrophising”) in the American business community these days. Walmart, once the low-wage poster child, with its outdoor food bins so “associates in need can enjoy Thanksgiving dinner,” raised its minimum wage for a second time, in February, to $10. McDonald’s, the other poster child, with its “McResource” help line for its fast food workers to get government assistance, says it’s now all for $10.10 minimum, if rolled out carefully for its smaller franchisees. At McDonald’s quarterly earnings call last week, CEO Steve Easterbrook said “higher wages for employees at company-operated restaurants” among other changes “has resulted in lower crew turnover and, in turn, better customer service.” Sales have also increased.

In New York City, according to a fast-food industry survey reported by Crains New York Business, “Seven of the 10 largest operators in the city expanded last year even though they knew their minimum-wage rate would jump to $10.50 on Jan. 1, 2016, and to $15 in 2018 in the five boroughs.” That included franchisees as well as corporate owners. Reduced profit margins, possibly for some, but “the message to investors from the executives was that the companies could manage the pressure of higher labor costs,” reported Crains.

The National Law Employment Project lists 22 companies, hospitals and a sprinkling of universities that have raised their minimum wage higher than $15 in the past two years. According to a survey of 1,000 business executives nationwide, 80 percent support their states raising the minimum wage, with just 8 percent opposed. “If you’re fighting against a minimum wage increase, you’re fighting an uphill battle, because most Americans, even most Republicans, are okay with raising the minimum wage,” the managing director of a market research firm founded by Republican pollster Frank Luntz, which conducted the poll, told an online gathering of state chamber of commerce executives in February.

In April 2015, Aetna, the mega health insurer raised the minimum wage for 5,700 claims administrators and other low-wage employees to $16-an-hour. CEO Mark Bertolini said it’s more than just money. Ordering Aetna executives to read Thomas Piketty’s “Capital in the Twenty-First Century,” Bertolini told The Wall Street Journal, “it’s not just about paying people, it’s about the whole social compact.”

Goodness! Did pigs just fly?